Justice Class Action Lawsuit Update: How New FTC Regulations Make Debt Settlement Easier?


Justice Class Action Lawsuit Update – How New FTC Regulations Make Debt Settlement Easier?

The Federal Trade Commission (FTC) has issued a new consumer protection regulation in the form of the Justice Class Action lawsuit Update. As we have all known, the net of settlement companies has been on a decline in recent times. This is the main reason why many consumers are hesitant to opt for settlements as compared to filing for court cases. However, the Justice Class Action lawsuit Update is meant to address this grave concern.

Justice Class Action Lawsuit Update Justice Class Action Lawsuit Update

This regulation has been designed to prevent the misleading practices of fraudulent settlement companies from undermining the interests of borrowers. In the past, many such companies indulged in practices like telling the distressed debtors that they would not get a settlement if they did not agree to go in for a settlement. This was used as an excuse to escape paying the actual amount. Hence, it became necessary to make the terms of the settlement clear to all concerned. The updated regulations have brought this into the notice of lenders and other settlement companies and also discourage them from such activities. It is to be kept in mind that the rules of the settlement negotiators should not be subverted by the borrowers.

It is for the same reason that the new regulations have prohibited the settlement companies from charging upfront fees before providing services.

If they do so, then their credibility will come down quickly. It will become hard to trust settlement companies as they cannot claim to have done something magic for the customer. Rather, they should provide all information to the customers and prove that they have provided all the possible assistance. This way, the customers can evaluate the efficiency of the company and judge whether to opt for or against opting for a settlement deal.

Secondly, it has been prohibited for settlement companies to charge an advance fee from consumers and then use the funds to do their own work.

The only money they can take out is the net proceeds. This rule has been very useful for borrowers as they will be able to know how much money they are going to get after going through all the negotiation processes. Therefore, they can plan their expenditure well and plan the expenditure as per the amount of the net proceeds. They can plan expenditure, keeping in mind the net proceeds so that they can keep their expenses and repayments at reasonable levels.

The Justice class action lawsuit update also forbids the companies from asking for advance payment from consumers before providing services.

The fact is that the settlement negotiators can negotiate and conclude a deal only when they have already collected a significant portion of the net proceeds. They are legally bound to ask for the net proceeds even if they are unable to get the entire amount. Therefore, there is no scope of wasting time. Instead, the settlement negotiators must focus on collecting the maximum amount of the net proceeds and use the remaining funds to do contingency planning and eventually to settle the liabilities of the borrowers.

There is another interesting rule that has come under the notice of the Federal Trade Commission. It has mandated that settlement companies cannot ask for advance payments from customers. The settlement companies are supposed to ask for payments only after they have obtained at least 50% of the total settlement amount. Therefore, the settlement companies cannot ask for advance payments from customers. This rule has made life easier for borrowers because now they know that they can take help of the settlement companies but they should be able to pay the company only after they have got a large portion of the total liability value.

The new regulation is based on the “Lack of Knowledge” concept. According to this concept, once a customer enters into a transaction with any company he/she is not in a position to know the true value of the product or service.

Therefore, they are not in a position to bargain well and arrive at a fair deal for them. In case of many companies, the customer may not be able to understand the actual financial value of the net proceeds until the due date for repayment has arrived. Therefore, they will be compelled to pay the entire amount irrespective of the actual net proceeds received during the transaction.

Many persons are not able to understand the concept of liability settlement and how it affects their financial position. Therefore, there are many persons who are not able to repay the entire due amount on time. Thus, they lose their potential ability to take advantage of the benefits provided by settlement companies. According to the new regulations of the FTC, no settlement company will be allowed to ask for advance payments from its customers. If a settlement company is found asking for advance payments from its customers, it will be sued and declared guilty and will have to forfeit all the funds it had advanced to the customer.

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