Companies that promise to reduce or eliminate credit card balances and other debt for customers will no longer be allowed to charge an upfront fee.
The Federal Trade Commission said Thursday that the new restrictions are a crackdown on the debt settlement industry, which flourished during the economic downturn as borrowers struggled to pay bills.
Debt settlement companies will now be able to charge a fee only after a customer’s debt has been reduced, settled or renegotiated. The rule takes effect Oct. 27.
Since the start of the recession, the Better Business Bureau has received more than 3,500 complaints about debt settlement companies. Customers said they ended up deeper in debt or missing payments to creditors.
Citigroup investors to split $75 million
Banking titan Citigroup Inc. is paying $75 million to settle civil charges that it misled investors about its potential losses from subprime mortgages as the housing bust hit in 2007.
The Securities and Exchange Commission announced the settlement with Citigroup on Thursday. It said the company repeatedly made misleading statements to analysts and in regulatory filings about the extent of its holdings tied to high-risk mortgages.
Citigroup earned $2.7 billion in the second quarter of this year. So the penalty represents less than 3 percent of its net income from April through June.
Rurban Financial earnings plunge
Rurban Financial Corp.’s second-quarter earnings took a $9.1 million dive after the Defiance, Ohio, company abandoned plans to spin off its data processing unit.
Rurban reported a loss of $8.1 million, or $1.67 per diluted share, for the three months ended June 30, compared to earnings of $1 million, or 20 cents per share for last year’s second quarter.
Rurban, the holding company of The State Bank and Trust Co., had planned to merge RDSI Banking Systems with New Core Holdings Inc. The spinoff, announced last year, “cannot be successfully completed,” the company said late Wednesday.
Brunswick deal won’t affect Fort Wayne
Brunswick Corp. on Thursday announced the sale of Triton Boats to Fishing Holdings LLC, an affiliate of Platinum Equity, for an undisclosed sum.
Lake Forest, Ill.-based Brunswick will retain some rights tied to Triton aluminum boats and will continue to sell some models under license. Brunswick’s Cypress Cay pontoon boats, which are manufactured in Fort Wayne, are not affected by the transaction, the company said.
Production of various other models is being shifted, however. The company estimated that associated restructuring charges could total between $18 million and $20 million, pretax. The company included $15 million of charges in its earnings, released Thursday.
Brunswick reported second-quarter earnings of $13.7 million, or 15 cents per diluted share, compared to a net loss of $163.7 million, or $1.85 per share, for the same three months of last year.
Initial jobless claims drop to 457,000
New jobless claims fell last week for the third time in four weeks but remain elevated. First-time claims for unemployment insurance dropped by 11,000 to a seasonally adjusted 457,000, the Labor Department said.
