In an attempt to prevent the Federal Trade Commission from passing amendments to the Telemarketing Sales Rules that could harm the debt settlement industry, the Association of Settlement Companies has come out in support of the industry and detailed why it better serves consumers in need than credit counseling.
For consumers who are struggling to consolidate debt, the TASC argued that debt settlement programs not only take less time than credit counseling – with the former usually lasting three years while the latter can take up to five years but are also significantly cheaper and easier to afford.
Dan Leuthold, the TASCs executive director, added that while debt settlement companies work on the consumers behalf to reduce outstanding debt balances, credit counseling services often have other interests they seek are looking to satisfy as well.
"Credit counseling companies in essence work as a collector and agent for the credit card companies, he said. "As such, they not only receive fees from the consumer but they also receive compensation from the banks, so they may not have the clients best interest at heart."
The TASCs differentiating between debt settlement and credit counseling programs comes as the FTC considers changes to the Telemarketing Sales Rule what would effectively ban the use of advance fees. The TASC stated that eliminating the fees would fore debt settlement programs to essentially for free for much of the settlement process and therefore force many out of business.