NBCSL Ratifies Resolution on “Debt Settlement” Companies
The National Black Caucus of State Legislators (NBCSL) recently ratified a resolution calling on state policymakers to put in place and enforce fundamental consumer protection rules on “debt settlement companies.” You can review the resolution here.
“Debt settlement companies” typically operate outside of federal and state requirements traditional lenders, such as banks and installment lenders, follow. This often leads to financial harm to the consumers. For example, predatory “debt settlement companies” typically suggest to consumers that they cease payment on outstanding loans without disclosing that such actions without the consent of lenders may damage consumers’ credit scores and trigger collection processes.
“The American Financial Services Association and its more than 400 member companies congratulate and thank the National Black Caucus of State Legislators (NBCSL) for its strong stand against so-called ‘debt settlement’ companies that claim to resolve consumers’ debts to a creditor, but in fact complicate consumers’ ability to resolve their debt issues and damage their credit and financial standing,” said AFSA President & CEO Bill Himpler.
“The NBSCL’s resolution should empower consumers and sends a clear and unwavering message to policy makers-and to ‘debt settlement’ companies that prey on minority communities-that fundamental consumer protections must be enforced. AFSA also takes seriously and supports the NBCSL’s call to ensure consumers are well-educated in relation to such debt-settlement processes and we continue to expand our educational efforts in this regard,” Himpler continued.
In August of 2019 AFSA published a blog post about a Wall Street Journal story outlining the unethical practices the debt settlement industry uses to “get the consumer’s guard down.” The AFSA Extra Credit Podcast also tackled the problem of debt settlement companies with Rohit Dewan of OneMain Financial.
AFSA, consumer-advocacy organizations, and federal regulators, such as the Consumer Financial Protection Bureau and the Federal Trade Commission, have expressed concerns about the schemes presented as solutions by debt settlement companies. AFSA continues to work with and educate policymakers on the need for additional rules of the road in the debt settlement space.
The AFSA Education Foundation's MoneySKILL program offers information about a variety of different topics, including strategies for dealing with debt. You can learn more at afsaef.org.
January 6th, 2020 by Dan Bucherer