High Interest Lenders’ Attack on Consumers and Affordability
ACDR Letter to U.S. House Committee on Energy and Commerce, Subcommittee on Commerce, Manufacturing and Trade. Sent August 10, 2026
The Honorable Jan Schakowsky
Ranking Member
Subcommittee on Commerce, Manufacturing, and Trade
Committee on Energy and Commerce
U.S. House of Representatives
Washington, DC 20515
The Honorable Gus Bilirakis
Chairman
Subcommittee on Commerce, Manufacturing, and Trade
Committee on Energy and Commerce
U.S. House of Representatives
Washington, DC 20515
Dear Chairman Bilirakis, Ranking Member Schakowsky, and distinguished Members of the Subcommittee,
On behalf of the Association for Consumer Debt Relief (ACDR)—the national trade association representing companies that help families resolve unmanageable, unsecured debt burdens—we write to address the American Financial Services Association’s (AFSA) recent characterization of debt relief services before the Subcommittee at the July 22 hearing entitled “Legislative Proposals to Strengthen Consumer Protection” and its corresponding efforts to advance the ironically titled discussion draft “Debt Settlement Consumer Disclosure Act.”
Our association shares the Subcommittee’s commitment to protecting consumers from scams, deceptive advertising, and unlawful advance-fee schemes. Such practices should be investigated and, when substantiated, prosecuted. We also appreciate the opportunity the subcommittee’s discussion provided to highlight the vital role that federally regulated debt relief programs play in helping millions of Americans regain financial stability when faced with unmanageable unsecured debt. Separately, the American Financial Services Association (AFSA) represents creditors whose financial recoveries are directly affected when consumers negotiate reductions of unaffordable unsecured debts. The Subcommittee should therefore evaluate AFSA’s claims in light of both the existing robust governing regulatory framework for debt relief and the economic interests of the institutions AFSA represents.[1] AFSA’s proposed restrictions—under the guise of disclosure—would make debt relief less available and less affordable for financially distressed consumers, limiting access to an option that may provide a more realistic path out of debt.
Much of AFSA’s submitted written testimony relies on selective framing that obscures the more fundamental challenge confronting millions of Americans: escaping high-cost debt that grows faster than they can repay it. Consumer debt relief offers a practical response to that mathematical reality. Interest charges are only part of the burden; late fees, penalties, and costly add-on products can push already-distressed borrowers even deeper into debt.
Yet AFSA broadly condemns debt relief providers for offering consumers a pathway out of unaffordable debt, even as its own members have faced significant regulatory scrutiny and in some cases litigation. In March 2026, for example, a bipartisan coalition of 13 state attorneys general sued AFSA member OneMain Financial alleging that the company deceptively added unwanted products to consumer loans and charged borrowers hidden fees and interest.[2] The lawsuit followed a 2023 CFPB enforcement action in which OneMain Financial agreed to provide at least $10 million in consumer redress and pay a $10 million civil penalty over allegations involving its marketing, sale, and cancellation of loan add-on products.[3] Together, these actions underscore the disconnect, if not deceit, between AFSA’s criticism of debt relief and the practices alleged against companies within its own membership.
Against that backdrop, the Subcommittee should evaluate AFSA’s testimony with particular attention to three material omissions: the circumstances and options of the consumers who seek debt relief, the extensive legal and regulatory safeguards in place that govern compliant providers, and the full context of the data and research on which AFSA relies.
The following sections address each of these issues in turn.
Debt Relief Serves Consumers Already Experiencing Financial Distress
Consumers seek debt relief because their financial obligations have already become unsustainable. American families are carrying historically high levels of unsecured debt while confronting elevated interest rates and persistently high costs for housing, food, transportation, healthcare, and unanticipated life events. Consumers today hold an all-time high $1.28 trillion in credit card debt.[4] With average debt settlement consumers carrying $30,000 in debt over seven accounts, ACDR member companies offer an important off-ramp from the debt cycle — reporting average principal reductions of approximately 32 percent after fees, generating aggregate annual consumer savings approaching $2 billion.[5],[6]
These outcomes must be evaluated against consumers’ realistic alternatives, including the cost of continuing to make minimum payments on high-interest debt, the risk of charge-off or creditor litigation, and the consumer’s ability to sustain the original repayment schedule. For example, a consumer carrying $30,000 in credit card debt at a 27 percent annual percentage rate (APR) could ultimately pay roughly $96,000 over more than 30 years by making only minimum payments. That prolonged cycle can result in consumers paying creditors several times the amount originally borrowed, while debt settlement can provide a path toward resolving otherwise unmanageable debt.
Debt Relief Puts the Consumer in Control
While debt settlement may involve nonpayment, federal regulations require that debt relief providers disclose potential consequences to consumers before enrollment.Creditors generally do not negotiate reductions on accounts that are being paid according to their original terms. The relevant policy question is not whether nonpayment can occur; it is whether the consumer is already unable to sustain the required payments, receives complete disclosures, retains control of the decision, and is enrolled only after an appropriate financial assessment. Consumers must be informed that nonpayment may result in interest, late fees, collection efforts, litigation, and damage to their credit.[7]
Under the Telemarketing Sales Rule’s (TSR) performance-based fee framework, a provider cannot earn a fee merely because a consumer enrolls, deposits funds, becomes delinquent, or remains in a program for a period of time. A fee may be collected only after:
The provider has successfully renegotiated, settled, reduced, or otherwise changed the terms of a particular debt;
The consumer has affirmatively agreed to that resolution; and
The consumer has made at least one payment pursuant to the resolution.
Debt relief providers do not own or control the money consumers place in their dedicated settlement accounts. Consumers retain full control of those funds, may reject any proposed settlement, and may leave a program and withdraw their remaining funds without a cancellation penalty.[8] This is inconsistent with AFSA’s suggestion that providers simply take control of consumers’ money while debts remain unresolved.
AFSA describes its members as “succeeding only when their customers succeed,” but this claim is inconsistent with AFSA member, OneMain Financials’ practice of including hidden fees and unwanted products to its loans and it is inconsistent with member Household Finance, who in 2002 paid a $484 million settlement over unfair and deceptive lending practices in the subprime housing market.[9]
The existing TSR creates a truly success-based model for the debt relief industry. Because the TSR restricts debt relief companies from collecting a fee before a settlement is reached, agreed to, and paid by the consumer, there is direct incentive for the company to deliver a meaningful settlement and the savings that come with it. This is more than just theory. While AFSA provides a handful of vague examples of debt-relief-gone-wrong, these experiences are a rare exception. In fact, of the 1.83 million consumer complaints received by the CFPB over a one-year period, only 988, or 0.054 percent, pertained to debt relief.[10]
Debt relief may not work for everyone, but when it does not work, consumers pay nothing and usually leave the program amicably. But for many consumers, debt relief does work. One consumer from Michigan experienced a sudden death in her family. Prior to enrolling with a debt relief company, her debt had climbed to over $33,000 across multiple accounts. In her words, “I’m using this (loan) to pay this (credit card), but now I have to borrow to pay this back, and now I have to pay this back.” Only when she enrolled these accounts for debt relief did she begin to make headway and get out of debt. Stories like this are common, and in many instances, the accounts in such a portfolio might be current, but by making only minimum payments, the debts continue to grow and lenders continue to profit. ACDR members routinely work with consumers who experience job loss, divorce, or unexpected medical expenses. For debt relief consumers, net savings of 20 percent or 30 percent are the norm, and these savings would be impossible through non-profit credit counseling.
Nonprofit Credit Counseling Is Not Cost-Free or Appropriate for Every Consumer
Lender hardship programs and nonprofit counseling are not substitutes for every consumer.A temporary deferral or rate reduction may help a consumer experiencing a short-term disruption. A traditional debt management plan (DMP) may help someone who can repay 100 percent of principal at a reduced interest rate over a longer period. Neither option necessarily works for a consumer whose aggregate minimum payment across multiple creditors are fundamentally unaffordable. Consumers entering debt relief commonly have numerous unsecured accounts, and a portfolio-wide resolution may be more realistic than separate negotiations in which each creditor focuses only on maximizing recovery on its own account.
The “nonprofit” credit counseling alternative AFSA champions is not a cost-free, incentive-free option that its testimony implies. AFSA repeatedly frames nonprofit credit counseling as the disinterested, consumer-first contrast to for-profit debt relief, and it asks Congress to exempt nonprofit counselors from the legislation entirely. But the nonprofit debt-management model carries its own fees and its own financial entanglements.
Debt Management Plans are commonly funded in part through monthly fees paid by the participating consumer and, critically, through “fair share” contributions—payments remitted to the counseling agency by the very creditors whose accounts are being repaid through the plan.[11] Those creditors are AFSA’s members. Because a DMP requires repayment of 100 percent of principal over a fixed term, a creditor recovers substantially more through a DMP than through a negotiated settlement, and the counseling agency’s compensation is tied to placing and keeping consumers in that full-repayment channel. A “nonprofit” designation does not make a service free, does not make it the least expensive option for a given consumer, and does not make its recommendation independent of the creditors who help fund it.
Existing Law and ACDR Standards Provide Substantial Consumer Protections
The 2010 amendments to the TSR regulate the most consequential elements of a debt relief transaction. Among other things, the framework:
• Prohibits advance fees;
• Prohibits deceptive representations about results or savings;
• Requires disclosures regarding timing, costs, savings, and program consequences;
• Requires the consumer to approve each settlement;
• Requires the consumer to make a payment toward a settlement before a fee is earned;
• Preserves consumer ownership and control of dedicated-account funds; and
• Permits the consumer to leave the program without a cancellation penalty.[12]
Importantly, the TSR does not operate in a regulatory vacuum. Debt relief providers may also be subject to generally applicable federal and state consumer-protection laws, state licensing and registration requirements, state fee and disclosure rules, regulatory examination, investigative authority, and enforcement by federal and state agencies. In AFSA’s testimony, the cited enforcement examples largely involve conduct that is already prohibited. Its examples include alleged advance-fee violations, deceptive advertising, sham legal representation, false promises, and entities structured to evade the TSR. Those cases demonstrate the importance of enforcing existing prohibitions against unlawful operators; they do not establish that compliant, performance-based programs are fraudulent. They also do not establish the need for more regulations and authorities that ultimately will constrain consumer access.
AFSA attempts to claim that the legislation is needed because the debt settlement marketplace has changed, particularly with digital advertising, lead generation, and online marketing—implying the rule did not exist during the era of the Internet. The Internet certainly existed, however, and the FTC anticipated the further shift to digital marketing when it amended the TSR in 2010 to govern debt relief services. The rule expressly covers consumer calls responding to internet advertising and other general media, which is part of the lengthy on-boarding process for consumers. The FTC also revisited the broader Telemarketing Sales Rule during its 2022 regulatory review and chose not to overhaul the debt relief framework, indicating that the existing structure remains capable of addressing today's marketplace.
ACDR Accreditation and Consumer Protection
AFSA states that the industry directs consumers to “cease all contact” with their creditors. ACDR’s accreditation standards expressly prohibit members from requiring consumers to stop communicating with creditors and prohibits the use of cease-and-desist notices, unless it is in the best interest of the consumer. Conduct inconsistent with those standards should not be attributed to compliant ACDR members or characterized as an essential feature of the regulated model.
ACDR standards supplement—not supplant—government regulationand apply across its accredited membership regardless of a company’s size or location. A standing, dedicated Standards Committee and ACDR’s legal counsel oversees standards development, review, and implementation. Additionally, before a standard is enacted, the full membership is made aware of the standard and has the opportunity for comment. ACDR conducted a comprehensive review and released updated standards in late 2025, addressing contemporary issues including suitability, marketing, consumer disclosures, settlement practices, third-party relationships, complaint management, and compliance enforcement.
The standards directly address AFSA’s assertion that providers isolate consumers from creditors. ACDR prohibits accredited members from requiring consumers to stop creditor communication by issuing cease-and-desist letters unless they are in the best interest of the consumer. This is a concrete example of standards evolving beyond AFSA’s generalized description of the marketplace.
ACDR standards address the precise consumer-protection risks AFSA identifies.ACDR’s accreditation standards cover personal cash-flow assessments, consumer disclosures, marketing and advertising, settlement practices, third-party products and services, complaint management, codes of conduct, and compliance enforcement. These standards distinguish accredited providers from the entities appearing in many of AFSA’s anecdotes and enforcement examples.
Accreditation includes independent accountability. ACDR-accredited members are subject to annual audits by an independent auditor, including verification of compliance with applicable standards. The protections applicable to accredited members are therefore not limited to voluntary statements of principle; they are supported by recurring compliance review.
AFSA’s Data Do Not Support Its Conclusion
AFSA evaluates debt settlement largely through short-term changes in credit score. A credit score is relevant, but it is not the only measure of whether a financially distressed consumer is better off. A meaningful assessment should also consider the consumer’s net debt reduction after fees, reduction in required monthly payments, interest and fees avoided on resolved accounts, ability to meet essential household expenses, the cost and feasibility of continuing minimum payments, the consequences of bankruptcy, and the realistic alternatives available at the time of enrollment.
Credit Score Is Not the Sole Measure of Consumer Welfare
To be clear, credit-score declines are primarily driven by a consumer’s inability to keep up with substantial debt obligations—not by debt settlement itself. Debt settlement is a tool that helps consumers resolve unaffordable debt and begin rebuilding their financial health. Specifically, debt settlement providers are in the business of helping consumers resolve unaffordable unsecured debt, not providing short-term credit-score improvement. The FTC regulations require that consumers are expressly informed that participation in a debt settlement program is likely to adversely affect their credit reports and credit scores. It is therefore misleading to criticize debt settlement primarily for failing to preserve a metric that providers are required to disclose may decline. The service should instead be evaluated according to its actual purpose: providing consumers with a path to resolving debt they cannot sustainably repay under the original terms.
Being Current Does Not Mean Being Financially Healthy
AFSA places significant emphasis on the fact that a TransUnion study found that 53 percent of enrollees were current on their accounts at enrollment in debt settlement, treating those consumers as financially stable borrowers.[13] TransUnion’s own data indicates otherwise. The subgroup classified as “current” had a median VantageScore 4.0 of 582 at enrollment, which falls within TransUnion’s subprime range of 300 to 600. Moreover, the subgroup’s median score fell from 645 six months before enrollment to 582 at enrollment—a 63-point decline that occurred before the consumer entered a debt settlement program.
The study’s broader debt settlement sample was also financially distressed, with a median score of 587 and 82 percent of consumers classified as subprime or near-prime at enrollment in debt settlement. These are not the credit profiles of financially secure households.
A consumer may remain technically current on a particular account while relying on additional borrowing, reducing essential spending, drawing down savings, or missing obligations not captured in the reported tradeline data. Current payment status should therefore not be treated as proof of financial stability.
Pre-Enrollment Borrowing Reflects Existing Distress
AFSA also suggests that debt relief providers caused or encouraged the balance growth observed before enrollment. The timeline cited in AFSA’s own evidence does not support that inference.
According to TransUnion’s study, much of the increase in credit card balances, open accounts, and personal loans occurred during the approximately two years preceding enrollment in debt settlement.[14] Therefore, that borrowing occurred before the consumer had any relationship with, and in most cases any contact with, a debt relief provider.
A provider cannot cause, encourage, or manufacture borrowing that predates its first interaction with the consumer. The accumulation of balances, credit cards, and personal loans before enrollment is not evidence that debt relief providers created financial distress. It is evidence that the distress was already developing.
Consumers generally do not open additional accounts and take on new personal loans while comfortably able to meet their existing obligations. That pattern is more consistent with households using additional credit to bridge income shortfalls, meet essential expenses, or remain current on existing accounts. Read in context, AFSA’s data describe the financial deterioration that leads consumers to seek relief; they do not demonstrate that debt relief providers caused that deterioration.
TransUnion’s Data Show Post-Enrollment Improvement for Delinquent Consumers
AFSA’s characterization also overlooks results showing meaningful credit-score improvement after enrollment among consumers who were already delinquent.
TransUnion reported that:[15]
Consumers who were 30 to 90 days past due increased their median score from 519 at enrollment in debt settlement to 551 six months later, an improvement of 32 points;
Consumers who were 120 or more days past due increased their median score from 525 to 551 after enrollment in debt settlement, an improvement of 26 points; and
Bankruptcy filers increased their median score from 556 to 562, an improvement of six points
These findings do not establish that credit score should be the principal measure of debt settlement outcomes. They do, however, undermine any categorical suggestion that enrollment necessarily prevents credit recovery or that bankruptcy produces superior short-term score improvement in every case.
AFSA’s Bankruptcy Comparison Is Unduly Narrow
AFSA’s comparison between debt settlement and bankruptcy relies heavily on the single metric most favorable to bankruptcy. TransUnion’s conclusion that debt settlement “does not lead to a more favorable credit outcome than filing for bankruptcy” evaluates the two options primarily through credit-score movement over a six-month period.
That analysis does not account for the broader consequences of bankruptcy. Depending on the chapter filed and the consumer’s circumstances, those consequences may include:
A public bankruptcy record that may remain visible for seven years in Chapter 13 cases and ten years in Chapter 7 cases;
Means testing, mandatory pre-filing counseling, trustee involvement, and court supervision;
The potential liquidation of non-exempt assets in Chapter 7
Attorney and filing costs that may be incurred regardless of the ultimate outcome; and
Potential consequences for employment, housing, professional licensing, and security-clearance reviews.
A responsible comparison must therefore evaluate debt settlement and bankruptcy across the full range of consequences, including cost, duration, public-record implications, asset exposure, and collateral effects—not solely through the metric that makes bankruptcy appear most favorable.
AFSA Omits the Dobbie Study’s Context and Conclusion
AFSA’s characterization of the Harvard/Dobbie study likewise omits important context and the study’s stated conclusion. AFSA cites the study for the propositions that the average settlement is not reached until more than 14 months, that account balances grow during the program, and that approximately one in four enrollees went three years without settling an account. Each statistic is presented in its least favorable form.
First, the 14-month figure is not the average time to a consumer’s first settlement. Dobbie states that first settlements usually occur four to five months after the program begins. The 14-month figure reflects the average timing across all settled accounts, including larger accounts that tend to be resolved later in the program. It therefore does not represent the point at which consumers first begin receiving relief.
Second, interim balance growth must be evaluated against the consumer’s realistic alternative. Interest and fees continue to accrue because the underlying debt was already unaffordable. Dobbie’s accretion analysis found that enrolled debt, even after accounting for interest and fees, ultimately remained below the amount that would have resulted from continued minimum payments, under which the annualized accretion rate remained at or above 15 percent. The relevant comparison is not debt settlement against a hypothetical frozen balance; it is debt settlement against the likely cost of continued repayment under the original terms.
Finally, AFSA omits the study’s overall conclusion. Dobbie concluded that debt settlement programs “have the potential to significantly benefit many financially distressed individuals, particularly if they are not eligible for Chapter 7 bankruptcy protection or wish to avoid the negative consequences of Chapter 13.”[16]
AFSA relies on selected data points from the study while omitting the authors’ explanation of those findings and their ultimate conclusion. The Subcommittee should consider the study in full rather than through the selective excerpts presented in AFSA’s testimony.
Conclusion
While debt relief may not be appropriate for every consumer, neither is bankruptcy, debt consolidation, nor a full-repayment debt management plan under non-profit credit counseling. Consumers experiencing genuine financial hardship should receive complete information about every lawful option and retain the ability to select the path best suited to their circumstances. Unfortunately, AFSA’s motives and efforts to advance the Debt Settlement Consumer Disclosure Act is not about consumer information; rather the association and their membership are attempting to restrict consumer knowledge and access to vital debt relief services so their consumers remained mired in their high interest debt. They are doing such just as affordability and the debt crisis comes into focus.
Consumer protection and consumer choice are not competing objectives. A properly structured framework, including the one that currently regulates debt relief, can and does advance both. ACDR welcomes a fact-based discussion with the Subcommittee and stands ready to work with policymakers on measures that preserve access to responsible debt relief.
Sincerely,
Jason Mulvihill
CEO and President
Association for Consumer Debt Relief
[1] July 22, 2026, Celia Winslow. AFSA Testimony to House Subcommittee on Commerce, Manufacturing, and Trade (identifying AFSA’s members as lenders, card issuers, finance companies, and other creditors).
[2] pbs.org/newshour/nation/onemain-financial-sued-by-13-attorneys-general-over-hidden-loan-add-ons
[3] consumerfinance.gov/enforcement/actions/onemain-financial-holdings-llc-et-al/
[4] Federal Reserve Bank of New York.Quarterly report on household debt and credit: 2025 Q4. Center for Microeconomic Data
[5] Will Dobbie. Financial Outcomes for Debt Settlement Programs: Estimates for 2011–2020. Harvard Kennedy School (commissioned by the American Fair Credit Council), 2021. Table 1, Panel D
[6] John Dunham & Associates. Economic Impact of the Debt Resolution Industry(2023), Table 3,
[7] See Telemarketing Sales Rule, 16 C.F.R. § 310
[8] 16 C.F.R. § 310
[9]https://law.georgia.gov/press-releases/2002-10-11/attorney-general-baker-announces-nationwide-predatory-lending-settlement
[10] Consumer Financial Protection Bureau. Consumer Complaint Database.
[11] peoples-law.org/credit-counseling
[12] 16 C.F.R. § 310
[13] TransUnion, Understanding Third-Party Debt Settlement (2026)
[14] TransUnion, Understanding Third-Party Debt Settlement (2026)
[15] TransUnion, Understanding Third-Party Debt Settlement (2026)
[16] Will Dobbie. Financial Outcomes for Debt Settlement Programs: Estimates for 2011–2020. Harvard Kennedy School (commissioned by the American Fair Credit Council), 2021. Table 1, Panel D