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Active Debt Solutions Addresses Tipster Issue

Active Debt Solutions, a member of the AACC, was the focus of an email sent in which said “I decided to dig up some dirt on the companies that Steve Rhode and his associates formed called the AACC. This is what I have found: – Active Debt is not licensed or bonded”

So I asked Active Debt for a response and here is what they had to say.

Active Debt Responds

This response comes from Sean Ryan at Active Debt Solutions:

First, let me say that I have to wonder what the AACC has done, as a whole to have someone take the time and effort to contact 50 states and regulatory bodies to check up on our companies! It’s a shame TASC never made such an effort.

Secondly, I will point out that the “tipster (send in your tips here)” includes nothing regarding any evidence of a consumer complaint or any harm done to consumers by the companies he “decided to dig up some dirt” on.

Unlike the “tipster (send in your tips here)” (“tipster (send in your tips here)” meaning the information came in anonymously), we have nothing to hide, We have no fear of any complaints by our customers and are not, and never have been, under investigation by any State or Federal agency.

We participate actively in discussions on GetOutOfDebt.org relating to debt settlement companies who have made a living out of lying & deceiving consumers to simply line their pockets.

Recently there have been very vocal opponents on the blog of our model, one which complies with Federal law and one which has collected fees AT settlement long before the federal mandate. Mostly, they appear to come from disgruntled, former operators of debt settlement companies, charging all their fees before service- companies designed to separate already broke consumers from more of their money!

I offer this background information on our company:

  • Employees: 5
  • Clients: Less Than 500
  • Incorporated: 2007
  • Fee: 30% of savings AT settlement (Prior to new FTC rule we had charged 25% of client’s savings AT settlement
  • Salespeople: 0
  • Customer Service: 3
  • Negotiator: 1
  • Affiliates: 0
  • Contracts: May be viewed on or website
  • Success Rate: May be viewed on our website

For anyone that understands what debt settlement was previous to the new Federal Rule regarding fees AT settlement ONLY, it should be clear that Active Debt Solutions is NOT one of the thousands of boiler room operations that forced the new law upon the industry. We were, moreover, the model for the new Law.

99% of the companies in debt settlement before the law changed on October 27, 2010 collected 15-25% OF THE CLIENT’S DEBT AMOUNT AS THEIR FEE BEFORE PROVIDING ANY SERVICE! Their fees were collected over 12-18 months, during which time their “clients” had saved nothing to settle any accounts, but had instead ONLY paid the settlement company’s fees.

Between 70% and 90% of those fees were paid to sales company as a commission. That begs the question of how the settlement companies could have serviced their clients after giving away so much of the fee just to sales commissions- The answer is simple; They did not service them. The only customer service these clients typically received was enough to keep them paying their fees and then they were usually abandoned if serviced beyond that point, at all.

The success rate (according to The FTC) for that model of doing business was less than 10%. The performance based model’s success rate is generally better than 75%.

Nearly one year ago, since the appearance of the proposed Schumer-McCaskill Bill, we decided to cease sales operations. We cut our small sales staff and since have focused entirely on servicing our current clients. Since then, we have looked at other opportunities, including all state and federal laws to reopen our sales division.

We have many letters from some of the states we have approached during the last year to better understand what is required for us to continue to operate in their states. Interestingly, nearly all of them told us that theirs is not to interpret their own laws, but rather to enforce them.

They suggest we hire a private attorney to interpret their laws and their state requirements. Enclosed are a sample of replies to us from state’s Attorney Generals regarding what is required to operate in their states. Perhaps the “tipster (send in your tips here)” knows more than the state’s AG’s, but the AG’s generally had no opinion. – Source

In open discussions with many states we were told that unless a client is harmed or complains that we are violating state laws that there is no basis for enforcing any laws.

The “tipster (send in your tips here)” I am certain will not believe this, but our clients have no reason to complain. We simply don’t lie to them; We don’t collect fees without any service; We focus on customer service; And we actually have to EARN our money in order to receive it. I go back again to the “tipster (send in your tips here)”. Why would he spend so much effort gathering “dirt” on companies who are openly doing the right thing? I assume it is because their own complaint-ridden, multi-million dollar operation was deemed obsolete recently by the new consumer friendly laws.

The “tipster (send in your tips here)” specifically points to Active Debt Solutions as not having a Florida Telemarketer’s Sales License AND as charging more than the allowable fee in the State of Florida. My simple reply to that is that we have NO Florida clients, so we cannot be charging more than the allowable fee. Secondly, we do not “telemarket” so we are not required to have a license.

Perhaps the “tipster (send in your tips here)” can also help us with the following:

  • What states require a license of our debt settlement company?
  • Who interpreted the state laws for him to decide which ones they are?
  • Which of our clients has filed a complaint against us? What was the nature of the complaint? How was the client harmed?
  • What laws has Active Debt violated? How? Who’s opinion is it that we violated any law?
  • If it is the “tipster (send in your tips here)’s” opinion, who is he?
  • What credentials does he have to interpret state law?

Lastly, I would ask, since Active Debt is hiding nothing and since the “tipster (send in your tips here)” has no evidence that we are violating any law or have any AG or client complaints, what is it we do that the “tipster (send in your tips here)” is not in favor of? How have we offended him? What, if anything should we be doing differently? And finally, why the ax to grind?

When we decide to begin marketing our services again, we will hire an attorney to interpret state laws in the states that we wish to provide services, follow the attorney’s guidance and do whatever is necessary to continue to help disadvantaged consumers with their debt problems.

Tell the “tipster (send in your tips here)” we are sorry the federal government stepped in and forced you to shut down your operation, but we take no responsibility for that. Until then, we will continue to provide exceptional service, with honesty, transparency and integrity.

Sean Ryan
Active Debt Solutions, Inc

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Active Debt Solutions Addresses Tipster Issue
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About Steve Rhode

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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.
  • Debt Relief Advocate

    Angelo, can you point to the section on your site that outlines the states that you are able to provide services in? I cannot find this…

    So, for your CCCS programs that you refer clients into, are you referring those clients to Debt Free America? Or is it through Care One? Are the CCC programs the same as Debt Management Programs? If not, then how are they different?

  • Angelo

    We are able to provide services in the states listed on our website. What you are missing is that Debt Settlement is not the only choice we offer. We are able to offer CCC programs, Debt Management Programs, Bankruptcy referral as well as consolidation loans to consumers in those states. Would you be so kind as to provide your company website address ? I’d love to see the details of your program and the terms and conditions posted on your website.

  • SeanDSLegalPlan

    Thank you for the information.
    Let me point out a few things:

    We are not making any telephone solicitations at this time. I read the Telemarketing license requirement the same way you do. It does not apply to us, however, as we are not operating a telephone solicitation operation.

    We do have the ability to enroll clients in Consumer Credit Counseling. We have not placed a new client in a long time however, but we still have the ability to do so. We will update the list of states we can place clients. At the time we gave that information regarding state’s licenses, it was correct.

    As I stated before, we are a very small company and we have not solicited any new business in nearly a year. Before we begin, we will meet state and federal requirements for that operation.

  • Debt Relief Advocate

    That is a reasonable response.
    Excellent job Mike, way to lend the helping hand. Beat me to the punch.

    I am certainly no lawyer either, good catch on the forms.

    Personally, I am all for federal regulations and further I am for individual state regulations, I believe each should be followed as closely as possible. Of course, anyone in the course of business has made mistakes, it happens. And it is learning from those mistakes that is going to improve who you are as a company. No complaints, hey that’s great. This isn’t about complaints. I am talking about compliance with state and federal regulations. And I am simply pointing an observation out.

    I had originally started the research after seeing this on the AACC site: http://newaacc.org/member/acti

    10. What states do you provide services in?
    We currently do not provide services in KS, WI, WV, IL, CO, CT and ND

    It concerned me a little because it is giving the impression that you are able to assist any consumer in states excluding the ones listed above.

    I just wondered, how can a DS company be able to service consumers in that many states given the fact that there are so many restrictions regarding fees to do business in some of those states? Too many of which to get into right now… Although any information you have to that can show you are able to charge equivalent to 18% of the debt load in those states, it would be great for you to share. Especially if states are telling you that you do not need to be licensed as long as there are no complaints. That may be beneficial for new and existing companies out there…

    Based on my research I have found that a company doing business in the state of Florida shall obtain a license as a commercial telephone seller.

    So, let’s first start by going to The 2010 Florida Statutes:

    http://www.leg.state.fl.us/Sta

    Then I click on section 501.605 Licensure of commercial telephone sellers-

    (1)Prior to doing business in this state, a commercial telephone seller shall obtain a license from the department. Doing business in this state includes either telephone solicitation from a location in Florida or solicitation from other states or nations of purchasers located in Florida.

    My interpretation, whether you have clients in FL or not, this statute would apply to anyone located in Florida soliciting out or soliciting in.

    However you want to interpret that is up to you.

    The only other point that I was making is that members of the AACC are advocating transparency and the support of regulation, yet there are particular members who may not be following all of the necessary state guidelines and letting the public know that they are licensed to do business in “all 50 states” or in your case all states except KS, WI, WV, IL, CO, CT and ND. And look, I applaud the effort that you “……. meet all requirements in states that do not require licensing and we are licensed or pending in states that do require licensing.” -http://newaacc.org/member/acti… And if you are not servicing in those states until you are licensed than even better.

    The fact is this, even if you are a Credit Counseling company, a Debt Settlement company, A DS Law Firm, big or small, it doesn’t matter who you are, but if you are providing debt adjusting/debt relief services to consumers you still need to pay attention and comply with state and federal guidelines. Remember the FTC amended the Telemarketing Sales Rule to control when fees can be charged, they left it up to the states to determine how much fees can be charged and the licensing requirements that go along with it.

    Steve once said:
    “Debt relief companies that operate outside the boundaries of regulations and laws, don’t harm me per se, they harm the field of debt relief, harm good companies that do operate in accordance with regulation and laws and, most importantly, they harm a disadvantaged class of consumers at their weakest time.”– http://getoutofdebt.org/26058/

    Every Debt Relief provider now has even ground rules to play by. It is an excellent time for the industry, especially those who are looking to get started. You just have to pay closer attention to what the states allow and don’t allow…no one is above the law even if you are a no-advanced fee company that has no complaints..

    None of this is any legal advice, I am definitely no attorney but even if you are technically still not soliciting and enrolling any new clients on, you are still servicing your existing business. You should still look into whether or not you should have this license. You can go to this site to get your license: http://csapp.800helpfla.com/cs

  • SeanDSLegalPlan

    That’s true Mike! And no need at this time. I will take you up on your offer, hopefully in a few months. That’s very kind.
    And thank you for the kind advice advice on the Contact Form. I’m certainly no lawyer but I thought if the client reached out to you that it was OK to reach back.
    Any advice you can give me is much appreciated!

  • Mike Reilly

    Good for you Sean, that’s a long answer for “not bonded or licensed”!…If need be, I have all the requirements regarding telemarketing licenses, state by state with all the required compliance and bonding protocol, just let me know. One thing many people/company owners overlook is their web inquiry form…you need to place a required field “may we call you” with a drop down “yes or no” for total protection. Without it, as the rule reads, if someone fills your form out and is on the DNC and you call them, you’re in violation. The likelihood of trouble is slim but there are attorneys out there making a living doing it.

  • Mike Reilly

    Good for you Sean, that’s a long answer for “not bonded or licensed”!…If need be, I have all the requirements regarding telemarketing licenses, state by state with all the required compliance and bonding protocol, just let me know. One thing many people/company owners overlook is their web inquiry form…you need to place a required field “may we call you” with a drop down “yes or no” for total protection. Without it, as the rule reads, if someone fills your form out and is on the DNC and you call them, you’re in violation. The likelihood of trouble is slim but there are attorneys out there making a living doing it.

    • Anonymous

      That’s true Mike! And no need at this time. I will take you up on your offer, hopefully in a few months. That’s very kind.
      And thank you for the kind advice advice on the Contact Form. I’m certainly no lawyer but I thought if the client reached out to you that it was OK to reach back.
      Any advice you can give me is much appreciated!

      • Debt Relief Advocate

        That is a reasonable response.
        Excellent job Mike, way to lend the helping hand. Beat me to the punch.

        I am certainly no lawyer either, good catch on the forms.

        Personally, I am all for federal regulations and further I am for individual state regulations, I believe each should be followed as closely as possible. Of course, anyone in the course of business has made mistakes, it happens. And it is learning from those mistakes that is going to improve who you are as a company. No complaints, hey that’s great. This isn’t about complaints. I am talking about compliance with state and federal regulations. And I am simply pointing an observation out.

        I had originally started the research after seeing this on the AACC site: http://newaacc.org/member/active-debt-solutions

        10. What states do you provide services in?
        We currently do not provide services in KS, WI, WV, IL, CO, CT and ND

        It concerned me a little because it is giving the impression that you are able to assist any consumer in states excluding the ones listed above.

        I just wondered, how can a DS company be able to service consumers in that many states given the fact that there are so many restrictions regarding fees to do business in some of those states? Too many of which to get into right now… Although any information you have to that can show you are able to charge equivalent to 18% of the debt load in those states, it would be great for you to share. Especially if states are telling you that you do not need to be licensed as long as there are no complaints. That may be beneficial for new and existing companies out there…

        Based on my research I have found that a company doing business in the state of Florida shall obtain a license as a commercial telephone seller.

        So, let’s first start by going to The 2010 Florida Statutes:

        http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&URL=0500-0599/0501/0501PartIVContentsIndex.html&StatuteYear=2010&Title=-%3E2010-%3EChapter%20501-%3EPart%20IV

        Then I click on section 501.605 Licensure of commercial telephone sellers-

        (1)Prior to doing business in this state, a commercial telephone seller shall obtain a license from the department. Doing business in this state includes either telephone solicitation from a location in Florida or solicitation from other states or nations of purchasers located in Florida.

        My interpretation, whether you have clients in FL or not, this statute would apply to anyone located in Florida soliciting out or soliciting in.

        However you want to interpret that is up to you.

        The only other point that I was making is that members of the AACC are advocating transparency and the support of regulation, yet there are particular members who may not be following all of the necessary state guidelines and letting the public know that they are licensed to do business in “all 50 states” or in your case all states except KS, WI, WV, IL, CO, CT and ND. And look, I applaud the effort that you “……. meet all requirements in states that do not require licensing and we are licensed or pending in states that do require licensing.” -http://newaacc.org/member/active-debt-solutions. And if you are not servicing in those states until you are licensed than even better.

        The fact is this, even if you are a Credit Counseling company, a Debt Settlement company, A DS Law Firm, big or small, it doesn’t matter who you are, but if you are providing debt adjusting/debt relief services to consumers you still need to pay attention and comply with state and federal guidelines. Remember the FTC amended the Telemarketing Sales Rule to control when fees can be charged, they left it up to the states to determine how much fees can be charged and the licensing requirements that go along with it.

        Steve once said:
        “Debt relief companies that operate outside the boundaries of regulations and laws, don’t harm me per se, they harm the field of debt relief, harm good companies that do operate in accordance with regulation and laws and, most importantly, they harm a disadvantaged class of consumers at their weakest time.”– http://getoutofdebt.org/26058/steve-rhode-is-a-scam-and-getoutofdebt-org-sucks

        Every Debt Relief provider now has even ground rules to play by. It is an excellent time for the industry, especially those who are looking to get started. You just have to pay closer attention to what the states allow and don’t allow…no one is above the law even if you are a no-advanced fee company that has no complaints..

        None of this is any legal advice, I am definitely no attorney but even if you are technically still not soliciting and enrolling any new clients on, you are still servicing your existing business. You should still look into whether or not you should have this license. You can go to this site to get your license: http://csapp.800helpfla.com/csrep/

      • Anonymous

        Thank you for the information.
        Let me point out a few things:

        We are not making any telephone solicitations at this time. I read the Telemarketing license requirement the same way you do. It does not apply to us, however, as we are not operating a telephone solicitation operation.

        We do have the ability to enroll clients in Consumer Credit Counseling. We have not placed a new client in a long time however, but we still have the ability to do so. We will update the list of states we can place clients. At the time we gave that information regarding state’s licenses, it was correct.

        As I stated before, we are a very small company and we have not solicited any new business in nearly a year. Before we begin, we will meet state and federal requirements for that operation.

      • Angelo

        We are able to provide services in the states listed on our website. What you are missing is that Debt Settlement is not the only choice we offer. We are able to offer CCC programs, Debt Management Programs, Bankruptcy referral as well as consolidation loans to consumers in those states. Would you be so kind as to provide your company website address ? I’d love to see the details of your program and the terms and conditions posted on your website.

      • Debt Relief Advocate

        Angelo, can you point to the section on your site that outlines the states that you are able to provide services in? I cannot find this…

        So, for your CCCS programs that you refer clients into, are you referring those clients to Debt Free America? Or is it through Care One? Are the CCC programs the same as Debt Management Programs? If not, then how are they different?

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