The primary consumer protection problem areas that have given rise to the States» actions include: (1) unsubstantiated claims of consumer savings; (2) deceptive representations about the length of time necessary to complete a debt relief program; (3) misleading or failing to adequately inform consumers that they will be subject to continued collection efforts, including lawsuits, and that their account balances will increase due to extended nonpayment under the program; (4) deceptive disparagement of consumer credit counseling; (5) deceptive disparagement of bankruptcy as an alternative for
debtors; (6) lack of screening and analysis to determine suitability of debt relief programs for individual
debtors; (7) the collection of substantial up - front fees so the debt relief company gains even if it fails to perform; (8) lack of transparency and information for consumers as to
payment of fees, status of accounts, and communications with creditors; (9) significant delays in active negotiation or engagement with creditors, coupled with prohibitions
on direct consumer communications with creditors; and (10), in the case of debt settlement companies, basing savings claims (and settlement fees) not
on the original account balance, but
on the inflated amount due (including late fees and
default rates of interest) at the time of settlement.