I’m publishing this opinion editorial piece from Scott Johnson at U.S. Debt Resolve for you to read.
For years, the debt settlement industry has ignored state laws, regulators opinions, and consumer’s best interest; as a result failed to support fair regulation. This might be the most outrageous time, as efforts are currently being put forth, not for compliance, but “the business as usual model” all to the detriment of a distressed consumer needing help.
The total disregard for the new Telemarketing Sales Rules (TSR) that will regulate the debt relief industry might be in its last move of this chess game. Regulators will be forced to call “checkmate” and pass the ultimate in restrictive laws that will eliminate the industry completely. The opportunity to self regulate has been squandered. In the waning days, before compliance is mandatory, the industry has little time to unite in support of the new regulation in order to preserve debt settlement as a viable option for consumers in need of debt relief.
As an insider and running a debt settlement company for over five years, I have witnessed first hand the resistance to change.
As a past accredited member of USOBA we received our “pink slip” from USOBA hours after testifying in support of the Uniform Debt Management Services Act in Texas.
US Debt Resolve was the first company in the industry to be an ISO 9000 compliant company and the first to attain a certification by a national bank. Our policies, procedures and operations have been audited by independent third party officials. The one thing for which we were not recognized was our willingness to go along with a business model that harmed consumers.
Most surprising about this continued defiance is that many companies are in shock because they believe they have done nothing wrong; or they want everyone to believe that because they couldn’t understand how to use Excel or batch track data, or that the software was too expensive or the fact that they believe only 10% of their clients were successful was some one else’s fault. It has been amazing for all to hear that there are a few bad actors ruining the industry I say, “now is the time for the few good companies to stand up, or forever we will be forgotten.”
Let the non-compliant companies move from fines to prison and that will clear the path for change. Performance based companies will emerge. The Association of Settlement Companies TASC spent millions of dollars and that did not buy them the additional two years of continued deceptive and abusive practices and now asking themselves how did this happen? and why so fast?
This is the result of, for far too long, not participating in the process of rule making. In November of 2007 there were only a handful of stakeholders at the final NCCULS (The National conference of commissioners on Uniform State Laws) hearing in Chicago, regarding the Uniform Debt Management Services ACT. The act was years in the making. It was certainly a missed opportunity to protect consumers. Now it seems the industry is clamoring for its return in its original form. When the FTC conducted a “Workshop” in September of 2008 they made many suggestions. Where was the reform the industry needed?
Does the industry remember ACME Debt Relief? The portrayal of this fictitious company was the affirmation that companies were being held accountable for their business practices; that data was needed to support claims and immediate change was needed. With the industries further defiance, lack of understanding, and general failure to conform, business practices assured continued investigations and harm to consumers. Remember the first people going to jail have been the attorneys portraying their firms as debt relief companies.
We are in Texas and even our boots can’t only cover so much bull. However our model led one bank to believe we were the fifth largest debt settlement company. This, because of the amount of debt we settled with them. At that point, our staff was less than 30 employees and enrolling around 100 clients a month.
If you are thinking compliance with the TSR, improved systems, better trained employees, enhanced relationships with debt owners, proper suitability testing for new enrollees or a performance based program and proven results…..not a chance. Here emerges the “loopholers” they claim that there is an exemption to the new rule and that is an “attorney model exemption” yes an attorney exemption.
The foundation to this strategy is that a debt relief firm will have an attorney attach his name with the debt firm and therefore business as usual. The question has already been asked and answered as submitted in FTC document on guidelines “I’m an attorney and I provide debt relief services. Am I covered by the new rule? There’s no general exemption from the TSR for attorneys who engage in telemarketing.
The exemption, the attorney model companies really want, is more profiteering, deception and abuse to lure consumers into the same program. What’s worse is with even higher fees and the same abysmal performance. This fraud is being perpetrated at the attorney level for small profits in comparison to short term gains. The public welcomes a rebuke from the American Bar Association. I, especially, like the claims of attorneys experience to manage your debt, all to find out that they have been a personal injury lawyer for last eight years. How is that going to help?
My message for regulators is give the new ruling a chance. Take enforcement where necessary. Let this remain and option for consumers as unnecessary. New laws will only penalize the people that need help and eliminate the few remaining companies providing performance based services. The fault remains with the perpetrators and they still need to be held accountable.
The message should be by regulators to the debt firms not complying with the new ruling by 27 September 2010 is best characterized by Wyatt Earp in the 1993 movie Tombstone “You tell ‘em I’M coming… and hell’s coming with me, you hear?”
Scott C Johnson
US Debt Resolve
I can always use your help. If you have a tip or information you want to share, you can get it to me confidentially if you click here.