Federal Trade Commission Bans Debt Management Companies From Taking Advance Fees

The Baltimore Sun today announced the following great news:

FTC Bans Advance Fees at Debt Relief Companies

The Federal Trade Commission announced that companies promising over the phone to reduce your credit card or other debt can’t charge you a fee until they do their job.

The rule affects for-profit businesses and will kick in Oct. 27th.

FTC Chairman Jon Leibowitz says the new regulation aims to prevent companies from taking money from consumers and never fulfilling a promise to reduce customers’ debt by half or more.

“Too many of these companies pick the last dollar out of consumers’ pockets – and far from leaving them better off, push them deeper into debt, even bankruptcy,” Leibowitz said in a prepared statement.

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