FTC List of Banned Debt Collectors Grows

In order to protect consumers from debt collection scams and unfair debt collection practices, the Federal Trade Commission publishes a list of banned debt collectors. As the website explains, these debt collection companies and people “are banned, by federal court orders, from participating in the business of debt collection.” These bans resulted from lawsuits against the debt collectors, and consumers can visit the website in order to see a complete list, as well as the accompanying cases and court orders. But the publication of this list was not the FTC’s final step in protecting consumers from fraudulent debt collection schemes. A recent article on the FTC blog reported that the federal agency has gone onto ban “hundreds of mortgage assistance and debt relief operations,” too.
What is the difference between banned debt collectors and banned mortgage and debt relief companies? In short, the former are attempting to collect money from debtors, while the latter claim to be helping debtors. Yet as the article explains, these companies do not always have the best interests of consumers in mind.
Understanding Mortgage and Debt Relief
How do mortgage and debt relief companies operate? As the article explains, “[d]ebt relief is any program or service—such as debt settlement or debt consolidation—that offers to renegotiate or change the terms of a consumer’s unsecured debt.” Often, debt relief companies target consumers who have substantial credit card debt or student loan payments. What do these companies offer? Typically debt relief companies will offer one or more of the following services:
  • To reduce the balance on your debts;
  • To lower the interest rate on your debts; or
  • To lower or eliminate the fees associated with your debts.
Mortgage relief companies offer similar services to those mentioned above with regard to home loans, and some of them even promise consumers to help with foreclosure prevention or to get a mortgage modification.
Debt Relief Companies that Violate Consumer Protection Laws
While there are legitimate debt and mortgage relief companies in operation, the article underscores that there are laws in place to ensure that consumers are protected from fraudulent debt relief promises. What are some of the actions that the law prevents these companies from doing? The article lists the following as prohibited behaviors:
  • Charging a fee before getting debt relief results;
  • Misrepresenting the type of services offered; and
  • Misleading consumers about the results of debt relief options.
These companies are monitored regularly by the FTC to ensure that they remain in compliance. When debt or mortgage relief businesses do not abide by the law, they can be banned from operation. As the article highlights, the FTC has now filed lawsuits against 500 debt relief and mortgage relief companies, and those lawsuits have resulted in almost 300 companies being banned. In addition to permanent bans, the FTC lawsuits also have resulted in “hundreds of millions of dollars in judgments.”
If you believe you were the target of an unfair debt collection practice or a fraudulent debt relief operation, you may be able to seek compensation. An experienced consumer protection lawyer in Oak Park can discuss your options with you today. Contact the Emerson Law Firm to learn more about how we can assist you.
See Related Blog Posts:
Suing Debt Collectors and Proving Harm

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