New fed rule bans advance fees for debt relief

COLUMBUS, — As of today, advance fees for debt relief services sold over the phone will be banned.

The new rule, passed by the Federal Trade Commission in July, prohibits companies from charging a fee before settling or reducing consumers' unsecured debt. Attorney General Richard Cordray encourages Ohio consumers to pay close attention to the new rule.

"Prior to the rule change, some debt relief companies would lock consumers into a contract over the phone and charge an upfront fee. In some cases, that fee ran into the hundreds of dollars. With this new rule, the fees are now illegal and punishable," Cordray said.

In addition to banning advance fees, the new rule places additional restrictions on those debt-relief companies that require consumers to set aside provider fees and savings used to pay creditors.

To read the new rule in full, visit www.ftc.gov.