Flip on your television or radio at almost any time of day and you’re guaranteed to hear at least one ad that promises to help you get out of debt. These ads have become more prevalent in the past couple of years as consumers face mounting credit card bills and faulty mortgages. While there are indeed legitimate debt reduction and consolidation agencies on the market, there are also tons of scams actively engaging in deceptive advertising campaigns in order to take advantage of desperate individuals.
In an effort to protect consumers from these unethical practices, the Federal Trade Commission (FTC) recently created new policies with respect to this industry. For instance, debt relief companies will no longer be able to charge upfront fees without delivering any results, unless the customer signs an agreement specifying the terms of the transactions. Additionally, there are several stipulations concerning the creation of special bank accounts for the purposes of paying off outstanding balances. The debt firms can no longer collect referral fees from account providers, which may curb corruption by eliminating back door deals.
Many of the policies focus on telephone marketing practices because this aspect has been particularly problematic. Telemarketers must now disclose important information to prospective customers, such as the fees involved and the estimated duration of the process. These conditions apply when customers initiate the contact as well; they are not merely applicable to sales solicitations. This rule will probably help consumers determine the validity of claims made in company advertisements, which allows them to make an accurate evaluation of the provider’s honesty and integrity.
For more details or to report a violation, please visit the FTC’s website here. If you run a debt relief business, you should go over all of your sales policies along with your ad campaigns to ensure that you’re in compliance. Consumers interested in obtaining these types of services will undoubtedly benefit from reviewing the rules, too. We certainly hope that these guidelines improve this unfortunate situation. This industry certainly has developed a negative reputation, so we’d love to see it reach its full potential.