The rules, which will take effect Oct. 27, 2010, will require companies that sell debt-relief services over the telephone to no longer charge a fee before they settle or reduce a customerâs credit-card, or other unsecured, debt.
âAt the FTC, we strive every day to make sure Americaâs middle-class families get straight deals for their dollars,â Leibowitz said. âThis rule will stop companies who offer consumers false promises of reducing credit-card debts by half or more in exchange for large, up-front fees. Too many of these companies pick the last dollar out of consumersâ pockets â and far from leaving them better off, push them deeper into debt, even bankruptcy.â
According to FTC, the rules specify the companies cannot collect fees until the debt-relief service successfully renegotiates, settles, reduces, or otherwise changes the terms of at least one of the consumerâs debts, there is a written settlement agreement between the consumer and the creditor and the consumer has made at least one payment to the creditor as a result of the agreement negotiated by the debt-relief provider.