Cuomo targets debt settling companies
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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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