The U.S. Senate held hearings today on the practices of the debt settlement industry. You can watch the entire video of the hearings below. It might be slow in the beginning but take your bathroom break before the halfway point. It gets good and you don’t want to miss a moment of it.
Basically the debt settlement trade groups of United States Organization of Bankruptcy Alternatives (USOBA) and The Association of Settlement Companies (TASC) came out looking like total idiots. And if you are a member of either of those two groups and don’t think the hearings were bad news for you, put down the crack pipe.
Senator Rockefeller who chaired the hearings was not in a “please blow smoke up my ass” mood. As he said to the debt settlement representative, “I don’t want to hear your happy talk.”
The witness panel consisted of:
- Mr. Gregory Kutz – Managing Director, Forensic Audits and Special Investigations, United States Government Accountability Office – Provided Testimony, Transcript of Undercover Calls.
- The Honorable Julie Brill – Commissioner, Federal Trade Commission – Testimony
- Mr. Phil Lehman – Assistant Attorney General in the Office of the North Carolina Attorney General – Testimony
- Mr. John Ansbach – Legislative Director of the United States Organization for Bankruptcy Alternatives (USOBA), Chief Operating Officer EFA Processing – Testimony
- William and Holly Hass – Consumers – Testimony
The hearing covered a number of topics that I have talked about before. There were questions about why USOBA won’t publish their member list and the answer from the USOBA representative was they didn’t want their membership list to be a subpoena list. The funny thing was the hearings used the graphic from my article Hey USOBA, Accountability, Credibility, Transparency. LOL.
My favorite comment was at the end when Senator Rockefeller asked the USOBA guy Ansbach how he could sleep with himself at night.
This came after USOBA refused to produce a member list and refused to say that members caught by government investigators would not be kicked out of USOBA. I talked about their ineffectiveness in policing the debt settlement industry in TASC & USOBA Here It Comes. You’ve Got Nobody But Yourselves to Blame.
On whole, myself and the people I talked to that watched the hearings felt that the debt settlement industry is probably going to face federal legislation, up-front fees will be banned and the only people that the entire country has to blame for the downfall of the debt settlement industry are the two trade groups USOBA and TASC.
As far as I can see these trade groups have done NOTHING to protect consumers from unscrupulous member companies and in fact the only company I know that has been kicked off USOBA was kicked off because they sided with consumers and not the trade association. “You want to defend consumers? Please leave and don’t let the door hit you on the ass on the way out.”
I was chomping at the bit to see if the Senate hearings would connect the dots on John Ansbach of EFA Processing, testifying on behalf of the debt settlement industry, to his partner at EFA processing, Ken Talbert, and then to DebtXS, a company I talked about yesterday in Do Debt Settlement Company Relationships With Hedge Funds Create a Fiduciary Problem for the Consumer?
My Impression of How the Debt Settlement Industry did at the Hearing
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This is from your wonderful company, US Debt Resolve.
Same old crap from every other company.
Can my creditors still contact me if I am in a Debt Settlement Program?
Upon signing the Power of Attorney, USDR contacts your creditors (in addition to any involved collection agencies and attorneys) and advises them to direct all collection efforts to our company, and to cease all communication with you. If you receive further calls, you should refer them to our Client Services Department who will handle the situation and advise the creditor once again to cease communication with you.
So you make your money writing articles and getting google, adsense clicks, nothing wrong with that. What’s wrong with this is the failure to mention Senator Rockefeller direct family ties to Chase Bank. He is the rat guarding the cheese. He abused his authority in congress to protect personal interests in the name of consumer protection. In truth, what he is doing is hurting consumers. Senator Rockefeller should have his head handed to him on a platter. Debt settlement is a valid and smart option that costs thousands less than Credit Counseling or making minimum payments. Shame on you for spreading half truths.
Great way to market yourself Steve. You cant gain membership with either organization because you are a scam. Wait to hate on what you aint.
Steve,
How is this looking. It seems all of the calls going to congress are from fake cheerleaders (read debt settlement company employees posing as consumers) and the companies themselves. What are the odds of this important legislation passing? I see nothing about it in the general media. This industry is way worse than some of the loan mod companies that got nailed.
Rumor has it the Debt Settlement Consumer Protection Act might come to a vote as early as tomorrow as part of another piece of legislation. But the FTC rules to regulate debt settlement will be out in a few weeks.
Something will happen soon.
Steve
Getting the bad companies out of the industry is a good thing. There are very legitimate companies that offer huge benefits to consumers and it usually costs the consumer much less than Chapter 13 or Credit Counseling. There are several good companies in this industry and it’s too bad that blogs like this imply that Debt Settlement is always bad, it’s not.
These guys are going to get what they deserve. When all of the unscrupulous companies fall to the wayside as a result of federal regulation, a few good companies will be left standing. Steve, I hope you do a profile on the good ones. Consumer Recovery Network, Brinker Hoffman, and Zip Debt come to mind. I imagine there are a few others.
.-= Jonathan Grossman´s last blog ..First Debt Settlement Deal =-.
At this point we need to see who is left standing.
Don’t forget US Debt Resolve. They get a real pat on the back as the first to put their performance numbers on their site, and on their front page.
Steve
Superior Debt Relief is also a GREAT company!!! They too posts their figures on their home page. The most upfront company I ran into when I was looking for help with my situation.
Randy,
That’s not transparency or enough information for a consumer to make an educated decision. I could not find any critical metrics as described in this post. You might want to look at US Debt Resolve and their disclosures as a better example.
Steve
Why in the world is the Federal Government holding hearings about the debt settlement industry???? We should be outraged. We are in the midst of a recession, we have oil pouring out of a hole in the gulf of mexico, unemployment is high, we’re fighting two wars in the middle east, we’re coming out of a banking crisis, a housing crisis etc. How many people are in debt settlement programs? one tenth of one percent? Maybe? This is total garbage. A lot more people were harmed by the housing crisis while the federal government stood by as banks and investors ran a-muck.
I am a witness that debt settlemnt companies are and can be a good thing when done correctly. I think what’s funny is we are not going after the creditor card companies who are continuously targeting people and young people to get into debt. Instead they are getting bailout money from the government. Talk about bad business practices.
Creditors? Perhaps you aren’t up on current events. Check out:
http://www.federalreserve.gov/consumerinfo/wyntk_creditcardrules.htm
This should help clear up your confusion. The government most certainly HAS been targeting credit card companies.
Steve … awesome reporting. I’m reading a lot of financial blogs/sites right now on news about debt settlement and consumer lawsuits over unsecured debt and you are the writer on it right now. Good job.
Katrinia,
“Right now”, no pressure, huh. 🙂
Steve
Yeah! Ha. I don’t see anyone else taking your stellar lead, which is a shame, because this is what we need to be covering right now. I’m currently right in the middle of watching the hearings … shameless stuff.
And LOVE the pix. It says it all. FYI I am also the main writer for Creditopia.com and am linking to your site a lot lately in my posts.
Cool.
You’ve got a lot of great stuff over there. Keep linking, love it.
Steve
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