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Tips and Alerts

On Debt Setlement

The FTC has issued a final ruling on telemarketing debt settlement. Read more here

ABC Good Morning America produced a news story on the dangers and risks of debt settlement, watch it here 

Government Accountability Office
On April 22, 2010, the US Senate Committee on Commerce Science and Transportation met to discuss the Debt Settlement Industry. This US Senate Committee oversees the activities of the Federal Trade Commission (FTC) and sought to discover the findings of the FTC with regards to the debt settlement industry. The GAO (Government Accountability Office) sought to determine if the findings in the proposed FTC rulemaking on debt settlement companies was accurate. The report did a study of 20 debt settlement companies.  The undercover consumer report overwhelmingly verified that the findings of the FTC were accurate. Indeed, fraudulent claims and large upfront fees left consumers more damaged. In fact, less than 10% of all consumers actually were successful, not the 35% success the Associations seem to claim. 

The Federal Trade Commission
Federal Trade Commission has issued an alert and have a proposed rulemaking regarding debt settlement. To learn about Facts for Consumers “Knee Deep in Debt”  visit
http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre19.shtm

New York Times article entitled “Peddling Relief, Firms Put Debtors in a Deeper Hole:  Credit Settlement Industry Under Fire”

(Courtesy of Money Talks News)

If you’re considering debt settlement to solve a debt problem, or know someone who is, here’s some required reading. 
This is the 
summary of the conclusions reached after an investigation of the debt settlement industry by the Government Accountability Office.
For more detail, here’s the
complete GAO report. It’s called Debt Settlement: Fraudulent, Abusive, and Deceptive Practices Pose Risk to Consumers.
Read the GAO report and you’ll learn that undercover GAO investigators contacted 20 debt settlement companies pretending to be consumers with debt problems. Here’s a few of the things they documented:

Seventeen of the 20 companies GAO called while posing as fictitious consumers said they collect up-front fees before settling debts — a practice FTC has labeled as harmful.

Nearly all of the companies advised GAO’s fictitious consumers to stop paying their creditors, including accounts that were still current: something that would obviously prove highly detrimental to credit scores.

GAO found that some debt settlement companies claimed unusually high success rates — as high as 100 percent. FTC and state investigations have typically found that less than 10 percent of consumers successfully complete these programs.

How to recognize a debt settlement come-on.

Since debt settlement companies rarely label themselves as debt settlement companies, it’s important to be able to differentiate these companies from other types of more reliable and less controversial debt relief agencies.

Debt settlement is simply offering to pay less than what you owe to fully satisfy a debt. So one way you’ll recognize a debt settlement ad is that it will say something like "reduce your debt 40-60%!" Debt settlement is the only technique (other than bankruptcy) that promises to reduce the amount you actually owe.

Credit counseling, on the other hand, normally offers to help you set up a payment plan to repay your debts in full, albeit with potentially lower rates and reduced fees.

Bottom line? I can’t say that all debt settlement companies are bad, some may genuinely care about you and act in your best interests, but I can now say with greater confidence that many are worth avoiding.

MoneyTalks News


Fund Analyzer
FINRA has just released several new upgrades to their popular
Fund Analyzer tool, which lets you compare up to three mutual funds or exchange-traded funds side-by-side and evaluate the impact of fees and expenses over time on your investments. Using the new Fund Screener, you can now search more than 23,000 funds and ETFs on nine key criteria, making the task of finding funds that meet your objectives quicker and easier. And the new Annual Expense Comparison illustrates how a fund’s expense ratio stacks up against an industry average of similar funds.  Other new features include one-click access to a fund’s prospectus and other disclosure documents, a PDF report you can print or save and a “Share This” function so you can send your report to others. Visit the Fund Analyzer at www.finra.org/FundAnalyzer.

Publications

FEDERAL AND POSTAL JOB SCAMS: TIPS-OFFS TO RIP-OFFS. Highlights that job seekers never have to pay for information about vacancies with the federal government or U.S. Postal Service, and that it’s free to apply for federal and postal jobs. Offers tips to help you avoid federal and postal job rip-offs. 8.5"x11", 2 pages.
 
WORK-AT-HOME SCHEMES. Offers people interested in work-at-home opportunities (including medical billing, envelope stuffing, and craft or assembly work) questions to ask before spending their money on these offers. 8.5"x11", 4 pages.
 
TAKE THIS SCHEME AND STUFF IT: AVOIDING ENVELOPE-STUFFING RIP-OFFS. Warns prospective workers that promises of big earnings stuffing envelopes from home are false and a sign of a rip-off. 8.5"x11", 2 pages.
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