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Will We Still Have a Job in Debt Settlement?

“Dear Steve,

I’m many of the employees that have recently found themselves wondering what is going to happened to my job at the end of September. I work for a company called [ ] and their back end is serviced by Legal Helpers Debt Resolution or Eclipse (Not sure what the relationship is there).

Our boss recently told us that we are going to be ok and we will continue to do business as usual, which I think is a bunch of BS. This is the same guy that pays us 7% commission, charges full charge backs, and if you don’t hit your goal he takes up to 30% of your paycheck.

He has never asked us to sign a commission plan and when I called the Texas Workforce Commission they informed me that they cannot take anything from your paycheck unless they have it in writing, except of course child support, or any other government enforced reduction. Back to my question!

Can these people really get around the new legislature? If they do will they be able to pay me the same commission? To be honest I think this is going to be a blessing, I’m tired of making these people rich while good people are getting ripped off. I’ve been doing this for almost 4 years now (started at CSA) and I’m ready for a change.

Love your website!”

I think the experts have spoken quite clearly that business as usual will not be tolerated, or even legal, past September 27, 2010 for good faith documents, and October 27, 2010 for the upfront fee ban.

Rather than listen to me or the Federal Trade Commission I think there are two recent posts from others which will speak louder to you. The first is from the law firm of Loeb & Loeb. This firm represents a number of debt settlement companies as clients and they issued a “you better comply” notice. Read Loeb & Loeb Law Firm Issues Guidance to Debt Settlement Companies Looking at FTC Loopholes.

This next post comes from an executive at a debt settlement that finally came to their senses. Read Debt Settlement Company Says “Enough is Enough” and Works Hard to Comply With FTC.

There are several class action lawsuits going around Dallas at the moment regarding debt settlement companies and pay issues. Here is one as an example. Read ABC Debt Relief, The Debt Answer, Lloyd Ward & Associates, and Lloyd Regner Sued By Employees.

The back room talk among the people I normally talk to is that debt settlement companies are probably going to keep telling debt settlement sales reps that everything is going to be fine up until the last minute so the sales team will keep selling.

I can’t tell you what to do but I can share my advice. If I was in your position I would start looking for another job. If the company is unwilling to provide you with a plan that complies with the new FTC rules coming into effect then they may either be keeping something from you or they don’t plan to comply. Either way, I don’t see that as good news.

But before you make any assumptions about what your company intendeds to do, I would speak to a supervisor or manager and talk this issue over honestly and frankly.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

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About Steve Rhode

Steve Rhode
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.
  • Chris Garrison

    Here is USOBA’s stance on it as well:

    Dear USOBA Member,

    In light of the Federal Trade Commission’s amendment to the Telemarketing Sales Rule, there have been many discussions among industry professionals about possible exemptions, or loopholes to the amendment. The USOBA team has noticed a high number of emails sent from different vendors to debt settlement companies regarding new FTC compliant business models. The USOBA team highly advises all of our members to be cautious of these new business models, and we strongly encourage all members to check with their legal counsel before moving in any direction.

    We understand that this amendment has the potential to greatly affect the debt settlement industry and finding exemptions and loopholes in the ruling could protect your revenue stream. However, the USOBA team wants to stress that these loopholes could be potential traps for companies. Debt settlement companies should be wary when pursuing marketing programs or business models based on such loopholes. For these reasons, we are warning industry professionals to avoid jumping at the promise offered by a loophole – consult your legal counsel immediately before making any changes to your business models.

    Below are some of the common business model changes that companies should be wary of:

    Changing to a Non-Profit Business Model
    Intrastate Telephone Calls
    The “Face-to-Face” Exemption
    “Internet Only” Transactions
    “Attorney Model” Transactions
    For more information about these models, click below to see a report from Loeb & Loeb, LLP attorneys, Michael A. Truman and Michael Mallow.

    http://www.loeb.com/exceptions

    Companies should carefully consider a business model that complies with the FTC’s advance fee ban. Several of our members have already implemented new business models that comply with the FTC rulings. For more information about FTC compliant business models please contact us at [email protected]

    Sincerely,

    The USOBA Team
    http://www.USOBA.org
    1-877-76-USOBA
    713-456-2837 fax

    Notice:This message is intended only for the use of the party addressed and may contain information that is confidential or privileged. If the reader of this message is not the intended recipient, any copying, dissemination, or distribution of this information is strictly prohibited. If you have received this communication in error, please contact me immediately by replying to this message and delete the original message at once. Thank you.

  • Chris Garrison

    Here is USOBA’s stance on it as well:

    Dear USOBA Member,

    In light of the Federal Trade Commission’s amendment to the Telemarketing Sales Rule, there have been many discussions among industry professionals about possible exemptions, or loopholes to the amendment. The USOBA team has noticed a high number of emails sent from different vendors to debt settlement companies regarding new FTC compliant business models. The USOBA team highly advises all of our members to be cautious of these new business models, and we strongly encourage all members to check with their legal counsel before moving in any direction.

    We understand that this amendment has the potential to greatly affect the debt settlement industry and finding exemptions and loopholes in the ruling could protect your revenue stream. However, the USOBA team wants to stress that these loopholes could be potential traps for companies. Debt settlement companies should be wary when pursuing marketing programs or business models based on such loopholes. For these reasons, we are warning industry professionals to avoid jumping at the promise offered by a loophole – consult your legal counsel immediately before making any changes to your business models.

    Below are some of the common business model changes that companies should be wary of:

    Changing to a Non-Profit Business Model
    Intrastate Telephone Calls
    The “Face-to-Face” Exemption
    “Internet Only” Transactions
    “Attorney Model” Transactions
    For more information about these models, click below to see a report from Loeb & Loeb, LLP attorneys, Michael A. Truman and Michael Mallow.

    http://www.loeb.com/exceptionstoftcsamendedtelemarketingsalesrule/

    Companies should carefully consider a business model that complies with the FTC’s advance fee ban. Several of our members have already implemented new business models that comply with the FTC rulings. For more information about FTC compliant business models please contact us at [email protected]

    Sincerely,

    The USOBA Team
    http://www.USOBA.org
    1-877-76-USOBA
    713-456-2837 fax

    Notice:This message is intended only for the use of the party addressed and may contain information that is confidential or privileged. If the reader of this message is not the intended recipient, any copying, dissemination, or distribution of this information is strictly prohibited. If you have received this communication in error, please contact me immediately by replying to this message and delete the original message at once. Thank you.

  • Damon Day

    I have a slightly different take on this. The facts are that a lot of good, well intentioned people will be put out of a job in the next 6 to 12 months. However, the facts are clear, this action had to be taken to clean up the industry. Even if a sales person is well intentioned, if they are selling something that is not good for consumers, then it doesn’t matter what the intentions were.

    So for the sales people that are worried about their jobs, the best advice I can give is to go with your gut. If you are working for someone like what was described above, I don’t know why you would want to stay there anyway and I would start looking for a new job. The reality is that 80 to 90 percent of the debt settlement outfits currently operating, will not be operating 12 months from now. That is my opinion of course, but all you have to do is look at the numbers and the way these companies are being operated.

    If the owner of your company is more concerned with people than profit, and he has prudently socked money away to cover the legacy costs of existing clients, then your company may be able to survive.

    If however, your boss, cares more about profits than consumers or employees, and didn’t manage the windfall profits they had been pulling in up until now, then you better get ready to find a new place to work.

    Also what are the actual success rates of the company? As a sales person they might keep these numbers from you (that should have been your first red flag). However, you have an idea about how many of your clients are still around after a year or so. If the company success rate is south of 50% which almost all of them are, then I will tell you right now, you are S.O.L. when it comes to keeping your job.

    If your boss doesn’t know how to run a company or offer a service that can’t even retain 50% of its clients, then there is no way it can be profitable under the new rules.

    In sum, if you are currently working for a debt settlement company that has been and even continues to front load their fees, you would be wise to start lining up interviews now, before you also have to compete for a job with several thousand other out of work debt settlement sales people.

    If your boss is telling you it is business as usual, then he/she is either delusional or lying to you. Either way, the company isn’t going to be there very long and you should start lining up other options and saving every penny you have right now so you and your family can weather a transition.

    I wish the news was better. I have been warning sales people for years that this was a bad business model and hurt consumers. Until now, sales people just lashed out and attacked me for it. OH well, I tried my best to use reason and logic.

  • http://DamonDay.com Damon Day

    I have a slightly different take on this. The facts are that a lot of good, well intentioned people will be put out of a job in the next 6 to 12 months. However, the facts are clear, this action had to be taken to clean up the industry. Even if a sales person is well intentioned, if they are selling something that is not good for consumers, then it doesn’t matter what the intentions were.

    So for the sales people that are worried about their jobs, the best advice I can give is to go with your gut. If you are working for someone like what was described above, I don’t know why you would want to stay there anyway and I would start looking for a new job. The reality is that 80 to 90 percent of the debt settlement outfits currently operating, will not be operating 12 months from now. That is my opinion of course, but all you have to do is look at the numbers and the way these companies are being operated.

    If the owner of your company is more concerned with people than profit, and he has prudently socked money away to cover the legacy costs of existing clients, then your company may be able to survive.

    If however, your boss, cares more about profits than consumers or employees, and didn’t manage the windfall profits they had been pulling in up until now, then you better get ready to find a new place to work.

    Also what are the actual success rates of the company? As a sales person they might keep these numbers from you (that should have been your first red flag). However, you have an idea about how many of your clients are still around after a year or so. If the company success rate is south of 50% which almost all of them are, then I will tell you right now, you are S.O.L. when it comes to keeping your job.

    If your boss doesn’t know how to run a company or offer a service that can’t even retain 50% of its clients, then there is no way it can be profitable under the new rules.

    In sum, if you are currently working for a debt settlement company that has been and even continues to front load their fees, you would be wise to start lining up interviews now, before you also have to compete for a job with several thousand other out of work debt settlement sales people.

    If your boss is telling you it is business as usual, then he/she is either delusional or lying to you. Either way, the company isn’t going to be there very long and you should start lining up other options and saving every penny you have right now so you and your family can weather a transition.

    I wish the news was better. I have been warning sales people for years that this was a bad business model and hurt consumers. Until now, sales people just lashed out and attacked me for it. OH well, I tried my best to use reason and logic.

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