Debt settlement companies generally charge consumers a percentage of their debt, often credit-card debt, in exchange for negotiating with lenders on the customers’ behalf. Some companies advertise aggressively, promising to cancel half of a customers’ debt or more. But, often, consumer advocates and the Better Business Bureau say, consumers going through debt settlement end up deeper in the red.

Starting Oct. 27, debt settlement companies that speak with clients over the phone will no longer be able to charge upfront fees. They need to better inform consumers about their fee structure, how long it might take to negotiate debts and possible bad outcomes. Additionally, any savings accounts that debt settlement companies ask customers to pay into (rather than paying their bills) need to remain in the customers’ name, in an independent bank, with the funds always accessible to the customer.

Consumer advocates applauded the change. “We commend the FTC commissioners for exercising their authority to lay down common-sense rules in the debt settlement arena, where unfair and deceptive practices are rampant,” said Michael Calhoun, the head of the Center for Responsible Lending. “Until now many debt settlement companies have required hefty fees — usually based on the size of the debt — at the beginning of a client relationship, before any of  the customer’s debts are settled. Far too often these companies never perform the task they were paid to do.”

The FTC plans to fine companies that violate the rules $16,000 per infraction. It also said it will go after companies posing as nonprofits.

You might get a feel for how consumer protection would be handled under the Fed.

Until this move by Gutierrez, whose top contributor to his 2008 campaign was a payday lender, consumer advocates fighting the industry were on a roll. They were regularly convincing state legislators that had once bent over backward for the industry  to change course, limiting the interest rates payday lenders could charge and banning some of the industry’s more abusive practices. The change of heart came about as states like Ohio found themselves inundated with payday lending stores on every block, and as the economic downturn put a focus on the plight of borrowers with payday loans. During a hotly contested battle in Ohio to limit payday lending, it even turned out that some lawmakers from hard-hit rural areas had themselves resorted to payday loans, experiencing the industry’s abusive practices first hand. Not surprisingly, the payday lenders lost that battle.

It’s hard to argue in favor of any industry that charges almost 400 percent interest and traps consumers with additional fees and repeated loans. But you can always count on the payday lending industry to offer outrages even beyond that, which makes the dishonesty of sudden apologists like Gutierrez even more breathtaking.

For example, The Wall Street Journal reported last year on how payday lenders specifically seek out customers among society’s most vulnerable: the elderly and disabled.

(Payday) lenders are increasingly targeting recipients of Social Security and other government benefits, including disability and veteran’s benefits. “These people always get paid, rain or shine,” says William Harrod, a former manager of payday loan stores in suburban Virginia and Washington, D.C. Government beneficiaries “will always have money, every 30 days.”

The law bars the government from sending a recipient’s benefits directly to lenders. But many of these lenders are forging relationships with banks and arranging for prospective borrowers to have their benefits checks deposited directly into bank accounts. The banks immediately transfer government funds to the lenders. The lender then subtracts debt repayments, plus fees and interest, before giving the recipients a dime.

As a result, these lenders, which pitch loans with effective annual interest as high as 400% or more, can gain almost total control over Social Security recipients’ finances.

Despite this, the industry lives to fight another day, as the Gutierrez about-face attests. It really is about the money, after all, and payday lenders always have been extremely generous with their largess. Watch the clip Mike refers to in his story, showing Gutierrez posturing in front of Jean Ann Fox, a longtime and well-respected consumer advocate who closely follows the payday lending industry. Gutierrez tries to put on a show of “reforming” the industry with his bill — but don’t believe a word of it. That’s an old tactic payday lenders use in the states as well, proposing measures they tout as “reforms” that are so filled with loopholes as to be meaningless. Their reforms are intended to draw support away from measures to limit them to charging 36 percent interest, which payday lenders contend would put them out of business.

Gutierrez should of course be ashamed of himself, but this isn’t just about him. If an industry that sinks as low as some payday lenders regularly have can gain enough respect in Congress to have Gutierrez spout such nonsense, imagine the fate of other reforms of the financial services world. Treasury Secretary Timothy Geithner talks a tough game when he envisions a sweeping expansion of the regulatory system. But as the Gutierrez debacle shows, even the bottom feeders of the financial industry still have enough sway to sometimes get lawmakers on their side. The disappointing comeback of payday lenders only proves that when it comes to cleaning up abusive and predatory lending, it’s far too early to get your hopes up for something real.