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Released: July 30, 2010

FTC rules take aim at debt-relief industry

Source: Ylan Mui, Washington Post (Free Registration)

The Federal Trade Commission issued stringent new rules cracking down on the burgeoning debt-relief industry on Thursday, saying it too often charges consumers hefty upfront fees but fails to reduce the amount of money they owe creditors.

The new regulations prevent any for-profit debt-relief company from collecting advance fees as of Oct. 27, a significant victory for consumer advocacy groups that have lobbied extensively over the past year for tighter oversight of the industry. Starting Sept. 27, it also requires companies to disclose how much the process could cost and how long it may take consumers to see results. The FTC also set new rules for creating and managing the accounts consumers use to save money to pay off debt. Advertising claims were also restricted.

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