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CareOne Conspiracy Theorists, It’s Over.

There has been a bunch of chatter about the fact CareOne has lost their BBB rating. That is certainly the way it appeared.

What in fact happened was that the BBB had changed the BBB rating to a No Rating when it was announced that there was going to be a multi-state settlement that involved CareOne.

As of today the A rating for CareOne has been restored.

According to Mike Croxson, president of CareOne Services, “As defined in BBB’s procedures, “No Rating” was put into effect while they reviewed the facts of the case and the settlement. The BBB determined based on the facts that led to the settlement that the incident was categorized as “minor” (as opposed to medium or severe) and the resulting impact was a deduction of 3 points from our reliability score…moving our rating from A+ to A.”

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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • Steve Rhode

    Jason,

    I personally don’t think it is material. The BBB grading system has numerous cases where companies felt they were mis-graded in the past but as evidenced by New Era recently changing their grade and the fact CareOne just live through an A+ to No Rating to A process it does appear the BBB, for whatever reason, and for whatever internal and private policy used, reviewed the situation and revised their grade.

    Bottom line on the BBB, it’s not perfect, at all, but compared to what alternative?

    As you can see in comments that Mike Croxson has posted on the site, he has posted his personal email address. Please feel free to contact him directly.

    Steve

  • Jason Taylor

    Steve, can you find out from Mr. Croxson how much in total he paid or donated to the BBB or anything related to the BBB (such as the Torch Award) for 2008 and 2009?

    From everything I can tell, I think CareOne really deserves a good grade BBB grade, but this may shed some light on how they kept their grade and membership while almost every other company was garnished with a “D” or “F”, though I don’t expect Mike to say something negative of the BBB as they have certainly been a HUGE benefit to his business during a time other companies, some undeserving, suffered greatly.

  • CCCS=BBB?

    Jason, you mean like Howard Dvorkin, founder of Consolidated Credit Counseling Services,DIRECTOR OWNER of BETTER BUSINESS BUREAU OF PALM BEACH COUNTY, INC

  • ComplianceSlave

    For The Record- We had an A and were accredited. That was taken away and an F in it’s place for most of last year- EVEN THO, AS AN ACCREDITED COMPANY, THE BBB HAD ANNUAL COPIES OF OUR CONTRACTS (SHOWING WE WERE DISTINCTLY DIFFERENT AND THEY KNEW WE NEVER CHARGED UP FRONT). The argument was ugly. I begged the head of our BBB to give me a reason, as their stupid policy was affecting the livelihoods of my sales guys. It was met with indifference.

  • ComplianceSlave

    Were small- Even if we could it wouldn’t be significant. I admit tho, that it’s the BBB that’s the problem. Care One was doing what any business would. It was just very hard and disheartening to speak to people that I knew we would help but because Care One had that A they were convinced that C O was the right company. Again, nothing against Mike- I think a lot of his company and I have NO clue as to how much help Care One gave clients before the “change”. Honestly, if I had to guess I will say I believe they made a greater effort than most.
    I have true disdain for the advance fee structure companies, but I know a lot of BAD guys in that business & I don’t believe Croxon is one. He’s made the change. I say good for him.

  • Nuffsaid

    Consumers enrolling in a chapter 13 get immediate action and value for their dollar. The attorney fees are often part of the repayment plan.

    CCCS companies provide immediate service to the customer while receiving a low fee margin.

    The majority of settlement companies up until recently were getting paid most if not all of their fees before any substantive results were achieved, often paying their sales and affiliate partners 75% of the fee. These sales partners sold to anything that could fog a mirror and in the process sold the industry reputation down the river.

    There is more than the obvious above to compare.

    The 50% margin was used as an example, but would silence any detractor and provide a strong extra credit to increase the grade.

    Nuff

    Nuff

  • Jason Taylor

    By using your logic, all BK attorneys who file chapter 13s and credit counselors should have an “F” too because both have success ratios less than 50%. Did the BBB do the same when the credit counseling industry went through their lashing?

    Oh but credit counselors, they are fellow “non-profits” to the BBB, including some very close tie-ins with of management at a major BBB office and a credit counseling company. Coincidence? It couldn’t be the one being investigated by the BBB itself could it?

    Oh lets just take a look where this all started-

    http://www.allbusiness.com/leg

  • Nuffsaid

    I think it would be hard to prove in court, but would certainly keep a few lawyers fed.

    There are other companies with decent BBB grades. The consumer found care one. So what. Wo could have lost business to another company with a higher grade too, he happened upon potential customers who took the time to locate reputable companies given the information available to them. They did their research and made a decision.

    The BBB painted an industry with a broad brush because the industry for the most part deserved it.

    Wo’s company, or any other company for that matter, has had the opportunity to make their case with the BBB for some time now. The BBB (may have been a local chapter somewhere) even came out with a list of things to provide in order to be reconsidered. The list is admittedly long, but even cut in half, the list would be hard for a settlement company, whose motive is first profit and sales then the customer, to address with truth.

    I am not a BBB apologist. The grading system has its flaws. That said, the most I come across the BBB grading issue is from the debt relief space.

    The industry was overtaken by profiteers and now has a terrible image to overcome. I think that the industry can and will overcome the image, but it will take time.

    Those deserving of a better grade can fight for it, or wait for the eventual cleansing that has only just begun and was instigated by state and federal regulators. Which is another point; the industry is only now clearing out bad actors due to regulatory actions and enactment of laws. This fact only supports the BBB position.

    I submit that few companies have higher letter grades because the vast majority have been, or are currently, unable to show that even half of the consumers benefit from their service. If you are reading this and can prove that 50% or more of your customers legitimately show a net benefit from working with you, get off your ass and fight for the grade you deserve.

    Nuff

  • Jason Taylor

    This is exactly why the 20/20 report may be just the beginning of the BBB’s troubles. BY giving a small (very small) handful of companies good grades while the rest of the industry had D’s and mostly F’s, they deliberately created an environment for unfair business competition. I wonder if any company that has been around a few years has well documented evidence of how their marketing cost skyrocketed with the broad stroke painted bad BBB grade.

    I think if Wo could document how many clients he lost, with as many potential clients specifically citing the BBB grade, a lawyer might have a hay day with it

  • Jason Taylor

    Mike,

    How much in TOTAL was paid to the BBB or anything RELATED to the BBB in 2008 and 2009?

  • ComplianceSlave

    “We’re proud of our long track record and feel that we are unique in our commitment to doing what is best for the consumer through our fee structure model.”

    Mike- NO offense but you are NOT unique here. My company went against Care One all the time last year and the consumer you “care” so much about, went with you because of your A on the BBB time and time again. We had an NR because we are a debt settlement company- even though BBB had our contracts for years which showed we never charge fees except for performance.
    I believe you are interested in keeping your company alive & i applaud you for not “loopholing”- Most companies in your position are loopholing or simply went away. Since you have so many companies under the Care One roof, my guess is you had little choice if you wanted to keep the 503 b alive & well-By keeping your name, I hope you will focus on actually settling your older model clients debts as you will under the new fee structure.
    It’s nothing personal but claiming a “unique fee approach” when a very of us little guys NEVER have is not fair.

  • Errick

    I appreciate that response. I stand by my statements, but I think it’s to your credit that you have come out and said your piece. And it appears I stand corrected and that you charge 30 percent of initial balance savings, although my fairly reliable information is different.

    But my point remains, despite the blanket of irrelevant facts; most of your customers do not pay enough money to cover gross settlement costs, which is why virtually all of them fail. They are mildly happy in the first six months because they have not figured it out yet.

  • Nichole Kelly

    Mike Croxson provided this comment for this post.

    We understand there is an overall need for many to better understand the BBB ratings structure and the fee structures under the new FTC rules. Based on your comments, I’d like to shed some light based on some of the comments here.

    BBB Fees – As a poster mentioned, there are other types of fees that the BBB approaches businesses about. CareOne pays the standard fees to the BBB and has consistently sponsored the Maryland BBB’s Torch Award dinner, along with roughly 10-15 other Maryland businesses. We’ve provided volunteers to support events that aim to protect consumers, including local events sponsored by the BBB that focus on identity theft prevention and protection. CareOne has a long history of supporting local events and organizations through sponsorships and volunteerism in partnership with its parent company Ascend One, which are highlighted here. http://www.ascendone.com/OurCo

    Being an active member of our community is very important to us and this sponsorship is just one example of how we do that each year. While I can’t speak on behalf of the BBB, I’m confident they would not let minor sponsorships impact their credibility to independently provide ratings of businesses. BBB it has been made clear to us that our rating is based on proactive resolution of the few complaints we have received. Many may not realize that less than 35 Better Business Bureau (“BBB”) complaints were filed in the last year on approximately 70,000 new inquiries for CareOne. Because the satisfaction of our clients is a major priority for us, all complaints have been successfully resolved and that is reflected in our “A” rating.

    Fee Structure – CareOne pioneered a success-fee model in August of 2009 because we believe that customers should pay for the value they receive from our services. Our fee structure is fairly simple. We charge 30% of the amount that we save the customer based on their pre-plan debt balance. If the customer’s pre-plan balance was $10k and we settled the debt for $3k, the fee would be $2100, which is a savings of $4900 for the customer. By basing our fee on what we save the customer, it rewards us when we deliver the best value to the customer, the lowest possible settlement. Most clients have been able to experience their first settlement in a timeframe that meets their satisfaction, in most cases in their initial 3-6 months on the plan. To be sure customers are satisfied; we also offer a 100% money back guarantee. We will refund all fees paid to CareOne if a customer is unhappy with their service within the first180 days. We’re proud of our long track record and feel that we are unique in our commitment to doing what is best for the consumer through our fee structure model.

    Fair Share Payments – Jason you are correct that CareOne does not accept any fair share payments from creditors. We believe that these types of payments create a conflict of interest for the consumer as it creates a dual agency relationship. For us, it is more important to be a true consumer advocate.

    I hope this information was useful and helps clarify CareOne’s position on the many points that were raised. If you have any further questions I am happy to address them. Please send me an email at mcroxson (at) careonecredit.com. For more information on why we support the FTC Guidelines check out this whitepaper. http://community.careonecredit

    Mike
    Mike Croxson
    President, CareOne Services, Inc.

  • http://twitter.com/Nichole_Kelly Nichole Kelly

    Mike Croxson provided this comment for this post.

    We understand there is an overall need for many to better understand the BBB ratings structure and the fee structures under the new FTC rules. Based on your comments, I’d like to shed some light based on some of the comments here.

    BBB Fees – As a poster mentioned, there are other types of fees that the BBB approaches businesses about. CareOne pays the standard fees to the BBB and has consistently sponsored the Maryland BBB’s Torch Award dinner, along with roughly 10-15 other Maryland businesses. We’ve provided volunteers to support events that aim to protect consumers, including local events sponsored by the BBB that focus on identity theft prevention and protection. CareOne has a long history of supporting local events and organizations through sponsorships and volunteerism in partnership with its parent company Ascend One, which are highlighted here. http://www.ascendone.com/OurCommitment.aspx?tm=2&sl=4

    Being an active member of our community is very important to us and this sponsorship is just one example of how we do that each year. While I can’t speak on behalf of the BBB, I’m confident they would not let minor sponsorships impact their credibility to independently provide ratings of businesses. BBB it has been made clear to us that our rating is based on proactive resolution of the few complaints we have received. Many may not realize that less than 35 Better Business Bureau (“BBB”) complaints were filed in the last year on approximately 70,000 new inquiries for CareOne. Because the satisfaction of our clients is a major priority for us, all complaints have been successfully resolved and that is reflected in our “A” rating.

    Fee Structure – CareOne pioneered a success-fee model in August of 2009 because we believe that customers should pay for the value they receive from our services. Our fee structure is fairly simple. We charge 30% of the amount that we save the customer based on their pre-plan debt balance. If the customer’s pre-plan balance was $10k and we settled the debt for $3k, the fee would be $2100, which is a savings of $4900 for the customer. By basing our fee on what we save the customer, it rewards us when we deliver the best value to the customer, the lowest possible settlement. Most clients have been able to experience their first settlement in a timeframe that meets their satisfaction, in most cases in their initial 3-6 months on the plan. To be sure customers are satisfied; we also offer a 100% money back guarantee. We will refund all fees paid to CareOne if a customer is unhappy with their service within the first180 days. We’re proud of our long track record and feel that we are unique in our commitment to doing what is best for the consumer through our fee structure model.

    Fair Share Payments – Jason you are correct that CareOne does not accept any fair share payments from creditors. We believe that these types of payments create a conflict of interest for the consumer as it creates a dual agency relationship. For us, it is more important to be a true consumer advocate.

    I hope this information was useful and helps clarify CareOne’s position on the many points that were raised. If you have any further questions I am happy to address them. Please send me an email at mcroxson (at) careonecredit.com. For more information on why we support the FTC Guidelines check out this whitepaper. http://community.careonecredit.com/ask_careone/m/careone_whitepapers/47006.aspx

    Mike
    Mike Croxson
    President, CareOne Services, Inc.

    • Errick

      I appreciate that response. I stand by my statements, but I think it’s to your credit that you have come out and said your piece. And it appears I stand corrected and that you charge 30 percent of initial balance savings, although my fairly reliable information is different.

      But my point remains, despite the blanket of irrelevant facts; most of your customers do not pay enough money to cover gross settlement costs, which is why virtually all of them fail. They are mildly happy in the first six months because they have not figured it out yet.

      • Cupid

        Errick – Whats the attrition rate in a DMP in the first 12 months? Nonprofit DMP-ers enroll consumers left, right and upside down
        who can qualify for chapter 7 bankruptcy. Do the DMP-ers encourage or
        instruct the consumer to consult with a bankruptcy attorney to learn
        more about chapter 7 before proceeding forward in a DMP?

        Bet Not!

        That pretty much is a breach of trust. That pretty much makes the
        nonprofit single solution DMP-ers about as bad as you say settlement
        companies are. Couple that with the fact that nonprofit DMP-ers get paid
        to represent banks payment programs that have to be complied with at
        the threat of pulled support and I think I would rather talk to someone
        who is not representing the creditors I might be struggling with. Banks
        that, need I remind
        you, have and will continue to pay out BILLIONS of dollars for their
        wrong
        doing. That’s what you support Errick. A system that brought this nation
        to its
        worst economic condition since the great depression.

        CareOne provides debt management plans and does not get paid by creditors to do it. That alone breeds trust.

        “Now get in the pit and try to love someone.”

        P.S. I don’t work for CareOne or any company related to them. I
        am not related to anyone who does work for them nor any contractor for them
        etc. I am just kinda sick of the Erricks and the holier than thou attitude they
        have about debt management plans that are mostly offered by nonprofits. CareOne
        is an exception and a good one for the DMP.

    • http://www.ftc.gov ComplianceSlave

      “We’re proud of our long track record and feel that we are unique in our commitment to doing what is best for the consumer through our fee structure model.”

      Mike- NO offense but you are NOT unique here. My company went against Care One all the time last year and the consumer you “care” so much about, went with you because of your A on the BBB time and time again. We had an NR because we are a debt settlement company- even though BBB had our contracts for years which showed we never charge fees except for performance.
      I believe you are interested in keeping your company alive & i applaud you for not “loopholing”- Most companies in your position are loopholing or simply went away. Since you have so many companies under the Care One roof, my guess is you had little choice if you wanted to keep the 503 b alive & well-By keeping your name, I hope you will focus on actually settling your older model clients debts as you will under the new fee structure.
      It’s nothing personal but claiming a “unique fee approach” when a very of us little guys NEVER have is not fair.

      • Jason Taylor

        This is exactly why the 20/20 report may be just the beginning of the BBB’s troubles. BY giving a small (very small) handful of companies good grades while the rest of the industry had D’s and mostly F’s, they deliberately created an environment for unfair business competition. I wonder if any company that has been around a few years has well documented evidence of how their marketing cost skyrocketed with the broad stroke painted bad BBB grade.

        I think if Wo could document how many clients he lost, with as many potential clients specifically citing the BBB grade, a lawyer might have a hay day with it

      • Nuffsaid

        I think it would be hard to prove in court, but would certainly keep a few lawyers fed.

        There are other companies with decent BBB grades. The consumer found care one. So what. Wo could have lost business to another company with a higher grade too, he happened upon potential customers who took the time to locate reputable companies given the information available to them. They did their research and made a decision.

        The BBB painted an industry with a broad brush because the industry for the most part deserved it.

        Wo’s company, or any other company for that matter, has had the opportunity to make their case with the BBB for some time now. The BBB (may have been a local chapter somewhere) even came out with a list of things to provide in order to be reconsidered. The list is admittedly long, but even cut in half, the list would be hard for a settlement company, whose motive is first profit and sales then the customer, to address with truth.

        I am not a BBB apologist. The grading system has its flaws. That said, the most I come across the BBB grading issue is from the debt relief space.

        The industry was overtaken by profiteers and now has a terrible image to overcome. I think that the industry can and will overcome the image, but it will take time.

        Those deserving of a better grade can fight for it, or wait for the eventual cleansing that has only just begun and was instigated by state and federal regulators. Which is another point; the industry is only now clearing out bad actors due to regulatory actions and enactment of laws. This fact only supports the BBB position.

        I submit that few companies have higher letter grades because the vast majority have been, or are currently, unable to show that even half of the consumers benefit from their service. If you are reading this and can prove that 50% or more of your customers legitimately show a net benefit from working with you, get off your ass and fight for the grade you deserve.

        Nuff

      • Jason Taylor

        By using your logic, all BK attorneys who file chapter 13s and credit counselors should have an “F” too because both have success ratios less than 50%. Did the BBB do the same when the credit counseling industry went through their lashing?

        Oh but credit counselors, they are fellow “non-profits” to the BBB, including some very close tie-ins with of management at a major BBB office and a credit counseling company. Coincidence? It couldn’t be the one being investigated by the BBB itself could it?

        Oh lets just take a look where this all started-

        http://www.allbusiness.com/legal/legal-services-litigation/5822816-1.html

      • Nuffsaid

        Consumers enrolling in a chapter 13 get immediate action and value for their dollar. The attorney fees are often part of the repayment plan.

        CCCS companies provide immediate service to the customer while receiving a low fee margin.

        The majority of settlement companies up until recently were getting paid most if not all of their fees before any substantive results were achieved, often paying their sales and affiliate partners 75% of the fee. These sales partners sold to anything that could fog a mirror and in the process sold the industry reputation down the river.

        There is more than the obvious above to compare.

        The 50% margin was used as an example, but would silence any detractor and provide a strong extra credit to increase the grade.

        Nuff

        Nuff

      • http://www.ftc.gov ComplianceSlave

        For The Record- We had an A and were accredited. That was taken away and an F in it’s place for most of last year- EVEN THO, AS AN ACCREDITED COMPANY, THE BBB HAD ANNUAL COPIES OF OUR CONTRACTS (SHOWING WE WERE DISTINCTLY DIFFERENT AND THEY KNEW WE NEVER CHARGED UP FRONT). The argument was ugly. I begged the head of our BBB to give me a reason, as their stupid policy was affecting the livelihoods of my sales guys. It was met with indifference.

      • http://www.ftc.gov ComplianceSlave

        Were small- Even if we could it wouldn’t be significant. I admit tho, that it’s the BBB that’s the problem. Care One was doing what any business would. It was just very hard and disheartening to speak to people that I knew we would help but because Care One had that A they were convinced that C O was the right company. Again, nothing against Mike- I think a lot of his company and I have NO clue as to how much help Care One gave clients before the “change”. Honestly, if I had to guess I will say I believe they made a greater effort than most.
        I have true disdain for the advance fee structure companies, but I know a lot of BAD guys in that business & I don’t believe Croxon is one. He’s made the change. I say good for him.

    • Jason Taylor

      Mike,

      How much in TOTAL was paid to the BBB or anything RELATED to the BBB in 2008 and 2009?

      • CCCS=BBB?

        Jason, you mean like Howard Dvorkin, founder of Consolidated Credit Counseling Services,DIRECTOR OWNER of BETTER BUSINESS BUREAU OF PALM BEACH COUNTY, INC

  • Jason Taylor

    They could simply give customers the option to do a flat fee after settlement rather than percentage. It seems some companies are charging around 20% of the total debt as a flat fee. The question everyone is wondering is how much client retention will improve with no advance fee models. If retention does not improve, I expect some companies to raise fees. The one disadvantage with no advances fees is people who complete the program end up paying higher fees because they are subsidizing clients who enroll and quit before fees are paid, even if for reasons no fault of the company providing services.

    I wonder if by offering debt settlement, this is how CareOne competes with “non profit” credit counselors because I don’t believe CareOne receives any fair share like the non profit’s do. It might only be 3-4% of the debt, but that adds up for the non profits. Take a look at Money Management International’s tax returns when you have some time to kill.

  • Errick

    Yes I could have been a bit clearer on those points.

    CareOne used to charge (through a law firm) 15 percent flat, which means, all the benefit of a better settlement goes to the customer. Then before TSR they charged initial fee plus monthly fee plus 30 percent of savings from the current (inflated) balance, capped at 24 percent. Most clients were set up to reach the cap after their small and simple accounts were settled, which meant CareOne got the 24 percent from most clients before they went under. This is really a front-loaded flat rate in disguise, because most clients reached it within 18-24 months anyhow.

    After TSR, CareOne now charges 40 percent from the initial balance, with no cap. Now it takes a lot longer for CareOne to get their money, which means you either have to pay your commissions later, or borrow a lot of money. So they pass most of that hit along to the sales people. They can quit, but the debt settlement company down the road has the same problem, they don’t have the money up front either, because the industry’s fee structure is set by the FTC. See it yet?

    Now under a full contingent fee, the customer has to SHARE almost half the benefit of a good settlement with CareOne, which makes it not so good. Even an astonishing settlement of 10 cents on the dollar costs the customer 46 cents! It used to cost 25 cents or 34 cents under the older plans.

    Got it yet? As for the contracts, why don’t you ask your buddy Mike Crockson for them? I’m sure he has nothing to hide from you.

  • Steve Rhode

    Help me understand how it is “now a price-controlled market.” The FTC TSR rules did not control fees except to say fees would be earned upon the successful settlement agreement of a debt as accepted by the consumer.

    Do you have a client contract which spells this out? I’ve never seen a version like that before and have no specific information about any settlement company promising a flat rate and taking the spread.

  • Errick

    CareOne debt settlement is a scam, and everyone who is talking about high fees and advance fees and BBB ratings and puffball AG settlements is missing the scam. Their customers are set up to fail.

    You tell your mark, I mean customer, just pay 50 cents for each dollar of your debts, and you will try to settle them. Your fee is just 15 cents, sounds great right? Then you turn around and settle their debts for 45 cents, holy mackerel you’re a hero! But wait, that settlement didn’t cost your mark 45 cents, it actually cost 60 cents with the fees. But the scam, I mean plan, buries that in the fine print of budgets and schedules and estimates. So the mark is faithfully pumping 50 cents each month into the scam, each time getting 10 cents further away from the financial freedom you described in vivid detail, but were very careful not to actually promise anyone.

    No one survives this, except a few of the small number of victims whose plans balance, who pay at least the gross settlement amount without fail for FIVE YEARS. And don’t get sued in that time. Which thanks to the debt buyers, is nobody.

    The best scams are simple for two reasons. First, your mark has to think it can’t be that simple, I’m a reasonable person and I think I would have seen something like this coming. Second, you have to make your mark embarrassed to come forward after you took them because only an idiot would have fallen for it.

    45+15=50. Can’t get simpler than that.

    This is why CareOne wants everyone to play by the same rules, because they actually benefit from the advance fee ban, but only if everyone has to play. Nowadays they take on average about 61 cents from the client for every dollar of debt. They settle at about 48 cents, which makes their fee about 21 cents, for a gross settlement cost of 69 cents. Every settlement puts the client eight cents on the dollar closer to being out of money and out of their hair. And the beauty is, you took your mark while looking like you succeeded. Only someone exempt from the advance fee ban can beat that.

    But wait, there’s more! Thanks to contingent fees, you have reverse-leveraged the mark even closer to imminent doom. Now even an awesome settlement, say 35 cents on the dollar, which used to cost 50 cents, now costs 61 cents! You’ve only scammed half of your customers at that level, but oh well tomorrow is another day.

    One might think the sales staff would revolt by the squeeze on their commissions. But thanks to Uncle Sam, what is their option? It’s now a price-controlled market. CareOne and the “coaches” will meet in the middle of this rock-solid cash flow, which is now even more secure because you haven’t “taken” any money until you’ve taken the mark. Look officer, I am just doing my job here.

    Even the regulators will not be able to get at this one. The FTC has put the gold seal of approval on the scam, all you have to do is NOT talk about the difference between gross and net settlements, and obey the advance fee ban and disclosure requirements, and it’s legal enough for the pencil pushers. It’s not even really deceptive, all the information you need to make the scam is right there in the papers. You told us you read it, you wouldn’t lie to us would you?

  • Errick

    It is minor. It’s actually not a fine, it’s a consent agreement to pay $4.5 million over 5 years to about 20 state AG offices, with no admission of wrongdoing. Cost of doing business.

    Less minor, actual victims of the “45+15=50″ scam have filed class action suits against CareOne in Washington and Florida. But those will probably settle too. Cost of doing business.

  • Errick

    “I checked with CareOne and they confirmed they pay the same BBB rate as other companies.” That was not really the question, which is: how much money does C1 pay the BBB? You know as well as I do that the dues is just the tip of the iceberg.

  • Steve Rhode

    That’s funny, that’s the first thing I thought about with the salary issue of the old credit counseling days.

  • Steve Rhode

    What do you think I let him off easy on?

  • Jason Taylor

    The whole blanketing of the DS and other industries with an “F” was a huge mistake- it really made it harder to tell the outright scams from legit companies, or well maybe companies rightfully derving a C+, etc. I doubt the BBB can afford to do all of the research necessary on every company and continously update their records for an accurate rating system. They need to go back to a pass/fail until they do.

    I really don’t think giving accredited members a few extra points was a big of a deal as the media made it out to be becuase companies who agree to handle complaints through arbitration if needed should be rewarded, but they should of given all companies an opportunity to agree to arbitration and get the points without having to pay the fee.

    The counsel of BBBs certainly needs to regain control of the local chapters and 300k and 400K salaries for non-profit executives? Come on! Sounds like some of the past credit counseling salaries the FTC found years ago when investigating into their non-profit status, but many still have huge salaries. Here is an LA Times article about the BBB salaries.

    http://articles.latimes.com/20

  • Errick

    That’s a bit naive. Yes the membership fee is the same, but then you get hit up for tickets to the Torch Awards, and then event sponsorships, and you pay for online access to the complaint system, and so forth. You let your friend Mike Crockson off easy again.

  • Steve Rhode

    I’m not a huge fan of the BBB because it is not a perfect system but the bottom line is that on one level they do give consumers an outlet to voice complaints, long before the internet was invented. On the other hand they certainly screwed up the rating system in some instances. The issues presented in the 20/20 investigation were tragic and I’d bet the BBB regrets they ever happened.

    And while it might not be a perfect system, people do rely on them in the absence of anyone else they feel they can rely on for similar services.

    If not the BBB, then what?

    Steve

  • Jason Taylor

    Thanks Steve. In fact the BBB rates are not as bad as some of the articles out there make them seem to be. This article alleges companies pay the BBB up to millions of dollars.

    http://ctwatchdog.com/2010/11/

    One could easily conclude that the BBB goes out of their way to keep the money coming in from their members as many articles also discuss, while non-paying businesses get the short end of the stick.

  • Steve Rhode

    I checked with CareOne and they confirmed they pay the same BBB rate as other companies. The BBB rates are here.

  • Jason Taylor

    How much money does Care One give to the BBB every year? Anyone else want to know?

    Interesting that paying a 4.5 million dollar fine is a result of something “minor””

    Business in America is becoming like getting pulled over in Mexico in a BMW, “you were going 100 in a 50 mph zone, but si, just give me 50 bucks and no problemo. In fact, if you give me an extra $20, I’ll call my buddies up the road for you and let em know your good, just please keep it under 85 cause the speed limit is 50 mph alright”

  • Jason Taylor

    How much money does Care One give to the BBB every year? Anyone else want to know?

    Interesting that paying a 4.5 million dollar fine is a result of something “minor””

    Business in America is becoming like getting pulled over in Mexico in a BMW, “you were going 100 in a 50 mph zone, but si, just give me 50 bucks and no problemo. In fact, if you give me an extra $20, I’ll call my buddies up the road for you and let em know your good, just please keep it under 85 cause the speed limit is 50 mph alright”

    • http://GetOutOfDebt.org Steve Rhode

      I checked with CareOne and they confirmed they pay the same BBB rate as other companies. The BBB rates are here.

      • Jason Taylor

        Thanks Steve. In fact the BBB rates are not as bad as some of the articles out there make them seem to be. This article alleges companies pay the BBB up to millions of dollars.

        http://ctwatchdog.com/2010/11/22/bbb-rates-staples-f-office-depot-a-why-office-depot-pays-dues

        One could easily conclude that the BBB goes out of their way to keep the money coming in from their members as many articles also discuss, while non-paying businesses get the short end of the stick.

      • http://GetOutOfDebt.org Steve Rhode

        I’m not a huge fan of the BBB because it is not a perfect system but the bottom line is that on one level they do give consumers an outlet to voice complaints, long before the internet was invented. On the other hand they certainly screwed up the rating system in some instances. The issues presented in the 20/20 investigation were tragic and I’d bet the BBB regrets they ever happened.

        And while it might not be a perfect system, people do rely on them in the absence of anyone else they feel they can rely on for similar services.

        If not the BBB, then what?

        Steve

      • Jason Taylor

        The whole blanketing of the DS and other industries with an “F” was a huge mistake- it really made it harder to tell the outright scams from legit companies, or well maybe companies rightfully derving a C+, etc. I doubt the BBB can afford to do all of the research necessary on every company and continously update their records for an accurate rating system. They need to go back to a pass/fail until they do.

        I really don’t think giving accredited members a few extra points was a big of a deal as the media made it out to be becuase companies who agree to handle complaints through arbitration if needed should be rewarded, but they should of given all companies an opportunity to agree to arbitration and get the points without having to pay the fee.

        The counsel of BBBs certainly needs to regain control of the local chapters and 300k and 400K salaries for non-profit executives? Come on! Sounds like some of the past credit counseling salaries the FTC found years ago when investigating into their non-profit status, but many still have huge salaries. Here is an LA Times article about the BBB salaries.

        http://articles.latimes.com/2010/nov/24/business/la-fi-bbb-20101124

      • http://GetOutOfDebt.org Steve Rhode

        That’s funny, that’s the first thing I thought about with the salary issue of the old credit counseling days.

      • Errick

        That’s a bit naive. Yes the membership fee is the same, but then you get hit up for tickets to the Torch Awards, and then event sponsorships, and you pay for online access to the complaint system, and so forth. You let your friend Mike Crockson off easy again.

      • http://GetOutOfDebt.org Steve Rhode

        What do you think I let him off easy on?

      • Errick

        “I checked with CareOne and they confirmed they pay the same BBB rate as other companies.” That was not really the question, which is: how much money does C1 pay the BBB? You know as well as I do that the dues is just the tip of the iceberg.

      • Errick

        CareOne debt settlement is a scam, and everyone who is talking about high fees and advance fees and BBB ratings and puffball AG settlements is missing the scam. Their customers are set up to fail.

        You tell your mark, I mean customer, just pay 50 cents for each dollar of your debts, and you will try to settle them. Your fee is just 15 cents, sounds great right? Then you turn around and settle their debts for 45 cents, holy mackerel you’re a hero! But wait, that settlement didn’t cost your mark 45 cents, it actually cost 60 cents with the fees. But the scam, I mean plan, buries that in the fine print of budgets and schedules and estimates. So the mark is faithfully pumping 50 cents each month into the scam, each time getting 10 cents further away from the financial freedom you described in vivid detail, but were very careful not to actually promise anyone.

        No one survives this, except a few of the small number of victims whose plans balance, who pay at least the gross settlement amount without fail for FIVE YEARS. And don’t get sued in that time. Which thanks to the debt buyers, is nobody.

        The best scams are simple for two reasons. First, your mark has to think it can’t be that simple, I’m a reasonable person and I think I would have seen something like this coming. Second, you have to make your mark embarrassed to come forward after you took them because only an idiot would have fallen for it.

        45+15=50. Can’t get simpler than that.

        This is why CareOne wants everyone to play by the same rules, because they actually benefit from the advance fee ban, but only if everyone has to play. Nowadays they take on average about 61 cents from the client for every dollar of debt. They settle at about 48 cents, which makes their fee about 21 cents, for a gross settlement cost of 69 cents. Every settlement puts the client eight cents on the dollar closer to being out of money and out of their hair. And the beauty is, you took your mark while looking like you succeeded. Only someone exempt from the advance fee ban can beat that.

        But wait, there’s more! Thanks to contingent fees, you have reverse-leveraged the mark even closer to imminent doom. Now even an awesome settlement, say 35 cents on the dollar, which used to cost 50 cents, now costs 61 cents! You’ve only scammed half of your customers at that level, but oh well tomorrow is another day.

        One might think the sales staff would revolt by the squeeze on their commissions. But thanks to Uncle Sam, what is their option? It’s now a price-controlled market. CareOne and the “coaches” will meet in the middle of this rock-solid cash flow, which is now even more secure because you haven’t “taken” any money until you’ve taken the mark. Look officer, I am just doing my job here.

        Even the regulators will not be able to get at this one. The FTC has put the gold seal of approval on the scam, all you have to do is NOT talk about the difference between gross and net settlements, and obey the advance fee ban and disclosure requirements, and it’s legal enough for the pencil pushers. It’s not even really deceptive, all the information you need to make the scam is right there in the papers. You told us you read it, you wouldn’t lie to us would you?

      • http://GetOutOfDebt.org Steve Rhode

        Help me understand how it is “now a price-controlled market.” The FTC TSR rules did not control fees except to say fees would be earned upon the successful settlement agreement of a debt as accepted by the consumer.

        Do you have a client contract which spells this out? I’ve never seen a version like that before and have no specific information about any settlement company promising a flat rate and taking the spread.

      • Errick

        Yes I could have been a bit clearer on those points.

        CareOne used to charge (through a law firm) 15 percent flat, which means, all the benefit of a better settlement goes to the customer. Then before TSR they charged initial fee plus monthly fee plus 30 percent of savings from the current (inflated) balance, capped at 24 percent. Most clients were set up to reach the cap after their small and simple accounts were settled, which meant CareOne got the 24 percent from most clients before they went under. This is really a front-loaded flat rate in disguise, because most clients reached it within 18-24 months anyhow.

        After TSR, CareOne now charges 40 percent from the initial balance, with no cap. Now it takes a lot longer for CareOne to get their money, which means you either have to pay your commissions later, or borrow a lot of money. So they pass most of that hit along to the sales people. They can quit, but the debt settlement company down the road has the same problem, they don’t have the money up front either, because the industry’s fee structure is set by the FTC. See it yet?

        Now under a full contingent fee, the customer has to SHARE almost half the benefit of a good settlement with CareOne, which makes it not so good. Even an astonishing settlement of 10 cents on the dollar costs the customer 46 cents! It used to cost 25 cents or 34 cents under the older plans.

        Got it yet? As for the contracts, why don’t you ask your buddy Mike Crockson for them? I’m sure he has nothing to hide from you.

      • Jason Taylor

        Steve, can you find out from Mr. Croxson how much in total he paid or donated to the BBB or anything related to the BBB (such as the Torch Award) for 2008 and 2009?

        From everything I can tell, I think CareOne really deserves a good grade BBB grade, but this may shed some light on how they kept their grade and membership while almost every other company was garnished with a “D” or “F”, though I don’t expect Mike to say something negative of the BBB as they have certainly been a HUGE benefit to his business during a time other companies, some undeserving, suffered greatly.

      • http://GetOutOfDebt.org Steve Rhode

        Jason,

        I personally don’t think it is material. The BBB grading system has numerous cases where companies felt they were mis-graded in the past but as evidenced by New Era recently changing their grade and the fact CareOne just live through an A+ to No Rating to A process it does appear the BBB, for whatever reason, and for whatever internal and private policy used, reviewed the situation and revised their grade.

        Bottom line on the BBB, it’s not perfect, at all, but compared to what alternative?

        As you can see in comments that Mike Croxson has posted on the site, he has posted his personal email address. Please feel free to contact him directly.

        Steve

      • Jason Taylor

        They could simply give customers the option to do a flat fee after settlement rather than percentage. It seems some companies are charging around 20% of the total debt as a flat fee. The question everyone is wondering is how much client retention will improve with no advance fee models. If retention does not improve, I expect some companies to raise fees. The one disadvantage with no advances fees is people who complete the program end up paying higher fees because they are subsidizing clients who enroll and quit before fees are paid, even if for reasons no fault of the company providing services.

        I wonder if by offering debt settlement, this is how CareOne competes with “non profit” credit counselors because I don’t believe CareOne receives any fair share like the non profit’s do. It might only be 3-4% of the debt, but that adds up for the non profits. Take a look at Money Management International’s tax returns when you have some time to kill.

    • Errick

      It is minor. It’s actually not a fine, it’s a consent agreement to pay $4.5 million over 5 years to about 20 state AG offices, with no admission of wrongdoing. Cost of doing business.

      Less minor, actual victims of the “45+15=50″ scam have filed class action suits against CareOne in Washington and Florida. But those will probably settle too. Cost of doing business.

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