Debt relief firms sued by the FTC

Debt relief firms are products of the economic recession. These firms had the purpose of helping financially troubled individuals with their debt issues given the vulnerable economic conditions at the time.

FTC says that these firms have charged card holders with a fee which are large enough, but are not identical to the efforts done by these firms to reduce their clients' debt. FTC responded to thousands of complaints about debt relief firms which law officials have targeted for deceptive advertising and fraudulent practices.

The Federal Trade Commission (FTC) has sued debt relief firms' Financial Freedom of America, Inc. under Financial Freedom Processing, Inc., Debt Consultants of America, Inc., and Debt Professionals of America, Inc. for having been involved in misleading and fraudulent practices of claiming debt reduction strategies with results that are far from encouraging and may even be quite the opposite of what these firms sought to guarantee in the first place.

In order to attract more clients, the FTC said that the firms named above have promised 30 to 60 percent debt reduction for their customers. The debt reduction time line which these firms have presented to their clients ranged from 18 to 36 months, as shown in the respective websites of these debt relief firms according to the FTC.

The advertising of the debt relief firms was also well-expanded not only to include websites but also other forms of media like television and radio. Print ads along with other advertising venues included toll free contact numbers for interested customers. The numbers serve the purpose of providing free consultation to the prospective clients.

After having been successfully included in the debt relief firms programs, the customers are then made to pay charges amounting to thousands of dollars every month, FTC said. Maintenance and negotiation fees were also among the payment requirements for the firms' continued and supposed debt relief efforts.

FTC said that the debt relief firms' clients, after many months of not seeing any improvement in their credit and significant reduction in their debt, have backed out of the services and left the programs in the firms, they were part of.

FTC says that the same debt relief firms have slapped their customers who have deferred from using their services with huge cancellation fees on top of their debt amounts. The FTC concludes that instead of the clients solving their debt issues their problems have been rather compounded in their decision to seek "relief" from these firms.

Bryant Park

Bryant Park is a financial consultant for one of the companies listed on Wall Street. He writes on a variety of topics ranging from credit cards to different loans that can be availed by consumers. He holds a bachelor degree in Financial Services from Dartmouth College.