Wednesday, February 9, 2011, AM | 1 Comment
Commercials are used for the purpose of promotion. Mostly what they claim is too good to be true. If a commercial promotes debt settlement companies or its certain services, they often eulogize the positive points of the organization. But the consumers actually remain in darkness about the reality. These ignorant consumers take a hasty decision by selecting an inappropriate company as they are lured by the brighter aspects of the organization as projected by the commercials. The companies often claim to cut your credit card debt in half, not charging upfront fee and aver to eliminate your debts within few months that might not be logically possible.
These commercials come with a warning as they proclaim that there are a lot of scammers in this field but claiming themselves to be authentic. These ad companies go to a great extent to seek the attention of the viewers or listeners in order to convince them. These agencies earn their revenue from the promotion of the respective companies. They usually start advertising without verifying the authenticity of the services provided by the company. So, you will definitely not take their word on that score.
Some commercial hoardings might state that if the debtors’ debt exceeds $10,000 then the company can help those consumers. You must be wondering why they are giving such fixed amount to eliminate your debt. The sole reason is that many companies charge a percentage of your total debt as their fee. So, if you have debt less than $10,000, they will not be keen to help you because they will not reap a good profit from it.
The Telemarketing Sales Rule (TSR) has been reformed by the Federal Trade Commission (FTC) last year to put an end to the illegal practices of the debt relief services. As per the new rule the companies are not supposed to contact the consumers and if the consumers respond to advertisements and call this also will go against the law.
According to the new rule the companies are not allowed to charge any upfront fee before they have settled the debt of their clients. They can charge fee for the service they have provided. In case, a company demands any upfront payment then they are violating the rule implemented by FTC. This will help you to understand that you are associated with a scam company.
Evaluating the modification in the law
As a consumer you should be aware of the modification in the FTC rule, instead of trusting what the companies assert through the commercials. The rule has prevented all the companies from charging up front for their services.
The companies are not liable to charge their clients until:
- They have settled the debt effectively or altered the terms of any one of the client’s debt.
- Both the parties, the creditor and debtor, have agreed to the settlement program and provided their client with a debt management plan.
- After the first payment of the client to the creditor in accordance with the agreement negotiated by the debt relief company.
The company cannot charge up front fee even if the clients enroll with overwhelming debts for the services.
In a Nutshell
Settling debts will not be an easy job for the company. So, if the advertisement claims something superfluous then try to verify its authenticity.
This article was written by our guest writer – Kevin Craig.
- Mar 16, 2011: Credit Card Debt Relief