The Federal Trade Commission and the Washington State Attorney General have filed a complaint alleging that four telemarketing companies have made false representations.
These companies sell debt elimination programs for hundreds of dollars and ultimately save customers little, if any, money.
The complaint alleges that Debt Solutions, Inc.; DSI Financial, Inc.; DSI Direct, Inc.; and Pacific Consolidation Services, Inc. falsely claimed that:
Consumers are also promised a full refund if they do not save at least $2,500, but the complaint alleges that few consumers have been able to collect refunds, since they are not told in advance that the $2,500 in savings may take decades to achieve.
Where consumers do see savings, it is most often because they are making higher monthly payments, not because of any reduction in interest rate.
According to the complaint, most consumers do not see their interest rates reduced at all, and that most reductions that are negotiated are 1% or smaller.
Lydia Parnes, Director of the FTC's Bureau of Consumer Protection, says that there are legitimate options to reduce debt: more realistic budgeting, credit counseling from reputable organizations, debt consolidation programs, and even bankruptcy.
The FTC offers additional suggestions for anyone considering a debt management plan: