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FTC proposals do not apply to a large portion of the debt relief industry

COLUMBIA, Md., Aug. 26 /PRNewswire/ -- Proposed federal regulations governing debt relief services would not apply to the nonprofit portion of the industry at a time when significantly more people are seeking help with debt, according to CareOne Services President Mike Croxson. For example, the proposed rules wouldn't cover nearly 90 percent of debt management program providers, which happen to be nonprofits.

"The proposed rules from the Federal Trade Commission will absolutely help protect consumers who need help dealing with debts they find overwhelming," said Croxson. "However, because the FTC does not have the regulatory authority to apply these rules to nonprofit providers, which represent the vast majority of this industry, these measures will fall far short of making a true impact."

CareOne believes that this issue is a stark example of the shortcomings in the current regulatory environment at the federal level and underscores the current administration's interest in new oversight and consumer protection measures for financial services. CareOne supports legislative and regulatory reform that will promote increased transparency, oversight and accountability in the debt relief industry.

"As Congress evaluates new regulatory structures such as the Consumer Financial Protection Agency, it will be important to address issues such as this. Rules and regulations should cover all providers, regardless of tax status, to help protect consumers," said Croxson. "The focus should be on regulating the product being offered no matter what type of entity is providing debt relief services to consumers."

At the end of July, the Federal Trade Commission proposed changes to its Telemarketing Sales Rules for companies that provide debt relief services. The proposed rules would require companies to disclose the services offered and how much they cost and how long it would take before consumers get debt relief. They would also prohibit all debt relief companies from charging fees until services have actually been provided. Unfortunately, none of these requirements would apply to not-for profit organizations who offer debt relief services.

The FTC will hold a public hearing on this issue on Nov. 4. CareOne has asked to participate in the public forum and will submit written comments in advance of the hearing. CareOne will advocate for a strengthened regulatory framework that includes:

In recent years, nonprofits in the debt relief industry have been found guilty of deceptive and abusive practices. For example, The Federal Trade Commission settled a lawsuit in September 2008 involving a nonprofit credit counseling company, AmeriDebt Inc. Called "the largest credit counseling / debt management deception case brought by the FTC," the proceedings found AmeriDebt had knowingly engaged in deceptive practices to promote and offer services to consumers.

"The FTC is taking the right steps to protect consumers, but more can be done to assure consumers get the help they need and are provided with the best services to improve their financial stability," said Croxson. "In the meantime, consumers need to look at whether their debt relief providers are in good standing with their state regulators and the Better Business Bureau and ask about how the fees are structured. Debt relief providers should be paid in a way that aligns their interests with consumers' interests."

About CareOne Services

CareOne Services was formed in 2002 to provide consumers with multiple solutions to complex money problems. CareOne Services, Inc. boasts a unique Financial Fitness Center that examines each consumer's individual financial situation and develops a personalized solution to help the consumer get out of debt and strengthen his or her financial footing.

CareOne Services, Inc. has helped hundreds of thousands of customers successfully overcome financial instability and continued giving them the confidence to manage their money successfully. CareOne takes a holistic approach in assisting customers to manage their debt, looking at an individual's situation and creating a solution that is achievable and works. CareOne does not offer to change or improve an individual's credit score. CareOne goes beyond providing the standard debt payment programs, helping consumers address day-to-day life issues that are the result of being in debt along with free educational tools online.

For more information about CareOne Services, visit www.CareOneCredit.com.

SOURCE CareOne Services, Inc.

Web site: http://www.CareOneCredit.com/

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