A new Federal Trade Commission rule meant to reign in the deceptive practices of for-profit debt relief services will take effect this week, The San Francisco Chronicle reported.
The Better Business Bureau has received more than 6,000 complaints about debt relief companies since December 2007. Many of these credit counseling, debt settlement and debt negotiation services advertise on late-night television and charge advance fees to cover their marketing costs, The Tulsa World reported.
Beginning Wednesday, the FTC will have the legal authority to ban debt relief firms from charging or collecting these upfront retainers until a debt has been settled and the customer has started to make payments. The new rule also requires these companies to:
* Back up their advertising claims
* Provide a written settlement agreement or debt management plan
* Tell customers how much their services cost
* List all potential penalties
* Explain how long customers will have to wait before seeing results - (more)
