New consumer consortium reveals regulatory evasion by debt settlement companies
Holly Springs, NC -- (SBWIRE) -- 12/22/2010 -- A joint complaint letter was filed today with the Federal Trade Commission by a consortium of non-profit consumer credit counseling agencies that collectively represents millions of financially vulnerable U.S. consumers. The letter calls for the FTC to take immediate investigative and enforcement action against debt settlement companies that have brazenly evaded the Commission’s recently amended Telemarketing Sales Rules (TSR), which was revised this summer to curb abusive practices in the debt settlement industry.
“The worst offenders are continuing to pillage the dwindling bank accounts of desperate consumers in broad daylight, daring the FTC and state attorneys general to take action,” notes Christopher Viale, CEO of Cambridge Credit Counseling. “We applaud the FTC for the actions announced last week, but we are encouraging greater vigilance and enforcement, specifically against those debt settlement companies that have obviously chosen to evade the new rules, rather than abide by them.
“Taking action may not be as easy it sounds,” continues Viale. “Debt settlement companies have amassed large stockpiles of cash during the recession, while the FTC and state law enforcement agencies have had to pick their battles carefully as their budgets continue to tighten. Congress and the states may need to provide additional funding to ensure that the FTC’s consumer protection efforts can be effective.”
Copies of the complaint letter were also sent to key U.S. Representatives and Senators, and to the National Association of Attorneys General. The letter was signed by the chief executives of eleven prominent non-profit credit counseling agencies, which together have counseled more than four million consumers. Many of their current clients are “refugees” of debt settlement programs that quickly exhausted their clients’ financial reserves through excessive up-front fees and other charges, while providing little or no services – including the promised settlements.
The letter identifies several tactics being used by debt settlement companies to evade the new TSR rules and requests that three steps be taken: that the FTC launch a new investigation into on-going fraudulent conduct; that the FTC obtain injunctions against the offending companies; and that the FTC coordinate its renewed efforts with state attorneys general.
A copy of the letter, along with the names of the signatory credit counseling companies, can be found at http://cesidebtsolutions.org/CESI/blog/430/.
About Cambridge Credit Counseling
Cambridge Credit Counseling Corp. is a professional housing and credit counseling agency dedicated to improving the financial literacy of young adults, and to providing financially distressed Americans with education and debt management services appropriate to their needs. Visit Cambridge Credit Counseling online at http://www.cambridgecredit.org. To learn more about Cambridge Credit Counseling’s community initiatives, please visit http://www.youtube.com/CambridgeCredit.