Today Damon Day and I talk about three quick topics. The first is a reader comment from our last podcast on debt validation. Danny sure is irritated by the podcast. Next, we talk about the termination of financing agreements for student loan assistance services. Finally, we discuss how the FTC is sending refund checks to people that were suckered into a business opportunity.
Steve Rhode: [00:00:00] Hey, listening to the, get out of debt guy show and I’m back again with Damon Day, DamonDay.com. Damon we didn’t do these shows for long periods of time. It was months and sometimes, maybe even a year between shows.
[00:00:13] And I think we’ve done now three in one week. So we’re on a roll.
[00:00:17]Damon Day: [00:00:17] hopefully we can keep it going.
[00:00:18] Steve Rhode: [00:00:18] Yeah, hopefully. So the last show we talked about a debt validation and the magic Beanstalk letters. So I’ve got to read you this comment that just came in.
[00:00:31]This comment that just came in about the last podcast that we did the guy writes in, I can tell now what he’s talking about is the transcript from the last podcast. Okay. It says transcript at the top. So he writes in, I can tell the person who wrote all of this either works for a bank or doesn’t know what to do when you receive all of the documentation required in debt validation.
[00:00:58] The whole point of a creditor validating these accounts is to have an attorney conduct an audit on the information and find where the creditor charged you incorrect fees and raised your rates illegally, which are violations of your. It sounds like a salesperson, doesn’t it? Yeah.
[00:01:15] he goes on to say, we all know these big banks are crooks and I’m tired of people defending these crooks.
[00:01:21] My name is Danny and I works with attorney and auditing these.
[00:01:27] Damon Day: [00:01:27] He said, I works with the attorney after he, he got mad at our,
[00:01:33] Steve Rhode: [00:01:33] My name is Danny
[00:01:34] Damon Day: [00:01:34] comment.
[00:01:37] Steve Rhode: [00:01:37] and I works with attorneys.
[00:01:40] Oh, God.
[00:01:42] Damon Day: [00:01:42] Danny. The funny thing is, and I agree with the guy. I Banks do rip people off all the time. I’m not defending the bank. I’m just saying the consumer is not going to get away with being able to get some magic Beanstalk letters running up 50 grand. This is the real world we live in running up 50 grand in credit card debt.
[00:02:01] However they did it doesn’t matter. And then just being able to send off some letters and, oh, we found where they raise your interest rate, then we’re allowed to do that or whatever they think they’re going to do. And just let the consumer walk. Now I agree. There are cases where that can happen and there are flukes out there, but to try to base your entire strategy around, we’re going to send these letters off and the banks are going to just leave you alone is a fool’s errand case in point.
[00:02:29] Steve Rhode: [00:02:29] Yeah. Oh, yeah. Tell me about this thing.
[00:02:31]Damon Day: [00:02:31] Case in point, I got an email actually yesterday from somebody that I’m not gonna read it verbatim, but basically she’s got some debt. She says she’s being sued by a collection agency. She’s got a hearing coming up. She’s been dealing with this for over two years. And here’s the key part I’ve validated the debt.
[00:02:52] I think what she means is I’ve asked them to validate the debt and all I have received were copies of statements, which is what we talked about on the show that I There’s no requirement that they have to do the kind of validation that the debt validation companies claim they have to do. So the creditor or the collector just responded with copies of statements.
[00:03:12] That’s your name? That’s your address? Unless she’s disputing that she goes, I’m not accepting or denying the debt. I’m just tired of dealing with it. And basically she’s asking if she can settle it, which is what we talked about. On the show, like if you’ve got the money to settle it, you might as well settle it rather than, and again, I don’t know if she hired somebody to do this, or she tried to do the magic beanstalk letters on her own, but now here she is two years later getting sued.
[00:03:42] And now she’s trying to deal with the lawsuit. Whereas if she would’ve just dealt with the debt two years ago, it would’ve been long gone.
[00:03:49] Steve Rhode: [00:03:49] At debt validation,
[00:03:50] Damon Day: [00:03:50] you go.
[00:03:50] Steve Rhode: [00:03:50] to the consumer financial protection bureau only required. The identity of the debt collector or the creditor would their address and phone number, the amount of the debt, including any fees, such as interest or collection costs, what the debt is for and when it was incurred and information about whether you or someone else may owe the debt you can request all sorts of other things, but it doesn’t mean they have to provide those.
[00:04:16] Damon Day: [00:04:16] Maybe we should just provide her Danny’s name. He works with attorneys and
[00:04:22] Steve Rhode: [00:04:22] here’s the funny thing about Danny’s comment too, is that, that he talks about the big banks, the crooks and everything else, where the majority of people that are trying to validate these things are actually working with collection companies because the debt collectors
[00:04:39] Damon Day: [00:04:39] Yeah. Yeah. And you talk about you got the granted, you got these banks that banks aren’t out for the interests of the consumers granted, but neither are these debt validation companies. The consumers are getting screwed on both ends, man.
[00:04:54] Steve Rhode: [00:04:54] Yeah there’s more to Danny’s comment. I didn’t read it cause it’s actually pretty long. He goes on to say.
[00:05:00] Damon Day: [00:05:00] Oh,
[00:05:01] Steve Rhode: [00:05:01] But of course, this is talking about the transcript, but of course he doesn’t mention that because he either works for these crooked banks or really doesn’t know what he’s talking about.
[00:05:12] We all know these big banks are crooks and I’m tired of people defending them. I works with attorneys.
[00:05:20] Damon Day: [00:05:20] Yeah and I’m certainly open, I would love if somebody wants to send in some court cases where the judge has looked at this stuff and said, oh yeah, absolutely. They were not able to properly validate the data. And so this case is dismissed. I’d love to see that.
[00:05:37] I know there are cases out there where cases get dismissed, not because of of the letters, but because attorneys just don’t want to deal with it. So there are one offs out there that does work sometimes, but what I’d love to actually see a court case where the judge enters the written opinion and basically validates the validation strategy, I would like to see.
[00:05:57]Steve Rhode: [00:05:57] One-offs like you said but we digress because the thing I wanted to talk about today was this settlement is class action settlement with equitable acceptance corporation now equitable acceptance. Was sued along with all of the student loan debt relief companies that were using them back in 2018, I’m going to describe exactly what the lawsuit said, equitable acceptance was doing it.
[00:06:25] And this is something that I tend to get a lot of questions about. Equitable acceptance was. Actually helping to fund student loan debt relief services companies that said that they could reduce your student loans. What we talked about last time, where they say whatever they can to get your payment lower.
[00:06:44] But the lawsuit filed said the scheme has masterminded by defendant equitable acceptance corporation, and depends on the coordinated efforts of EAC and individual dealers. The dealers learn. Vulnerable federal student loan borrowers with promises of loan forgiveness, which the dealers do not and cannot offer.
[00:07:07] At EACs direction, they sell the service for $1,300 because few borrowers can afford that sum upfront the dealers offer a payment plan where you pay 39 to $49 a month, but the dealers do not in fact offer any payment plan. Instead they steer the borrowers to EAC to provide funds. EAC extends each borrower and entirely new loan in the form of a maxed out line of credit for the full price of the services charging 21% interest.
[00:07:39] Steve: [00:07:39] And it adds hundreds of more dollars to the price as part of the service. EAC. I see
[00:07:48] Damon Day: [00:07:48] What a gig.
[00:07:49] Steve Rhode: [00:07:49] Ah, yeah, I see pays, but the front end dealers, the salespeople which are rewarded for each new loan that are generated. And then when they go out of business the people are left without the company to provide that service, but they still owe, the new individual loan.
[00:08:05] And this has been a mess I was talking with regulators years ago and You can keep going. After all these individual student loan service, debt relief, scammy companies, all you want, but if you’re going to cut this thing off at the knees, you’re going to have to stop this flow of money. And so finally it wasn’t the government, but a class action lawsuit was filed in 2018 and it has just come out that the settlement.
[00:08:37] That is agreed to in the class action suit prevents equitable acceptance from collecting on any of those contracts that they generated. So if you’re a consumer and you fell into that pit with student loan, debt relief services, And equitable acceptance was trying to collect then a need to pay attention, watch your mail.
[00:08:57] You might get something in the mail about a settlement expect to get pennies on the dollar if you’re going to get any refund. But the big good news is that these things were, will No. longer be collected on. All right.
[00:09:09] Damon Day: [00:09:09] got an email two, two days ago, and apparently I was added as a class member in a suit with. Against apple, I don’t know anything about it, but the email said I win and I am entitled to, I think it was $3 and 9 cents and just click here. So I clicked on it. I’m like, what is this? And it’s like this pages of information they want from me to fill out, cause I’m the, a class member, a parent, I don’t even know what it was for. I’m looking at it going. I’m not going to fill this out for $3, man. I just deleted it. I’m like, you know what? You keep my $3. Seriously going back to this EAC thing,
[00:09:55] I know what they’re doing, but you remember what the mortgage crisis, the mortgage fiasco one of the, there was lots of reasons for it back in oh 7 0 8. But one of the big problems was you had all these junk loans being sold and the reason they were being sold is because the people doing the selling.
[00:10:11] We’re not responsible for how it turned out, because they would just package them up and sell off these these bad loans and mortgage backed securities or whatever. And it was the poor investor that got left holding the bag. So you’ve got something very similar here. You’ve got these student loan debt relief sales outfits, where at this point.
[00:10:31] The sky’s the limit on what they could promise, because they’re they’re selling a service for 30 or $40 a month. That’s supposed to take place over years and years as you’re going through these programs, but they’re getting paid all up front. They’re basically taking that back end potential issue and passing that off to passing off that risk to in this case, EAC.
[00:10:51] So the sales guys were free to promise anything because they’re going to get paid all of the money right up front. It’s not like they had to perform that service and meet the obligations that they were promising if they couldn’t do it, that’s EACs problem.
[00:11:06]Was a great deal for these companies.
[00:11:08] Steve Rhode: [00:11:08] what I don’t know is what the discount was for those companies to get paid upfront. Now, the ingenious part about it as a scheme is that EAC was not the student loan company, they only thing that they were doing was offering the financing and the contract. So when the underlying company disappeared, which they seem to do all the time, EAC said you still owe us the money.
[00:11:34] Anyway. So now you’re not getting the service. You owe a very expensive contract on services. You’re not getting, and EAC was going after people to pay for these things. It was a mess.
[00:11:46]And we have too much experience in this industry to know that this is the end of EAC, but somebody else will come along and do the same damn thing.
[00:11:57]Damon Day: [00:11:57] Yeah, but probably not the end of the people behind it. They’ll just change the name and do something.
[00:12:01] Steve Rhode: [00:12:01] Yeah.
[00:12:01]Damon Day: [00:12:01] what’s interesting though, when you think about it, if the consumer went out on their own and went, cause you think of EAC was, and I haven’t even read the article, but EAC was probably trying to claim that they’re just the financer, right? So they shouldn’t be held responsible.
[00:12:12] They just provided the money. But of course, then they. They followed all of that and realized that EAC was actually seeking these deals out. In a normal situation, if you say, as a consumer, I want to buy this service for 1300 and I put it on my credit card or went to a bank. Like a lending club loan or something like that, lending club wouldn’t be on the I’d still be on the hook for that $1,300 for whatever the terms was, whether that company went out of business or not, and lending club would have nothing to do with that.
[00:12:36] So it is interesting. You have a situation here where they’ve identified. The fact that EAC was must have been acting in a much higher capacity than just an innocent lender blindly providing people money because of different qualifications. So they obviously had their hand in the cookie jar.
[00:12:53] Steve Rhode: [00:12:53] Yeah.
[00:12:53] According to the suit, they were soliciting dealers and vetting them as being good participants in this program. So yeah, they were deeper into it than just a finance company. Another thing out is the federal trade commission is sending checks to people who are deceived into buying worthless online marketing services.
[00:13:15] Of course people are going to get a fraction of what they actually spend on this stuff,
[00:13:18] but this is one of those online services. It sounds very familiar to a story that you told me a few years ago where a company sold business consulting or online sales development services, where people would market products . And these companies said we can sell you a package.
[00:13:38] That’s going to make you millions. tell me about that story again, about the the grandmother that bought into something like this.
[00:13:44] Damon Day: [00:13:44] And unfortunately this kind of stuff happens all the time. Tends to be with old, older clients or potential clients, cause I have conversations with consumers every day and what’s going on and how did you get into the dead? And I do have some that I’ve talked to where it’s business opportunities because they’re trying to start a second career or whatever.
[00:14:02] And I don’t remember the. Details on this situation. I remember telling you the story where I just got off the phone with the lady. And it was just like, I cannot believe this because she was essentially saying, look, I found the service and it’s, I don’t remember how much, five grand, 10 grand, whatever it was.
[00:14:18] Of course she had to put it on a credit card. Yeah. It was a lot of money. And the whole pitch was basically. It was like an e-commerce thing where they’re going to set up a website and that sells products. And they’re going to drive people to the website and facilitate the sale and do everything.
[00:14:35] Literally, she was just going to have to put in her five grand or 10 grand, and then it was going to be like a money tree. It was just going to all hands-off they do everything. And then she sits back and collect your checks.
[00:14:46] And she was like, next month it’s going to start paying out we’re right around the corner. And then I’m going to get this money. I’m going to pay this debt off. And I wanted to be supportive without I didn’t want to blow up her dreams, but I’m like sitting there going, there’s no way.
[00:14:59] And I told her, I said look, here’s what I don’t understand. If they really had this turn key system where they could literally create the websites, drive the traffic and make the money. Why would they need you? Like, why would they need your five grand? They’re doing all the work wouldn’t make.
[00:15:18] It’s such a great thing. Why wouldn’t they just put their own five grand into it, make the websites for themselves and make all the money. Like it doesn’t make sense. This is like the greatest investment ever.
[00:15:28] Steve Rhode: [00:15:28] The funny thing is that I’m old enough now that I actually had a life before computers. And before we had this retail internet store scam it was the vending machine scam. All you have to do is buy these 20 machines and we’ll help you locate them.
[00:15:43] And you’re going to make money just going around collecting. It was the same thing. It was just a different product.
[00:15:48]Damon Day: [00:15:48] I fell for that. I’m not as old as you, but I did a bubble gum machines those ones with the big globe and the ball swirls around. But yeah, I remember those whole things. And I used to do in college, I got into this, it was coupon books where you had these great coupons and double coupons.
[00:16:08] And so I would, I bought like boxes of these coupon books and then my job was to go sell it to people. I think it was $25. Thousands of dollars in savings in the coupon books. I think I sold five to my friends, and then after a while I was like had all these coupon books and I even realized what a pain in the ass.
[00:16:27]It was very difficult to actually earn your $25 back it just by utilizing the coupons, but yeah it’s very similar stuff, but I just told her, I said think about it logically. It doesn’t make sense if all they need from you is. They don’t need you. If they can make this money machine without any work on your part, they could just do it for themselves because it doesn’t cost them $5,000.
[00:16:50] Cause that’s, they’re going to have some profit in there. So they can probably what they’re doing for you probably cost them 400 bucks and they make five grand. And then in three months they say, I don’t know why it’s not working, but if you put in another 5,000, we can really ramp it up for you.
[00:17:05] Steve Rhode: [00:17:05] let me give you.
[00:17:05] the platinum package. If I remember correctly, this was a retail website where they would put products that were available online and people would buy them. And this poor woman, she had no clue about. What she was doing, starting a retail site. And if I remember correctly, the pitch was something like your own Amazon store
[00:17:30] if they’re setting up a hundred of these things how are they going to find her.
[00:17:34]Damon Day: [00:17:34] It would be no different than you going out to the middle of the desert, where there’s no roads and no people and opening up a store. That’s the same thing. You got a website that nobody knows about and nobody’s going to visit. And you’re like, I don’t know why it’s not making it. Because nobody knows about it.
[00:17:52] And why would they go to this random? And I looked at it, it was not even a nice looking store that they put together. It was one of those scammy looking scuzzy sites that you’d never even consider putting in a credit card into you. Just go to Amazon and buy the same thing for probably the same price.
[00:18:08] Steve Rhode: [00:18:08] Yeah. So anyway, people are going to be getting some checks the checks average over $511 each, which is like I said, pennies on the dollar, especially when these people are putting in five and $10,000. They’re not getting a whole bunch of money
[00:18:23] Damon Day: [00:18:23] Oh, yeah. Oh, I found that email. This is and I don’t, I honestly haven’t even looked at it cause I just archive did a whatever, but I went back and found it. And this was like five days ago, grace class action. Honestly, I don’t even know if this is a scam or what it is. Cause I didn’t I never applied for any kind of class that any of that kind of stuff, it’s always a waste of time, but it’s so it could be a scam it says digital checking Grace class action. And it says pursuant to the terms of the class action settlement, grace at all versus apple, Inc. And it gives a case number. You’re a class member. Your award has been calculated in accordance with the settlement and the check-in close is valid for 90 days. But as far as I know, they’re just fishing for information.
[00:19:06] That’s going to be a scam, but I’m not going to take the chance for $3 and 6 cents.
[00:19:11] Steve Rhode: [00:19:11] That’s like all of a sudden I’m getting these text messages about, oh yeah. Hey lucky you, your Costco account just received a receipt that has this code on the bottom and you won first and our AirPods raffle. Okay.
[00:19:27] I don’t go to Costco so I know it’s a scam right off the. But there’s never a shortage of people who want to take your money.
[00:19:35] Just don’t let them be smart.
[00:19:37] Damon Day: [00:19:37] Okay. I’ve been trying to reach you about your used cars warranty.
[00:19:42] Steve Rhode: [00:19:42] I’m not even polite anymore. I just go click everyone’s so concerned about my used car, my extended warranty, which I don’t have.
[00:19:51] Damon Day: [00:19:51] Yeah. Your used cars, extended warranty. I’ve been trying to reach you. It’s about to run out. You need to give us more money.
[00:19:57]Actually be legit because I’m thinking it’s $3. If it was a scam, it would need to be like three or four, like something to entice me.
[00:20:03] So the fact that it’s $3, it’s probably legit. It’s stupid. I’m not going to go do anything and fill in any form for $3, but it’s probably legit because that’s about what you’re people think that the government can protect you from these guys. And if they if they were a scam, they wouldn’t be able to have this website or whatever.
[00:20:22] The reality is there’s just so many shams out there. There’s no way the agencies can keep up with it. And by the time they do track them down and go after them, it takes years. This one that you’re talking about, this EAC, you said that was filed in 2018. So that was three years ago. And then how long did it take before that even started?
[00:20:40]Steve Rhode: [00:20:40] I think I started writing about them in 2015.
[00:20:44] Damon Day: [00:20:44] we are six years later.
[00:20:46]Steve Rhode: [00:20:46] Hey, did you ever own an apple?
[00:20:48] Damon Day: [00:20:48] Yes. Four S four
[00:20:50] Steve Rhode: [00:20:50] That’s what it was. That website was a
[00:20:53] Damon Day: [00:20:53] $3, baby. What? I pay $800 for that phone back then.
[00:20:57] It’s legit.
[00:20:58] Steve Rhode: [00:20:58] who were people who owned an apple iPhone four or four apps that were in California on April
[00:21:05] Damon Day: [00:21:05] me, baby. That’s me. I got it.
[00:21:09] Steve Rhode: [00:21:09] So what was the settlement?
[00:21:12] Damon Day: [00:21:12] You said we was going to Sizzler.
[00:21:15] Steve Rhode: [00:21:15] There’s an $18 million settlement fund.
[00:21:17]Damon Day: [00:21:17] And I got $3
[00:21:19] Steve Rhode: [00:21:19] You got $3.
[00:21:21]Damon Day: [00:21:21] Yeah, at least the government’s looking out. So what happened? What was the big beef? What did what was my problem with my
[00:21:27] Steve Rhode: [00:21:27] A lawsuit alleging that apple interfered with FaceTime. For iOS six and early operating systems. Apple’s FaceTime feature would no longer work on the apple iPhone four or four ass unless users updated the operating system.
[00:21:43] Damon Day: [00:21:43] So the attorney found somebody that had some kind of like older legacy phones, and they’re saying that apple purposely wouldn’t let it work. So people were forced to buy a newer.
[00:21:55] Steve Rhode: [00:21:55] No, they were forced to update their operating system. There’s no charge.
[00:21:58]Damon Day: [00:21:58] So this is what an 18 million you said.
[00:22:01] Steve Rhode: [00:22:01] Yeah. $18 million settlement fund.
[00:22:03]Damon Day: [00:22:03] So everybody, you got $3. And so the attorney’s probably got what, 40% of their 18th, the 18 million.
[00:22:10] Steve Rhode: [00:22:10] I, don’t know what they got. Please see the settlement
[00:22:12] Damon Day: [00:22:12] the whole thing is just it’s ridiculous. So what if apple doesn’t charge for that? You’re saying the whole beef was apple said, you need to update the IOS because the old one won’t support this.
[00:22:25] And somebody had a problem with that. So there became a class action and some attorney decided it was a good idea. So apple had a problem. $50 million defending that. And then they started to pay out 18 million and people wonder why they have to now charge $1,200 for freaking I-phones. Cause crap like this.
[00:22:43] Give me my $3.
[00:22:44] Steve Rhode: [00:22:44] $18 million settlement fund. I’m trying to see how much the attorney’s got, but I can’t see it just scanning through.
[00:22:51]Damon Day: [00:22:51] I guarantee you, they got six or 7 million.
[00:22:53] Steve Rhode: [00:22:53] There’s a settlement administrator, which is the grace class action.com website, which is probably
[00:23:01] Damon Day: [00:23:01] probably had to get a million cause yeah, $3. You got your $3.
[00:23:06] Steve Rhode: [00:23:06] All right. So the settlement administrator, their fees are capped at $1.4 million.
[00:23:14] Damon Day: [00:23:14] Oh, good thing. There is a cap on, and they only got one point for such a first world. Problem.
[00:23:20] Steve Rhode: [00:23:20] Yeah. The attorneys that filed the suit, their fees can not exceed $6 million with verified expenses cannot exceed $1.1 million. All right.
[00:23:34] Damon Day: [00:23:34] basically you have a law firm going out there saying, how can we make five or $6 million? And then trying to figure out what problem there is. They’re just trying to create a problem to get paid.
[00:23:44] Steve Rhode: [00:23:44] that’s class action lawsuits.
[00:23:46]Damon Day: [00:23:46] I want my $2
[00:23:48]Steve Rhode: [00:23:48] Oh, I’ve got to go back to what Danny said. My, my name is Danny. I works with attorneys. So if You have a question about anything that we talked about today please don’t contact me. Contact Damon day.
[00:24:01] Damon Day: [00:24:01] ask Danny.
[00:24:02] Steve Rhode: [00:24:02] DamonDay.com. We’re talking to Danny cause he works at attorneys. All right. Damon,
[00:24:07] Damon Day: [00:24:07] he works for attorneys, maybe class action attorneys. Get you $3 back.
[00:24:12] Steve Rhode: [00:24:12] $3 make a holla.
[00:24:13]Damon Day: [00:24:13] Yeah, I still have that four S in a drawer somewhere
[00:24:15] Steve Rhode: [00:24:16] What you should do is print out the email and tape it to it.
[00:24:23] Damon Day: [00:24:23] such a good investment return. $3.
[00:24:27] Steve Rhode: [00:24:27] All right. Talk to you later.
[00:24:29]Damon Day: [00:24:29] Bye.