A consortium of non-profit consumer credit counseling agencies filed a joint complaint letter with the Federal Trade Commission on Wednesday, calling for the agency to take "immediate investigative and enforcement action against debt settlement companies that have brazenly evaded" the FTC's recently amended Telemarketing Sales Rules.

The rules were evised this summer to curb abusive practices in the debt settlement industry.

“The worst offenders are continuing to pillage the dwindling bank accounts of desperate consumers in broad daylight, daring the FTC and state attorneys general to take action,” says Christopher Viale, CEO at Cambridge Credit Counseling. "Taking action may not be as easy it sounds. Debt settlement companies have amassed large stockpiles of cash during the recession, while the FTC and state law enforcement agencies have had to pick their battles carefully as their budgets continue to tighten. Congress and the states may need to provide additional funding to ensure that the FTC’s consumer protection efforts can be effective.”

The letter was signed by the chief executives of eleven prominent non-profit credit counseling agencies, which together have counseled more than four million consumers. Many of their current clients are “refugees” of debt settlement programs that quickly exhausted their clients’ financial reserves through excessive up-front fees and other charges, while providing little or no services – including the promised settlements.

Copies of the complaint letter were sent to several U.S. Representatives and Senators, and to the National Association of Attorneys General. 

The letter identifies several tactics being used by debt settlement companies to evade the new Telemarketing Sales Rules and requests that the FTC launch a new investigation into fraudulent conduct, obtain injunctions against the offending companies and coordinate its renewed efforts with state attorneys general.

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