Debt Settlers Turn to Texting to Avoid Regulation
Many disingenuous debt settlement companies have started texting consumers in order to gain entry into their lives and ultimately take advantage of their debt situations.
This practice comes in response to the new debt settlement rules that the Federal Trade Commission (FTC) enacted in October, 2010 that place various restrictions on for-profit debt settlement companies that reach agreements with consumers over the phone. These rules prohibit predatory debt settlers from collecting fees before providing significant impact on a consumer’s debt.
Prior to the FTC regulations, it was common for debt settlement companies to call consumers, make promises, accept payment and never actually positively affect their finances. FTC rules do not prohibit similar practices carried out on the Internet or in person. It appears, however, that these companies do not want to relinquish phone privileges and have turned to texting as a means of circumventing the government rules, which do not explicitly apply to this type of communication.
The current approach held by debt settlers in terms of text message solicitation is to contact consumers ostensibly as a survey company and inquire about their debt situations. If consumers indicate that they want to lower their debt, they are given the option of dealing with a consumer advocate. This advocate is often actually a debt settlement company that charges up-front fees for promises of debt relief. These promises most often turn out to be empty and consumers are left with less money and the same debt situation.
“It is key that consumers demand that any agreement they enter into with a debt settlement company adhere to the FTC regulations,” said Odysseas Papadimitriou, CEO of WalletHub.com and an industry expert on credit cards and credit card debt. “Since Web, in-person and text message communications are not covered by these rules, people should only enter into debt settlement agreements via phone, if at all. Consumers really need to protect themselves because there are so many illegitimate companies in the debt settlement industry.”
If consumers receive suspicious texts inquiring about their debt, they can also report them to the Federal Trade Commission. Simply deleting the messages and not responding to such overtures will protect you from scams as well.
Depending on their carrier, cell phone users can also set account preferences online that will keep them from receiving text messages originating from the Internet, which is the case for most spam texts. Such filtering will not affect texts coming from other cell phones.
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