FTC Reins In ‘Debt Relief’

WASHINGTON (CN) - The Federal Trade Commission plans to combat telemarketers who advertise "debt relief services" that make deceptive representations to consumers.

The agency's new regulation under the Telemarketing Sales Rule would prohibit misrepresentation and requires certain disclosures for consumer protection.

Such services often advertise they can reduce consumers' interest payments by specific percentages or minimum amounts, in exchange for a fee of hundreds of dollars, and falsely purport to be affiliated, or have close relationships, with consumers' creditors.

The Telemarketing Sales Rule requires that telemarketers soliciting sales of services promptly disclose the identity of the seller; the fact that the purpose of the call is to sell goods or services; and the nature of the goods or services being offered. The FTC would require the disclosure of the total cost of the debt reduction service being offered and the cost of repaying the consumer's debt.

The Commission also proposes to ban the practice of debt relief service providers requiring up front payment for their services.

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