Connecticut Attorney General Richard Blumenthal has proposed legislation to fight predatory debt rescue scammers.
Blumenthal says he is investigating several debt reduction entities for misleading consumers about their services and results. In some cases, debt reducers – who are unregulated – deceive consumers into relinquishing their homes or paying expensive advance fees.
Blumenthal's proposal – An Act Concerning Foreclosure Rescue and Debt Reducers – would compel debt reducers to provide advance disclosures that clearly and conspicuously explain their services, and prohibit advance fees, he says.
‘Like quicksand, these supposed debt rescue schemes sink consumers deeper in distress the more they struggle," Blumenthal says. "We must rescue families from false rescuers, who offer lead-filled lifelines."
Specifically, Blumenthal's proposal would require individuals selling debt reduction services to clearly describe in a contract the likelihood that the debt can be reduced or foreclosure avoided, provide consumers with a three-day right of cancellation and be nonprofit.
The legislation would also authorize the banking commissioner to investigate and reduce debt reducer fees that are excessive when compared to common industry fees and in relation to the consumer's financial benefit of such services.
SOURCE: The Office of Attorney General Richard Blumenthal