WASHINGTON – So-called “debt settlement” continue to market “dubious” services to consumers, despite extensive criticism from government agencies and regulators, the media and consumer groups, according to the Consumer Federation of America, which has issued a new statement urging consumers to beware of companies offering to cancel or reduce their debts.
Reaching an “agreement” with such companies often leads to new problems for consumers, said the CFA, that include lower credit scores and the resulting higher rates on future loans, debt collection lawsuits, late fees, penalties and more.
These companies, said the CFA’s executive director, Stephen Brobeck, often take advantage of consumers’ “desperation.” The CFA called for action at both the state and federal level, including a “not worse off” provision to provide consumers with a refund if they end up worse off. The states should also set limits on the fees these companies charge, the CFA said, urging the Consumer Financial Protection Bureau to enact new rules.
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