Cuomo targets debt settling companies
New York State Attorney General Andrew Cuomo is launching an investigation into 14 debt settlement companies, which he calls a "rogue industry." Ashley Milne-Tyte reports.
New York State Attorney General Andrew Cuomo (Brad Barket/AFP/Getty Images)
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KAI RYSSDAL: With recessions come companies that promise to help individuals get themselves out of financial trouble. For a fee of course. The debt settlement industry -- as it's known -- has grown from about 300 companies to a thousand in just the past couple of years. Those fees, and some other troubling practices, have caught attention of New York State Attorney General Andrew Cuomo. He's launched an investigation into 14 companies, calling debt settlement a rogue industry. From New York, Ashley Milne-Tyte reports.
Ashley Milne-Tyte: Cuomo says some firms have pressed clients to sell their blood plasma to pay off their debt and the firm's fees. Gail Cunningham of the National Foundation for Credit Counseling says there's not much to stop them.
Gail Cunningham: It's a wild, wild west out there when it comes to regulation.
She says many debt settlement companies aren't honest about what they can and can't achieve for the client. And they charge a lot up front.
Cunningham: You know, let's have a fee once a service has been provided and let's have that fee commensurate with the service.
Robby Birnbaum represents the Association of Settlement Companies, an industry trade group. He says most firms have perfectly reasonable fees.
Robby Birnbaum: And I'll tell you frankly, in the majority of cases these companies are getting dramatic results for these consumers.
Like clearing 20 to 50 percent of their original debt. Birnbaum says the attorney general should be looking at what he says are the real culprits: rapacious credit card companies.
In New York, I'm Ashley Milne-Tyte for Marketplace.
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From chandler, AZ, 05/11/2009
How many times do you get india when you call your credit card company? Often they don't understand our credit system and how life can happen to anyone. It's not that easy to just call your credit card company and get results. Not to mention if you do get someone in the united states, they are getting paid some type of bonuns for collecting delinquent accounts and won't just offer up a settlement to every caller. Simply put there is a need for debt settlement companies, they have the clients interests in mind, not the banks, and they do all the dirty work for people who want to pay what they owe, but don't have time with work and family. Simply put the credit card company only wants you to call them or deal with their extended collection agency, with a pretty name of credit counseling.
From HI, 05/09/2009
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pressed clients to sell their blood plasma to pay off their debt and the firm's fees. Gail Cunningham of the National
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Was it George Bernard Shaw who said, "It is the ignorant who suffer"? Why people are ignorant? Is it because grandparents do not teach them the alphabet at age one or age two? Is it because cousins and peers do not teach them that alcoholic beverages will kill a large percentage of their brain cells? Do public school teachers fail to spell it out to our children as they are locked up in school too many years merely to protect the job market from unfair competition of young workers? Are families broken up before grandparents and parents can explain critical social concepts to progeny?
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America the Beautiful runs on a full tank of debtors and credit ratings. The system of pay before you go has fallen by the side of the road, mugged and neglected by Samaritans the World Over. The American Dream has degenerated into a tangle of pre-qualifying, points, amortization, leverage, default swaps, and many more inefficient and non-competitive mechanisms that are now bringing our nation into the clutches of the board certified, ethical, assisted-suicide specialist.
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Oh! Yes! And one more thing! Have a very cheerful day. ;)
From roseville, CA, 05/08/2009
Banks have huge debts, but they're getting a helping hand from the federal government. If you have overwhelming debt--perhaps from bad investments, or maybe a job loss, a medical crisis or just plain overspending--you're probably on your own. Check the website http://obamadebthelp2009.blogspot.com
to see if they can help. I am glad I did read it before I talk to my CC company and it helped - Jane Jim, California
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