WASHINGTON, April 23 (UPI) — A Government Accountability Office report on debt settlement firms said the industry was deceiving U.S. consumers about reducing their debts.
At a Senate Commerce Committee hearing, the GAO said companies were promising pie-in-the-sky results, illegally encouraging borrowers to stop making debt payments, and advertising their firms as if they were connected to federal agencies, The Washington Post reported Friday.
Some companies tell consumers they have a success rate as high as 100 percent in helping people reduce their debt load. But federal and state surveys have pegged the figure at less than 10 percent, the newspaper said.
Committee members heard recordings of debt settlement company sales staff telling consumers their firms were “government approved,” or claiming they had some connection to the Troubled Asset Relief Program — a $700 billion bailout program that was designed for companies, not consumers.
“It is appalling beyond words. These debt-settlement companies are kicking people when they are down,” said Sen. John Rockefeller IV, D-W.Va.
Trade groups, such as the U.S. Organization for Bankruptcy Alternatives, confirmed debt settlement firms were prohibited from telling borrowers to stop making payments.
The industry also claims it has helped consumers by negotiating settlements on $2 billion in debts.
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Tags: Debt Settlement, Debt Settlement Firms, Firms, Settlement Firms
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