ACM warns about misleading practices by commercial debt counselors

The Netherlands Authority for Consumers and Markets (ACM) warns about misleading practices by commercial debt counselors. Various providers are unclear about the costs and conditions of the services they offer. ACM has contacted several providers that do not comply with the rules, and confronted them with these findings. As more and more consumers experience financial difficulties and, as such, are susceptible to businesses that take advantage thereof, ACM has launched an investigation into this sector for possible violations.

Edwin van Houten, Director of ACM’s Consumer Department, adds: “In our investigation, we saw there are commercial providers that take advantage of people’s dire financial situations. They ask a lot of money for their services without making clear in advance how long such a process will take and what it actually entails. That makes it hard for consumers to assess whether such a service is worth their money. That has to stop.”

What is this case about?

There are commercial debt counselors that target individuals with debts that cannot or do not wish to be helped by their municipalities. Some individuals may find it appealing to use the services of a commercial debt counselor. Such counselors advertise that they offer direct counseling services for which individuals can easily apply without any waiting list, and that they are able to hold an intake meeting within 24 hours. Some municipalities have to cope with long waiting lists. Commercial debt counselors must comply with the rules that protect consumers. For example, they need to be clear about the services that they provide, about the costs thereof, and, if necessary, about how to cancel those services. ACM has found that not all providers do so properly. As a result, individuals that already experience a great deal of stress because of their financial situations may not be able to make well-informed decisions.

Following reports, ACM launched an investigation into commercial debt counselors. The investigation has revealed that various providers do not comply with the rules. ACM contacted providers that did not seem to comply with the rules. They had two weeks to make adjustments on their websites so that they were clear about the nature of their services, the costs thereof, and the conditions for taking out debt counseling services. The interactions with the commercial debt counselors have revealed that they were not aware of current consumer rules. Most debt counselors that ACM had contacted have already implemented the requested adjustments.

Follow-up action by ACM

ACM calls on all commercial debt counselors to be clear about the following aspects as soon as possible: the services they offer, the costs thereof, and how individuals are able to cancel those services, should they wish to do so. Over the next several weeks, ACM will actively check whether these providers are clear about those aspects. If necessary, ACM can impose a fine or an order subject to periodic penalty payments.

Consumers with complaints may contact ACM’s consumer information portal, ACM ConsuWijzer, for advice or for filing a report.

What kind of assistance can individuals with debt receive?

Consumers with debts are entitled to a free debt counseling plan from the municipality in which they live. More information on debt counseling by municipalities can be found on www.rijksoverheid.nl (external website) (in Dutch. Search term: “schuldhulp”). Commercial providers of such services sometimes work together with municipalities, or are able to help individuals that do not qualify for those municipal services. In that context, it is important that consumers mind the conditions and costs of those services.

Consumers with debts may contact the Dutch Debt Relief Route (in Dutch: Nederlandse Schuldhulproute) at www.geldfit.nl (external website) for free advice or call 0800-8115.