The Canadian publication Maclean’s has recently published a scathing article on the debt settlement company Cambridge Life Solutions.

But the underlying story here is how Cambridge Life Solutions just shifted a business model now prohibited in the United States to push on unsuspecting fun loving Canadians.

But the model Cambridge Life uses is a controversial one. The United States Federal Trade Commission (FTC) calls one of the core elements of its business “an abusive practice.” The model it uses, which relies on consumers paying fees to the company before it reaches deals with creditors, was outlawed in the U.S. in 2010 and is illegal in Manitoba. The company says its program takes discipline, and those who see it through often see outstanding results. Phill Allopenna, the company’s Toronto branch manager, says successful clients pay back an average of 40 cents for every dollar they owe. Critics, however, say the program can leave the unwary with more debt, less money and bad credit.

It would be interesting to see audited company data that supports the repayment claims in accordance with the proper way to calculate success rates laid out by the Federal Trade Commission. What I find curious is that the company spokesperson allegedly relates the success rate for a reduction in the debt to be 40%, a seemingly pulled out of the ass number that many shuttered debt settlement companies used. Is there any basis in fact for that assertion?

Clients also agree to pay service fees equal to about 15 per cent of their original debt. Most of those fees get paid up front, before Cambridge Life strikes a deal with creditors. For the first three months of some programs, every penny customers pay into the plan goes to the company. In one contract Maclean’s obtained, a customer paid Cambridge Life more than $2,000 a month in service and maintenance fees for the first three months.

This advanced fee model in the U.S. was horrible and helped consumers to get sued faster by their creditors rather than settle their debts. As far as I know there is no study that shows taking fees in advance from consumers and ignoring their creditors is beneficial to anyone other than the debt relief company.

Cambridge Life Solutions doesn’t operate in Manitoba or Alberta. But in the provinces where it does—all the others minus Nova Scotia and Newfoundland—Allopenna says clients have had their debts cut by as much as 90 per cent. He would not say, however, what percentage of clients who enrol in the program actually finish it.

And that’s the point, isn’t it. The true question is if the Cambridge Life Solutions program is beneficial to consumers. If it is then why not share that data and results in an open and transparent way. Some may feel that not sharing that data is a way for the company to shield itself from criticism.

As for Alan Thicke [celebrity spokesperson], he’s standing by the company. “Debt relief is a relatively new and growing product,” he said through a spokesman. “My due diligence clearly supports Cambridge as a leader in the field.” – Source

LOL.

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