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