The Ohio House passed a bill Dec. 4 that would allow debt settlement firms to charge higher rates in the state, under protest from consumer advocates. The industry has generated consumer warnings from the Better Business Bureau and Ohio Attorney General Mike DeWine, but the American Fair Credit Council argues that the bill would protect consumers and provide for the operation of legitimate companies.
There is debate over the legitimacy of debt settlement since, under most plans, consumers stop payments on their debts and place money into an account that the settlement firm uses as leverage with creditors. The industry and its fees in Ohio have been regulated under the state's Debt Adjusters Act for about a decade already. Some consumer protection groups oppose the new bill, saying that it would help an industry that already has a poor track record. DeWine warned that “far too many of these businesses fail to deliver on their promises and leave consumers in a worse financial situation.” The measure now moves to the Senate.