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Home > Debt Relief Industry > Robby Birnbaum Provides Interesting Review of What Went Wrong With U.S. Debt Settlement Industry

Robby Birnbaum Provides Interesting Review of What Went Wrong With U.S. Debt Settlement Industry

Robby Birnbaum, a lawyer with the law firm Greenspoon Marder and an executive with both TASC (The Association of Settlement Companies) and AFCC (American Fair Credit Council) recently participated in an enlightening interview with Richard Cooper from Total Debt Freedom in Canada.

Putting the interview into context, with the lobbying and pushing back TASC engaged in against regulation for the debt settlement industry and FTC rules for the debt settlement industry, I found the interview very interesting.

Birnbaum talks about how participants in the debt settlement industry in the U.S. had a very low threshold for entry and many from the mortgage industry saw debt settlement as an easy conversion of their sales staff to reach consumers who they may have previously reached.

It was an attractive industry for those old mortgage sales organizations because there was not a lot of regulation to protect consumers. Birnbaum says, “It became a numbers game. And the numbers game was basically how many consumers could you convince to signup for your company or the company you were doing business with as quickly as possible. Specifically, they were problematically marketing statements, advertising or phrases that promised consumers things like we will eliminate your debt quickly, or we have special government programs or special government connections, or we have power over your creditors or we know your creditors and can work with your creditors.”

Birnbaum goes on to say that a number of other claims made by the industry or marketers were problematic as well including the ability to stop collection calls, eliminate debt quickly, or you won’t get sued.

Problems reached a height around 2009 with aggressive marketing and advertising with mentions of bailouts, government programs, some used ads that included footage of President Obama.

Birbaum says, “Thankfully the government stepped in and put some marketing restrictions in place that helped to clean up a lot of the industry in the U.S.” Ironically I don’t remember TASC embracing the process at the time and wanting the FTC to pass new regulations to protect consumers. Regardless now, it seems Robby Birnbaum now feels the new FTC Telemarketing Sales Rules were necessary and good.

The insight provided by Birnbaum into the type of service consumers should expect from a debt settlement company today is right on target. He says, “The good actors even back then and still today were not over promising on results. Their websites, direct mail, all of it, was very fair because they were really focused on customer retention and if you can get a long term customer in your program and build that relationship, not just for settlement services, but for more services, it is to basically to keep the customer happy. And you do that through not over promising, you do that through realistic expectations, being the customers partner in the program and holding their hand.”

You can watch the entire interview here.

Source

Robby Birnbaum Provides Interesting Review of What Went Wrong With U.S. Debt Settlement Industry
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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.
  • stopping heather

    Birnbaum is a scumbag. Back when all those “Heather With Account Service” calls were going around, I started a site about them, found out who the major players were and identified them.
    Guess who their lawyer was? Robby Birnbaum. I had to switch hosts after he sent baseless threats, someone, and I don’t know for sure who, but someone posted my name and address on complaint sites directing people to contact me.
    He never sued me even though his client was totally innocent… A few years later there was his client front and center in court.

  • 2Cents

    The AFCC is dead. If any company is still paying them dues or are participating as a means of attaining some level of “perceived credibility” is compromised. Everyone flocked to Robby’s side thinking he was some fantastic expert in this space and quite frankly, he was responsible for leading many good people to the “dark side”. I watched people send out deceptive mailer after deceptive mailer waving the banner of Robby’s approval. He charged them money to “review their contracts and models”, most of which have been reviewed multiple times by multiple firms, then charged them for bad legal advice, then took their money through the AFCC, then took more money from them to host afcc conferences, then takes their money again to represent them through litigation when they are caught doing things they shouldn’t have been doing in the first place. A fool and his money are easily parted, I guess. He has allowed AFCC banner carrying members to run some of the WORST deceptions in the history of the industry. I have heard stories about Robby’s private (and pseudo-public) life involving drugs and “loose living” while partying it up at the trade show events. Like I said, “heard stories” from credible sources, of course or I wouldn’t even say it. It seems that wherever there is some sort of trouble, RB is somehow tied into it. It;s deplorable that the ESP posse got away with paying family members, associates and affiliates huge chunks of money, including $20K to Robby’s firm, while they flushed a BK and screwed thousands of consumers that believed their scam. Listen, don’t shoot the messenger, but if you are still involved with this organization, you are most likely a dirty firm. RB is NOT an authority and now he is doing damage control to try to keep Greenspoon Marder from being dirtied up from his nonsense. Why else would you speak so many contradicting statements through so many venues. It’s a bummer that these types of people can run rampant and destroy an industry, further screwing the consumers that need the help. Just my 2 cents…

    • CHRIS

      The Sun Sentinel is reporting United Financial Systems received more than 440 complaints since the start of 2010. This is more complaints than any other South Florida business has received.
      Robby Birnbaum, the lawyer for United Financial Systems “blamed the financial difficulties on a recent rule change by the FTC that made it difficult to generate new revenue.”
      This is Robby defending a Company that couldn’t make it under the new rules. Wnder how much his bill was??
      He wrote in a July email to the Attorney General’s Office that the company’s problems were the result of a recent rule change by the FTC that made it difficult to generate new revenue.
      http://articles.sun-sentinel.com/2011-12-14/news/fl-united-financial-systems-20111214_1_debt-management-due-refunds-capital-debt-relief

  • http://DamonDay.com Damon Day

    Reminds me of that joke… How do you know when a Lawyer is lying?
    Comment if you know the punchline :-)

    What really cracks me up is that these guys forget that Google “Knows What They Did Last Summer”

    It takes a special breed to be able to shroud both sides of an issue with a consumer protection cloak and take whatever side makes them the most money at the time. Either advance fees help consumers or they hurt them.

    These guys (advance fee settlement companies and the attorneys that represented them) claim advance fees hurt consumers and fought the FTC tooth and nail by dreaming up every nonsensical argument they could muster, until they aren’t allowed to charge them anymore.

    Then the Red Sea parted and all of the sudden, it is thank the lord Jesus in heaven that the FTC stepped in and put a stop to this horrible practice that was hurting consumers. We worked side by side with them on this important consumer protection law. We only charge fees on performance.

    TASC in 2009 – Quoted from their website – “making compensation dependent upon securing a settlement would turn the debt settlement company into a guarantor of results, an ethical violation.”

    Wow, give the marketing department a bonus. Not allowing settlement companies to rape their clients before they do anything is actually an ethical violation? If you steal 10,000 dollars from a consumer, do nothing, that is totally fine. Not charging the 10,000 would be an ethical violation – Brilliant.

    TASC in April 2010 – Letter to FTC – “We believe that the advance fee ban will have a significant negative impact on consumers as a result of increased creditor leverage in the settlement negotiation process.

    October 2010 – Advance Fee Ban Passes, despite the millions that TASC member companies spent to stop it.

    TASC in 2011 – Quoted from their website – “TASC proposed and continues to believe, that a less intrusive and equally consumer-protective solution would have been to mandate a full refund policy, backed up by a surety bond. However, after much discussion, both internally and with regulators, consumers and other interested parties, we have determined that the FTC’s position of tying fees to performance is an acceptable way of ensuring that consumers actually get what they pay for and expect.”

    Translation – (my words) We spent millions of dollars and had our asses handed to us, so we will now agree, albeit with strong objections in a lame attempt to save whatever face we have left, that the advance fee ban is actually a good thing for consumers.

    June 2011 – TASC is now the AFCC – Nothing like a good old fashion name change so consumers can’t do a google search and clearly see you were against them before you were conveniently for them (empty words) once you had no other choice.

    Quoted from the AFCC website today- “FAIRNESS • We fight for fair treatment for our customers by their creditors, and we provide fair services to the customers we serve. We only accept fees after we have successfully resolved a debt.”

    I guess they are saying that they weren’t fair until the law required them to be huh?

    Isn’t that an ethical violation?

    • Guest

      thanks for the history lesson Damon but aren’t you just “Flogging a Dead Horse” we all know the history but hopefully most of us left in the industry are now focusing on the “Future”

      it must be exciting for you to find something here these days that you feel you can post a long winded comment to

      • http://DamonDay.com Damon Day

        You might know the history, but most consumers don’t. Isn’t it important to show that this new breed of consumer advocates are the same people that had no problem ripping of consumers when they could get away with it? Or does that idea just hit to close to home for you?

      • AnotherGuest

        Damon why would it be important? Why does a consumer today need to hear the same old rant from you about who (in your opinion) were the bad apples in the “old” debt settlement industry and what they did or didn’t do in certain situations? Why is the lawyer lying joke appropriate?
        Even if I agreed with your take on the history of the industry (and lawyers), I don’t see how shouting it out helps today’s consumer to plan their strategy to get out of debt.
        Debt relief is a highly regulated industry today with people and companies here to help consumers. You clearly have a narrow view of the viable options available to consumers today and also clearly are no friend of debt settlement. The wild west has been cleaned up Damon but luckily (as the previous commenter noted) every once in a while a post about who you think was a “bad apple” in the gold ‘ol days comes along…I too bet it makes your day!

      • http://DamonDay.com Damon Day

        Clearly the problem is that you think the problem has been fixed.

      • http://DamonDay.com Damon Day

         Are you actually asking me why a consumer might want to know that a company they are potentially staking their families financial future on might be a company that is of highly questionable ethics?

        Well I guess it is a good thing all the bad actors are gone and we don’t have anyone left misrepresenting anything to consumers. (Sarcasm emphasized for those of you that missed me and might have forgotten how I love it so.) 

        ;-)

  • gg

    Interesting… I also found Richard’s full blog post here with the interview embedded:  
    http://blog.totaldebtfreedom.ca/2012/02/us-debt-settlement-the-rise-fall/

  • Keeping_it_real

    Freaking Hypocrite!  

    How can you sit here and point out the problems in the industry when YOU were the attorney defending these companies and YOU headed the lobbying efforts through TASC and fought to keep advance fees?   Its attorneys like you who allowed this problem to continue for so long, to the point the FTC HAD to step in.  And you continue to represent those who still harm consumers except they are hiding behind the attorney exemption.  If advance fees were problematic, how is the attorney model not ?…and more importantly what does that say about the attorney who represents them but in public calls them problematic??Haven’t you done enough damage to this industry Robby? 

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