I previously wrote about a press release from a different debt settlement company that used a quote from the Federal Trade Commission Chairman to support debt settlement. I debunked the comment by putting it into context. You can read “Good Example of Twisting Information in Favor of Debt Settlement“.
Well I just found out that John Craven, president of Debt Settlement USA is using the same incomplete quote on his site, in my opinion, in an effort to make people believe that the FTC Chairman is blindly in support of debt settlement.
Craven says, “Commissioner Thomas Rosch of the FTC recently spoke at the Credit and Collections Conference where he stated that in his view “debt settlement can provide some real benefits for consumers.” If the FTC recognizes the need for the industry, it is a shame the BBB does not recognize the benefits.” – Source
Let’s be clear here, the Federal Trade Chairman spoke very specifically about bad acts and his concerns about the debt settlement industry in his presentation. It was not an endorsement of debt settlement. Partially quoting him as a way to promote debt settlement is in my opinion a misrepresentation of the position of the Federal Trade Commission.
Overall the Debt Settlement USA site does not contain many of the objectionable statements others use to hype debt settlement services. But in this one case, the FTC Chairman’s statement should be either eliminated or qualified.
Here is a larger portion of what the FTC Chairman had to say in his presentation.
First, debt settlement firms should limit their performance claims to those they can adequately substantiate. For example, a debt settlement firm should not advertise that it can successfully negotiate a consumer’s settlement down to only 50 percent of his or her unsecured debt, if the firm’s average settlements are closer to 80 or 90 percent of its consumers’ unsecured debt.
Second, debt settlement firms’ ads should not misrepresent the benefits of debt settlement. For example, they should not claim that the program will protect consumers from debt collection calls or creditor law suits if that is not true.
Third, debt settlement ads should disclose, clearly and conspicuously, the negative impact that participation in a program may have on a consumer’s credit score, and how long that impact may linger. This disclosure should not be made only in the written contract, but in the ad itself.
Fourth, if a debt settlement firm promises to refund debt settlement service fees to consumers if their debt settlement negotiations are unsuccessful, the firm must honor that promise. Moreover, if the refund is subject to certain terms and conditions, they should be clearly and conspicuously disclosed before the consumer signs up for the program.
Finally, I believe certain practices should be prohibited in the debt settlement industry. In particular, debt settlement firms shouldn’t be allowed to charge any payment in advance of performing services for the consumer. This type of advance payment is already prohibited for credit repair services, and I think they should similarly be prohibited here. – Source
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