Buckeye Reporter

Columbus, OH – On Monday, The Buckeye Institute released a new policy memo urging lawmakers to assist Ohioans struggling with debt by adopting policies to improve debt resolution options and increase “consumer access to all available debt management and settlement options.”

In the memo, Greg R. Lawson, a research fellow at The Buckeye Institute, outlines the struggle Americans and Ohioans face with increasing amounts of debt, noting that “Americans face more than $1 trillion in credit card debt” alone, and “Ohio’s credit card debt averages more than $5,700 per person.”

To “ensure that debt resolution companies can effectively operate in Ohio” and help people struggling to get out of debt, Lawson calls on lawmakers to align Ohio’s regulations with the federal telemarketing sales rule, which provides “significant consumer protections.” Lawson also urges lawmakers to “authorize a single entity, such as the attorney general or the Ohio Commerce Department’s Division of Financial Institutions, to oversee and regulate the debt resolution industry across the state.”

Consumer debt, as Lawson points out, is not “a generic one-size-fits-all problem with a one-size-fits-all solution.” Instead, Lawson writes “[d]ebt repayment programs can and should vary” and that “well-tailored laws, rules, and oversight should ensure that debt resolution companies operate ethically and effectively.”

The Buckeye Institute's recommendation emphasizes aligning state regulations closely with the federal telemarketing sales rule (TSR) promulgated by the Federal Trade Commission (FTC), which already provides significant consumer protections. It suggests foregoing caps on allowable fees while establishing consistent state-level oversight.

As daily living expenses rise alongside near-historic inflation rates, household debts have increased. Nationally, Americans face over $1 trillion in credit card debt. In Ohio alone, credit card debt averages more than $5,700 per person—over 8.5 percent of the state's median household income—making various forms of financial assistance necessary for many consumers.

Debt management services can help restructure repayment schedules by focusing on one creditor at a time. Debt resolution providers often negotiate lower total debts for clients. Before 2010 these services were largely unregulated; however since then TSR has prohibited charging fees until consumers accept a settlement agreement.

Despite these federal efforts to regulate the market effectively post-2010 changes have left Ohio law lagging behind in offering broad flexible options for consumers. Current state laws allow consultation fees before settlements are reached differing from TSR rules creating market uncertainty.

The memo concludes that improving this situation starts with aligning state laws more closely with TSR particularly regarding up-front fees collection practices prohibiting advance charges until tangible outcomes are produced for consumers ensuring ethical operations within industry standards without arbitrary price caps discouraging service providers' participation finally authorizing single regulatory entities like Attorney General or Commerce Department's Division overseeing entire sector statewide clarifying existing muddled regulatory framework enhancing both consumer access quality service provision standards alike.