Digging out from a mountain of debt is an intimidating and often overwhelming process. Consumers in this situation need help, not to have their burdens compounded by more expenses from for-profit debt-settlement firms.
That’s why Ohio should not rush forward with a proposal to open the state to for-profit debt-settlement companies.
Federal regulators have cracked down in recent years on debt-settlement firms that have bilked customers by taking their money but failing to settle debts as promised or charging customers who have to negotiate their own settlements with creditors.
In some cases regulators found that debt-settlement companies misled their customers about fees and about the option of negotiating with creditors directly for free.
All of this should give lawmakers pause when they take up the Financial Accountability and Independence Recovery (FAIR) Act from State Sen. Bob Hackett (R, London), which would allow for-profit debt-settlement companies to operate here. F
or years such firms were barred from working in Ohio, but a recent state Supreme Court case has opened the door, prompting the bill.
Proponents say the measure will give Ohio consumers choice. But even without opening the door to potentially predatory for-profit firms, Ohioans already have choice. P
eople who face debt problems can, of course, work directly with their creditors to settle the debt or work out payments. They also can turn to non-profit debt counseling agencies and to lawyers to help with their financial difficulties.
Lawmakers should recall the state’s long fight to rid itself of predatory payday lenders, who, once they got a foothold in a state with lax regulations, took advantage of consumers here with loans that carried as much as 600 percent interest.
Consumers wrestling with debt need choices, yes. But they need protection too and that should be the General Assembly’s first concern in this case.
— Toledo Blade