One statement I often hear from consumers and those inside the debt relief industry is how the debt relief companies that take advantage of consumers, don’t deliver services, leave them getting sued, and take their money in fees, is a new problem. The reality is it is anything but a new problem.
Consumers getting less than they pay for in debt help has been a problem that extends back into the at least the 1940s that I’m aware of. But let’s look back at the problems faced by people in 1963. Here is what the North Carolina state legislature wrote prior to the passage of their debt adjusting law.
Dirty Debt Lumpers
Whereas a national organization known as National Better Business Bureau states: “that those who have swarmed into the debt adjustment field recently have included a large portion of unscrupulous or income-petent opportunists whose activities have spread misery throughout the land. They have used extravagant and deceptive advertising to claim far more than they knew they were in a position to deliver. They have made false promises to persons whom they knew, or should have known, were beyond redemption credit-wise. They have withheld their own fees from the debtors’ payments and have failed to promptly make agreed payments to creditors or to obtain creditors’ accession to the pro rata plan devised. The net result of their activities, in many cases has been to leave already desperate people more hopelessly mired in debt and litigation than before.”; and
Whereas said debt adjusters and their business and practices are known by several names such as pro-raters, debt-poolers, debt managers, credit counselors, budget systems, funding agencies, debt-liquidators, and debt-lumpers, and these practices have grown to such proportions that for the most part they have become a national menace by preying upon unfortunate people and harassed debtors, and those engaged in such practices, except for a few, have engaged in false advertising, have falsely held themselves out as being competent and able to solve debt problems regardless of any and all circumstances, have lured ignorant and unsuspecting people into executing contracts heavily loaded in their favor and have charged large fees for alleged services which results in the piling on of debt; and
Whereas, such practices have been condemned by Merchants Bureaus, Boards of Trade, Better Business Bureaus, Chambers of Commerce, and have been designated by the National Legal Aid Association as “The Meanest Racket Out”, and many magazines of national circulation such as Good Housekeeping, Readers Digest, the Kiplinger Magazine and Changing Times and many other reputable publications have published articles condemning such practices; and
Whereas, said debt adjusters are now increasing in number in the State of North Carolina and many instances of their unwarranted practices are now being made known in the State, and instances of many sharp practices, hardships on the unfortunate, no services actually performed, and increase of debt through false advertising and other fraudulent means, have been committed and have been carried out in the capital City of Raleigh, with the result that there are many cases before justices of the peace wherein creditors have brought suits against debtors although those debtors have executed contracts and paid money to those who hold themselves out as performing the service of business of debt adjuster.
Debtors being disadvantaged is certainly nothing new, unfortunately. It’s gone on for a long time and no matter what I write or what actions regulators take, it will go on for a long time into the future.