WASHINGTON – A new report by undercover government investigators bolsters long-standing concerns that companies promising to help consumers overwhelmed by credit card and other debts often turn out to be financial predators who charge high fees but deliver little or nothing in return.

When Government Accountability Office investigators posed as distressed consumers seeking help, so-called debt management companies gave them wildly exaggerated descriptions of the firms’ success rates and sometimes promised savings of as much as 50 cents on the dollar, Gregory Kutz, the GAO official who ran the investigation, told Congress on Thursday.

But after paying big up-front fees — often running to several thousand dollars — many consumers end up deeper in debt than they were before seeking help, Kutz said. Such practices have caused complaints about debt relief companies to more than double since 2007, according to the National Association of Attorneys General.

The Federal Trade Commission is considering new rules to prevent debt settlement companies from charging up-front fees and giving inaccurate information about their programs.


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