On the heels of the FTC’s List of Banned Debt Collectors comes the sequel: The FTC’s List of Banned Mortgage Relief and Debt Relief Companies and People. Why would someone be banned? Well, here’s the story.
Debt relief is any program or service – such as debt settlement or debt consolidation – that offers to renegotiate or change the terms of a consumer’s unsecured debt. That means things like credit card or student loan debt. What they offer might include reducing the balance, interest rate, or fees owed. Mortgage relief is similar, but for home mortgages, and can include foreclosure prevention and defense or loan modification.
The law is clear: mortgage and debt relief operations can’t charge a fee until after they get the promised mortgage or debt relief results. They also can’t misrepresent their services or mislead people about the results of their programs.
And any company crossing that line will end up in trouble with the FTC – like the student loan debt relief cases just announced by the FTC. Some companies have to pay what we call “monetary relief” – basically, handing over their ill-gotten gains. And some can wind up with limits on their business activities. Companies also are monitored by the FTC to make sure they comply.
But, sometimes, the behavior of a debt relief operation is so egregious that the FTC asks the courts to permanently ban the company or person from the industry. The FTC has sued over 500 companies and individuals who broke the law. Nearly 300 of them have been banned, and there have been hundreds of millions of dollars in judgments. And now that list is public, along with the details of the cases.
If you’re struggling to pay your bills, check out our free materials to help you deal with your debts and avoid scams.
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