Sorting Out Debt-Relief Promises
Author: Jennifer Waters</br></br>Consumers will be protected from debt-relief companies that charge hefty upfront fees and make questionable claims, thanks to new government rules that take full effect in late October.</br></br>"The new rules are a huge first step," says Lauren Bowne, staff attorney for Consumers Union. "They're going to prevent companies from charging upfront fees until they actually do something for you."</br></br>But consumers shouldn't get too complacent. The amendments to the Telemarketing Sales Rule, or TSR, apply only to for-profit companies and do not cover ambiguous claims that might be made by such companies on the Internet or in face-to-face meetings.</br></br>The rules come amid a growing number of consumer complaints, and as the number of companies promising consumers relief has skyrocketed in the recession. In 2002, for example, there were only eight debt-relief companies in the business. Today there are at least 2,000, and they're managing a total of about $20 billion in credit-card and other unsecured debt, according to the Association of Settlement Companies, a trade organization.