TASC: FTC Proposal Would Hurt Finance Industry

MADISON, Wis.—The Federal Trade Commission’s proposed changes to the Telemarketing Sales Rule (TSR) would not only adversely affect consumers in debt but creditors as well, The Association of Settlement Companies (TASC) announced today.

The FTC is seeking to create an amendment banning advanced fees that TASC believes could effectively eliminate debt settlement as a viable option for consumers struggling with unsecured debt as well as for creditors (e.g. banks) that need to repay the federal government. The ban would make settlement companies in essence work for free for the better part of what is normally a three-year program. Last year, the debt settlement industry settled $2.2 billion worth of debt.

“Without the debt settlement industry, many consumers who lack the courage to admit an overloaded debt condition and the willingness to do something about it will lose their conduit to a better tomorrow,” Carmine Dorio, Senior Vice President of Progressive Financial, said. “These consumers will then simply dissipate into credit’s black hole commonly referred to as bad debt.”

This bad debt would stem from consumers who cannot afford credit counseling or have to file for bankruptcy, the so-called alternatives to debt settlement if the industry was eliminated. According to a study conducted by consumer advocacy group Credit Karma, credit card debt increased 14 percent nationally from September to October, so the need for a viable option such as debt settlement also is increasing, TASC noted.

At the same time, debt settlement has grown as an increasingly useful financial tool for creditors. The publication insideARM reported recently that “accounts receivable management companies are shifting their collection strategies to include more settlement offers … as debtors struggle through a recession that shows little sign of letting up.”

“Debt settlement provides a useful medium for consumers in debt and their creditors,” Dave Leuthold, Executive Director of TASC, said. “During this tough economic climate, debt settlement is even more valuable for more consumers and creditors and should not be eliminated by the FTC.”

About The Association of Settlement Companies
The Association of Settlement Companies (TASC) promotes fair business practices, consumer protection and industry standards for the debt settlement industry. TASC, founded in 2005, serves to protect consumers through an organization seal that represents best practices and standards of reputable companies. The organization also protects its member companies through lobbying efforts at the state and national levels, as well as awareness initiatives to educate consumers on debt settlement as a financial solution. All TASC member companies pledge compliance to strict association bylaws governing business practices and ethics. For more information, visit www.tascsite.org.