A Call, Make That a Scream, for Transparency in the Debt Settlement Industry

When I started the GetOutOfDebt.org site it began with a desire to assist consumers that were facing financial troubles. In my background I’ve not only lived through financial troubles and went through bankruptcy, but I also started a national non-profit credit counseling organization, Myvesta, to help others and then closed that organization after 12 years (1994-2006). As you can see I’ve been on both sides of the situation when it comes to debt and debt help.

On this GetOutOfDebt.org site, over time, I’ve wound up writing about many different debt relief companies. Most of them have been debt settlement companies.

That happened not out of a desire to target debt settlement companies but simply because waves of rouge debt settlement companies have exploded over the past few year and they’ve been in the news, a lot.

I’ve written a number of reviews on debt settlement company web sites in my work here helping consumers. Those reviews grew out of questions people asked me about this company or that one. Again, I’ve had no target programmed in the launch codes for my review writing for any particular company. If I’ve written about you, please lighten up, I don’t have a vendetta against you.

One of my staff attorneys told me something very wise back in my credit counseling days. Judy said “Steve, all consumers with debt problems are considered to be a disadvantaged class of people needing extra protection.” She was right, oh so right. What Judy was saying is that people with money troubles are generally thought to be, by regulators, a group of people needing special protection and when they have a complaint, will be first thought to have been taken advantage of.

In all reality, consumers with tough money troubles are actually more frail and fragile than others. With limited resources and tough problems ahead, these consumers need protection against being ripped off. Getting screwed just one by an unethical debt relief organization can be the last nail in the financial coffin that will practically require the consumer to go bankrupt.

Openness and Transparency

TransparencyWhen I was living in the UK a couple of years ago there was constant chatter about companies being “open” and “transparent.” At first I didn’t get it, after all, I moved there from America where things like openness and transparency are not commonly used words except in relation to doors and drapes.

What I learned from the experience is that companies actually should not be afraid of being open and honest with the people they serve. In fact, customers are happier, expectations are better communicated, and there are less unpleasant surprises either the company or customer have to face and deal with.

Now flash forward a couple of year and here I am back in lovely America helping consumers with debt problems and writing about the debt relief industry. And for some ungodly reason I now can’t get those phrases of openness and transparency out of my head.

An Educated Consumer is Always Your Best Customer

Sy Syms, the clothier, had a slogan that an educated consumer was always his best customer. So true. The more a customer knows about the service a debt relief company will provide, the fewer surprises, and the more informed they are, I mean really informed, the better off everyone will be. The company will be better off because they are less likely to have an unhappy customer and the consumer will be better off because they will have a better idea of what to expect from the product or service being delivered. The fewer surprises there are for the consumer, the fewer surprises the debt settlement company will have.

That all seems obvious and makes good business sense, right? So what kind of sense does it make when a debt settlement company makes untrue statements, fictional sales promises, or omits to disclose important information? None. That is all happening now because of a totally lack of openness or transparency.

Sales people for debt settlement companies lie all the time about the realities of being in a debt settlement program. They make promises the consumer won’t be sued, creditors will cheerfully accept the reduced payment, there are no tax consequences of settling debt, the credit report will not be impacted with debt settlement services, and all the debt will be settled. Consumers are lied to each and every day and in most of my reviews on debt settlement companies I’ve documented numerous cases of fictional information, important omissions and untruths that exist right on the web sites of debt settlement companies.

What makes me scratch my head is that these companies that intentionally mislead or omit important information are not helping themselves. While they may make a sale in the short term, in the long term it only creates more unhappy clients that are more likely to complain when the sales promised expectations do not come true.

My Call for Debt Settlement Industry to be Open and Transparent

The knee jerk reaction companies will initially have when requested to be more open and transparent is “Hell No.” But that would be the wrong answer. Companies that are open and transparent demonstrate to consumers they can be trusted. Companies that are not open and transparent strongly demonstrate to consumers they can’t be trusted.

Think about this, would you be more willing to make an investment of $5,000 for debt settlement services from a debt settlement company that will revel key facts about their success rates and what to expect or would you go with a company that refused to tell you that?

What I’m Calling For – 10 Open Measurements

When you look at a credit card offer and it has key important points that allow you to make an educated and informed decision about the offer. I think the same should exist for the debt settlement industry as well. Here are the ten items I think good companies should make clearly available on their site, on one page, to allow consumers to make an educated decision about who to work with.

  1. Cost of program.
  2. Link to debt settlement program terms and conditions.
  3. Ongoing success rate of past clients that settled only some debt.
  4. Ongoing success rate of past clients that settled all debt.
  5. Average length of time in the program.
  6. Average settlement amount.
  7. Customer satisfaction data.
  8. Percentage of clients that were sued for a debt that was included in the program.
  9. Percentage of clients that continue to get collection calls while in the program.
  10. Reason why clients left the program before settling all debts, broken into category.

(Please add the following credit on the bottom of this list when you publish it on your site. Credit: Steve Rhode and link it to https://getoutofdebt.org//18248)

For #10, here is what I suggest:

Once a client is identified as “dead” then a customer service rep should contact them to elicit feedback on the reason why the client fell out of the program and what the company could have done differently to deal with that issue.

In my experience the reasons broadly breakdown into the following buckets:

  • Relationship separation (divorce, breakup)
  • Reduction in income
  • Loss of income
  • Decided to go bankrupt
  • Continued collection activity
  • Sued
  • Went with another company
  • Elected to do nothing

Not every company is going to embrace this call for openness. Heck, the vast majority won’t and if they don’t my opinion is consumers should stay far away from those companies. If they have something to hide about the effectiveness and reality of their program there is nothing good that can come out of that.

Do You Have a Question You'd Like Help With? Contact Debt Coach Damon Day. Click here to reach Damon.

Let’s say one company that is willing to be open runs into a situation where another company sales person makes a claim their results are better but they are unwilling to publish their results. Consumers are smart enough to know the second company is probably not being honest and can’t be trusted.

Let’s say two companies publish their metrics and one company is better than another in one area or another. The company with lower metrics should work harder to improve their performance and beat the other company. In this case the company and consumer win.

Let’s say an Attorney General is looking at going after debt settlement companies. Which they are. Who do you think the Attorney General will perceive as the one less likely to trust. That’s right, the one not being open and transparent.

Being open and transparent is good for the companies participating in this approach as well as consumers that work with those companies. By making the metrics available on their web site, companies are helping consumers to be able to make educated and informed decisions.

I’m Happy to Announce At Least One Debt Settlement Company Agrees With Me

While I have been critical of some debt settlement companies, I am happy to be in discussions with one debt settlement company that has embraced this concept and plans to be the first debt settlement company in America to achieve these standards. Who will be next? If you want to be the next company and let me brag about you, contact me at contact@getoutofdebt.org.

If You Take Up The Challenge and Publish the List I Will Brag About You

If you are a settlement company that sees the wisdom in taking up this challenge and publishing these real-time ongoing data measurements, send me an email at contact@getoutofdebt.org with the URL of your page and I will brag about you on the GetOutOfDebt.org site.

Damon Day - Pro Debt Coach

Photo Credit: Sam Beckwith

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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.
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