This is a rumor and not confirmed but I thought it was worth discussing.
The scuttlebutt is that a number of debt settlement companies and marketers plan to get around the FTC telemarketing sales rules on debt settlement and debt relief services by forming an offshore law firm in London and making the member companies part of the firm in some way.
I’ll admit, that’s a clever approach but it is horribly misguided. And for companies that have been on the conference calls listening to the pitch and believing the hype, let me just say, it is a mistake.
If the debt settlement industry at large wants fee restrictions like in the still idling Debt Settlement Consumer Protection Act then an offshore move will only stimulate the quick resurrection of the bill to punish the debt settlement industry at 5% of savings.
I’m not making that figure up, you know it’s in the legislation sitting in committee on the Hill.
Putting together a syndicate or cartel to create an offshore entity to engage American consumers in practices labeled abusive and deceptive will not be taken kindly by state regulators, the Federal Trade Commission or my old friends at the Office of Fair Trading (OFT) in the UK.
If anyone thinks the OFT is not aggressive and tenacious in going after deceptive businesses, they would be mistaken. The OFT has broader power and authority in the UK than the FTC does here.
And a move like the London based law firm to sell debt settlement services back to U.S. residents is only going to create a cooperative effort by both the OFT and FTC to target participants.
If this rumor is true, it’s a bad idea but if you do insist in playing it out I can’t wait to cover it.
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