New regulations in place to protect consumers
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By Alan Bligh
Often, we have warned you about the problems cause by some debt relief companies. At last we are receiving help. The Federal Trade Commission recently announced amendments to the Telemarketing Sales Rule which will prohibit for-profit companies that sell debt relief serves over the phone from collecting any advanced fees prior to settling or reducing debt.
These new regulations offer consumers additional protections when trying to reduce credit card or other unsecured debt. This indeed is great news.
This year, BBB has processed more than 2,600 complaints nationwide against debt relief companies, which include credit counseling, debt settlement and debt negotiation services. Generally, consumers allege companies in these industries may charge large advance fees, fail to reduce debts, or misrepresent their services.
On Oct. 27, for-profit debt relief companies who make telemarketing calls, or are called by a consumer in response to debt relief advertising, are prohibited from collecting advance fees for their services. Companies can only charge their customers after:
1. There is a written agreement between the consumer and their creditor;
2. The company successfully renegotiates, settles, reduces or otherwise changes the terms of at least one of the consumer's debts;
3. The consumer makes at least one payment to their creditor after the successful negotiation or settlement.
In addition, on Sept. 27, 2010, three other Telemarketing Sales Rule provisions will take effect. These provisions will:
1. Require companies to disclose to consumers how long it will take to see results, how much their service costs and any negative consequences that could occur;
2. Prohibit companies from misrepresenting their success rate or claiming they are non-profit;
3. Extend the Telemarketing Sales Rule to cover calls consumers make to these companies in response to advertising.
These rather tough rules should go a long way in curbing many of the abuses perpetrated by some debt relief companies.
COLLEGE STUDENTS AND IDENTITY THEFT
College students have enough to juggle when it comes to school, work and their social life and fighting fraud often doesn't make the list of priorities. Because college students are so susceptible to identity theft, the BBB recommends that they take simple steps to protect themselves on campus. Remember:
School mailboxes are not always secure and can often be easily accessed. Have sensitive mail sent to a permanent address such as the parents' home or a post office box.
Important documents should be stored under lock and key.
Never, ever loan your credit or debit card to anyone. Also, just say no if your friend wants you to co-sign for a loan or financing for items like a TV.
Make sure your computer has up-to-date anti-virus and spyware software.
Alan Bligh is the executive director of the Better Business Bureau in Corpus Christi. Contact him by e-mail at abligh@corpuschristi. bbb.org.