A disturbing trend is becoming clear that some companies promoting lawyer backed debt relief services have in fact created a clever little model for cleaning out consumers and making twice as much money. Basically what happens is the lawyers get the exclusive client for essentially free since the consumer winds up paying the marketing costs of the affiliate selling them service. Then the law firms make money on the backend after the marketing representative has been cut out of the relationship.
Here is how it works.
- Consumers in financial trouble are sold attorney backed debt relief services.
- Consumers pay an advance fee for these services since attorneys claim they are not bound to abide by the FTC telemarketing sales rules that prohibit advance fees.
- Marketers of these services are paid massive commissions, up to 95%, of the fees from the front-end debt relief service. Essentially the consumer has paid big fees to be sold to.
- The majority of consumers enrolled will fail and then will be sold or moved into backend bankruptcy services where the law firms keep the fees and does not share that with the front-end marketing representative.
So what is apparently being done is to sell a consumer with a wonderful promise that lawyer based advanced fee debt elimination services are a great thing. The consumer buys in on a positive note; the claim that an attorney is going to make the debt go away.
Then by the time it all starts to unravel the bulk of the advanced fees have been paid and the marketing representative is not owed or due any additional funds.
Some models include a partial credit for bankruptcy and some do not. The consumer that fails on the debt reduction plan is then given the “too bad it didn’t workout for you” speech and then shuffled to bankruptcy where additional fees are charged.
The reason this is the double-tap method is because the firms must be aware that most of the people enrolled will fail and are just waiting to up-sell them on the bankruptcy. One firm I reported on previously was charging consumers twice the going rate for bankruptcy services.
This approach makes money on the front-end, during the plan and on the backend.
So what do you think. Is that just business or is there something just plain wrong with that approach?
Here is How to Financially Screw Consumers With the Debt Double-Tap Method. by Steve Rhode
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