Consumers looking for protection from deceptive debt settlement companies received positive news when the Federal Trade Commission issued stricter regulations this year.
However, despite the new rules, many consumer groups warn that debt settlement businesses continue to operate on the Internet, often using the same illicit practices, such as propagating claims that they can settle credit card debt at a fraction of the cost.
The amount of consumer harm in this issue is really unbelievable. There’s $40 to $50 billion wrapped up in these types of programs, and there is only a 2 percent success rate.
While the recent regulations prohibit false advertising via the phone, many have taken to popular social networks such as Twitter to advertise to consumers, the news source says. In addition, cell phones have also become a target, with many companies sending text messages to consumers.
Others have taken to posing as attorneys who represent debtors, claiming the laws don’t cover legal fees incurred for services, Viale said, according to the source.
For now, consumers should be weary of these advances. Of the 1,000 debt settlement firms that existed prior to the regulations, Viale says only 20 to 30 have agreed to comply with new regulations.