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Reaction to Bankrate.com

Apr 07, 2010

Dear TASC member,

Over the past year, Bankrate.com has published several articles regarding debt settlement that contain factually incorrect information and/or information that is incomplete or misleading. While valid points are sometimes made, more often than not the articles are biased and thus not providing the best information to consumers.

For example, Steve Bucci authored an article titled“3 Truths About Debt Settlement.” Even though only one of the points was strictly about debt settlement, Bucci had some good information in his article, such as mentioning the misleading ads that have people thinking they can just settle and walk away from their debts. That is a great point to make, as TASC addressed the same issue in a consumer advisory not long ago.

But then Bucci loses his credibility by saying that debt settlement “rarely” or “almost never” works, and that lenders would want a lump sum of 60 percent very quickly, which most people just do not have. TASC prepared information for the FTC showing that debt settlement actually does work. In 2009 TASC member companies settled more than $1.1 billion of consumer debt, saving consumers more than $600 million of debt that they could not afford to repay otherwise. The report also showed that more 34 percent of consumers completed their program, compared to only 21-26 percent for credit counseling (debt management) programs.

Our efforts to reach out to Bucci have gone unanswered, including an offer by our PR firm on Oct. 13, 2009 to interview a representative from TASC. Clearly, it is very difficult to get with someone at Bankrate.com to have a full discussion of the issues.

The fact is that even leading consumer groups admit that for many consumers today, debt settlement is the only affordable solution to their financial situation. These consumers find that a debt management program, even through a non-profit company, often is not affordable, and that they either do not qualify for or do not want to file for bankruptcy. And it’s preposterous to claim that a consumer could settle on their own directly with a creditor. Even the National Consumer Law Center, a leading consumer advocacy group, found that this was often impractical. In addition, even if one creditor were to settle directly, there are still on average six more.

For sure, debt settlement is not for everyone. Certainly if someone can afford to repay their entire debt, we believe they have a moral and a legal obligation to do so. If a person feels they would be better off hiring a lawyer, they certainly should do so. But it is also true that if a person believes they are better off enrolling in a settlement program, they should be able to do so and not be swayed by misleading or factually incorrect information from a source like Bankrate.com.

Sincerely,


David Leuthold
Executive Director
The Association of Settlement Companies