Thanks to an awesome tipster (send in your tips here) I have heard that Credit Solutions held an internal meeting yesterday and announced to staff that the company will comply with the new FTC TSR, effective yesterday.
In my opinion I think CSA has a potential issue with their statement:
“Amount of time necessary to obtain the represented results: The debt settlement program is designed as a 36 month program: If you save the required amount per month and remain in the program for the entire 36 months, we believe that you will settle your debt as set forth below.”
The FTC has said that claims and estimates must be made on historical data and not forward looking statements. While the wish is that the program takes less than 36 months, what has it historically taken? And what about creditors that don’t or won’t settle?
You will notice that the FTC disclosures don’t mention either the percentage of debt or success rate of the program. Two glaring omissions that consumers should know before enrolling so they can be fully informed.
Number four under the FTC disclosure section also fails to mention that wages can be garnished, assets levied, or liens placed against property.
Consumers enrolling in the CSA program will need to pay special attention to the statement:
“Further, if Client accepts an offer to settle any enrolled account, Client’s obligation to pay the entire Service Fee for that enrolled account shall come due and Client shall pay the Service Fee for the settled account immediately after Client has agreed to settle that account.”
So if the company does not perform, settle the account, or does no work on the account and the consumer settles it, they will owe the company the 20% settlement fee regardless.
Here is a funny (ironic) overlook in the contract:
“Client acknowledges that Client should review all options available before entering into this Agreement. Other debt relief options available to Client include, but are not limited to: Chapter 7 Bankruptcy, Chapter 11 Bankruptcy, Consumer Credit Counseling, and Debt Consolidation.”
What, no Chapter 13 bankruptcy?
The contract terms say:
“It is also a condition precedent to Company’s obligations in this Agreement that, other than the amounts paid for Service Fees upon settlement, the funds that Client transfers into Client’s Global Client Solutions Special Purpose bank account shall remain in the account until the end of the term of this Agreement or until Client settles with one or more of Client’s creditors.”
But they also say:
“With regard to your separate Global Client Solutions Account: You own the funds that you will hold in that account. You may withdraw from that account and this debt relief service at any time without penalty, other than the funds earned by CSA according to 16 CFR 310.4(a)(5)(i) (A) through (C).”
So which is it? Can the consumer withdraw funds at any time or the funds must remain in the escrow account until the client settles at least one debt?
That seems to fly in the face of the FTC TSR guidance that says “the customer owns the funds (including any interest accrued), controls them, and can withdraw them at any time.” – Source. The way I read it a customer could withdraw money from the GCS account at any time and not qualified with a first settlement clause.
The contract says:
“IN ENTERING INTO THIS AGREEMENT, CLIENT REPRESENTS THAT CSA CREDIT SOLUTIONS OF AMERICA, LLC., HAS NOT, AND FURTHER UNDERSTANDS CREDIT SOLUTIONS SHALL NOT, TAKE ANY ACTIONS TO DISRUPT THE RELATIONSHIP BETWEEN CLIENT AND ANY CREDITORS OR PERSONS WITH WHOM CLIENT HAS ANY CONTRACTUAL OR BUSINESS RELATIONSHIP.”
But it seems that by its very nature the company has disrupted and interrupted the relationship between the consumer and creditors by agreeing to place themselves in the way as a third-party and have the consumer direct funds away from making the minimum creditor contractual payments and instead direct them into a plan created by CSA.
But then CSA goes on to say:
“THE CLIENT FURTHER REPRESENTS CREDIT SOLUTIONS HAS NOT PROVIDED CLIENT WITH ANY ADVICE OR RECOMMENDATION REGARDING THE ADVISABILITY OF REDUCING OR TERMINATING PAYMENTS TO CLIENTS CREDITORS.”
I’m not sure I believe that statement. I’ll secret shop that one for sure.
Here is the Tip I Got
Yesterday Doug [Van Arsdale, CEO] had a meeting with the company to announce compliance of the new FTC ruling effective yesterday. CS has now officially gone to the new model. He of course being a good salesman sold it as the best thing that could ever happen to CS. here are some of the disclaimers now on the new Contracts. Are we in compliance? anything in bold are my words
The disclosures are on the very 1st page in big print
FTC DISCLOSURES
- Amount of time necessary to obtain the represented results: The debt settlement program is designed as a 36 month program: If you save the required amount per month and remain in the program for the entire 36 months, we believe that you will settle your debt as set forth below.
- The time by which CSA will make a settlement offer to your creditors: We will contact your creditors within 72 hours after Midnight of the Effective Date of this Agreement to notify them of your enrollment and to request that they make all communications with us. However, CSA will make settlement offers based upon our experience with each individual creditor to reach the best result for you. For the average time between enrollment and the first settlement offer for accounts enrolled with Credit Solutions, see figure 1 below.
- The amount of money, or percentage of each outstanding debt, that you must accumulate before CSA will make a bona fide settlement offer to each of your creditors: We will contact your creditors within 72 hours after Midnight of the Effective Date of this Agreement to notify them of your enrollment and to request that they make all communications with us. However, CSA will make settlement offers based upon our experience with each individual creditor to reach the best result for you. For the average time between enrollment and the first settlement offer for accounts enrolled with Credit Solutions, see figure 1 below.
- The use of a debt relief service will adversely affect your creditworthiness. You may be sued by your creditors, in court or arbitration, while you are enrolled in a debt relief program. Until you settled your accounts, your debts may increase as a result of penalties, fees, increased interest and costs related to litigation or arbitration instituted by your creditors.
- With regard to your separate Global Client Solutions Account: You own the funds that you will hold in that account. You may withdraw from that account and this debt relief service at any time without penalty, other than the funds earned by CSA according to 16 CFR 310.4(a)(5)(i) (A) through (C).
Disclore regarding fee
Enrolled Amounts: Client warrants and represents that the creditor name(s), identifying information and debt amount(s) provided at the time of enrollment are factual, or approximately accurate, to the best of Client’s knowledge. Client acknowledges that the fees to be paid by the Client to Credit Solutions, as well as the amount of money to fund settlements, and the number of installments to complete the program are estimates based on the information provided by you, the Client. The actual fees that you pay will be calculated at the time each enrolled account is settled by you from your GCS account and will equal 20% of the difference between the Enrolled Balance of the particular account(s) settled and the settlement amount. The Enrolled Balance shall be the balance of the particular account as of the Effective Date of this Agreement, unless Client subsequently adds accounts in which case the Enrolled Balance will be calculated as set forth in Paragraph 8 below.
Compensation: In consideration for debt negotiation services provided by Company, Client will pay to Company a service fee equal to twenty percent (20%) of t the difference between the Enolled Balance of a particular account of the Effective Date of this agreement except as set forth in Paragraph 8 above and the settlement amount for that particular account(the “Service Fee”) Client shall pay the Service Fee immediately after Client settles each enrolled account by paying the Service Fee to Company directly from Client’s GCS special purpose account. An enrolled account is considered to be settled for purposes of the Service Fee when Client accepts a settlement offer and makes at least one payment to the creditor to fund that settlement. Further, if Client accepts an offer to settle any enrolled account, Client’s obligation to pay the entire Service Fee for that enrolled account shall come due and Client shall pay the Service Fee for the settled account immediately after Client has agreed to settle that account. As stated above, Client authorizes Company to work with Global Client Solutions to facilitate Client’s transfer of funds from Client’s Global Client Solutions account to pay this Service Fee
All the important stuff that covers our butt
Acknowledgement and Disclaimers. Client expressly acknowledges that Company does not provide investment, tax, or legal advice of any kind. If Client is sued, receives an arbitration demand from a creditor or otherwise needs legal advice, legal expertise or court filings, Client should consult with an attorney. Client agrees Company has not represented it will assist Client in the preparation or filing of any documents necessary to respond to any legal proceeding of any kind. Client agrees Company has not represented it will assist Client in the modification, improvement or correction of credit entries on Client’s credit reports or that Company can stop all collection telephone calls or correspondence. Client understands this Agreement is not a “debt consolidation” agreement and Company will not disburse any funds to any Client creditor accounts. Client understands debts less than one thousand dollars ($1,000.00) may require payment of the full balance due at the time of settlement. Client understands contracted credit accounts will continue to accrue interest and/or late fees until accounts are settled. Client also understands creditors may continue to impose other penalties as a result of delinquent payments, including, but not limited to, the reporting of adverse information to credit bureaus and/or the filing of a lawsuit or arbitration demand to collect subject debts. Client understands the services of Company may have a negative impact on their credit report. Client understands that the discharge of indebtedness of over six hundred dollars ($600.00) may be considered taxable income to Client. Client acknowledges that Company’s results may vary and are dependent upon several factors including Client’s circumstances, Creditor’s willingness to settle, and Client’s ability to save funds. Client is aware Company provides debt settlement as a debt relief option; however other debt relief options are available to the Client. Client acknowledges that Client should review all options available before entering into this Agreement. Other debt relief options available to Client include, but are not limited to: Chapter 7 Bankruptcy, Chapter 11 Bankruptcy, Consumer Credit Counseling, and Debt Consolidation. Client acknowledges that Company has not nor shall it take any actions to disrupt the relationship between Client and any creditors or persons with whom Client has any contractual or business relationship. Client further acknowledges that Company has not provided Client with any advice or recommendations regarding the reduction or cessation of payments to creditors. Client acknowledges that the Company does not receive compensation from the Client’s creditors, bank or third party collection agencies. Client has engaged Company for the sole purpose of negotiating offers of settlement of Client’s Total Unsecured Debt. Client expressly acknowledges that Client may be sued by Client’s creditors and that Client’s credit score and credit history may be negatively affected if Client does not pay their regularly scheduled minimum credit card payments. Additionally, Client expressly acknowledges that Client is entering this Agreement fully and completely aware of the risk of lawsuit, arbitration demand and damage to Client’s credit score and credit history.About GCS
GCS Special Purpose Account and Client Payments to Creditors: It is a condition precedent to each and every obligation of Company that Client shall enter into a separate contract with Global Client Solutions through which Client shall set up a GCS special purpose account from which client will settle Client’s enrolled accounts and pay Service Fees to Company. GCS may charge Client fees for this account. It is also a condition precedent to Company’s obligations in this Agreement that, other than the amounts paid for Service Fees upon settlement, the funds that Client transfers into Client’s Global Client Solutions Special Purpose bank account shall remain in the account until the end of the term of this Agreement or until Client settles with one or more of Client’s creditors. Although only Client can control the funds in this account and Company has no power to initiate any transfer of these funds without Client’s approval, Client promises to keep these funds in the Special Purpose Account for the term of this Agreement. These funds are budgeted for ultimate distribution to creditors, and will be budgeted until all contracted creditors are settled in full. When Client chooses to settle an enrolled account and accept an offer presented to Client by Company. CLIENT will then authorize Global Client Solutions to make all settlement payments directly to creditors from their Special Purpose Account. Client acknowledges that it is possible that Client may settle their enrolled accounts for more than the amounts budgeted under Paragraph 16. Company has no control over Client’s GCS account and does not share any fees or control GCS in any way. GCS is an independent company that has agreed t o work with Company in order to serve Client. Although your promise to set up a GCS account to keep the funds in your Special Purpose Account in order to complete this debt settlement program are conditions of remaining in the program, you may remove those funds from your GCS account at any time and have the right cancel this contract at any time.The contradicting statements that double covers our butts
Client/Creditor Relationship Statement
IN ENTERING INTO THIS AGREEMENT, CLIENT REPRESENTS THAT CSA CREDIT SOLUTIONS OF AMERICA, LLC., HAS NOT, AND FURTHER UNDERSTANDS CREDIT SOLUTIONS SHALL NOT, TAKE ANY ACTIONS TO DISRUPT THE RELATIONSHIP BETWEEN CLIENT AND ANY CREDITORS OR PERSONS WITH WHOM CLIENT HAS ANY CONTRACTUAL OR BUSINESS RELATIONSHIP. THE CLIENT FURTHER REPRESENTS CREDIT SOLUTIONS HAS NOT PROVIDED CLIENT WITH ANY ADVICE OR RECOMMENDATION REGARDING THE ADVISABILITY OF REDUCING OR TERMINATING PAYMENTS TO CLIENTS CREDITORS. CLIENT HAS ENGAGED CREDIT SOLUTIONS FOR THE SOLE PURPOSE OF NEGOTIATING A RESOLUTION WITH SAID CREDITORS UNDER THE TERMS OF THE AGREEMENT. CLIENT FURTHER INTENDS, BY THIS AGREEMENT, TO CREATE A CONFIDENTIAL RELATIONSHIP WITH CSA IN REGARD TO RESOLVING ANY OUTSTANDING CREDITOR CLAIMS, SUITS, OR JUDGMENTS. I VERIFY THAT I HAVE READ, UNDERSTAND AND AGREE WITH THE ABOVE CLIENT/CREDITOR RELATIONSHIP STATEMENT AND I FURTHER AGREE AND UNDERSTAND THAT CSA CREDIT SOLUTIONS OF AMERICA, LLC., HAS NOT AND SHALL NOT TAKE ANY ACTIONS, VERBAL OR OTHERWISE, TO DISRUPT THE CLIENT/CREDITOR RELATIONSHIP. I HAVE ENGAGED CSA FOR THE SOLE PURPOSE OF NEGOTIATING A RESOLUTION WITH SAID CREDITORS UNDER THE TERMS OF THE AGREEMENT.
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I bet you when the client speaks with credit solution and ask them,” what do I do when they call me for a payment to them?” and credit solutions response,’ don’t worry sir/ma’am, once you enroll with us we will take it from here and you will no longer are required to pay them directly and our cease and desist communication form will reroute all communications away from you so this way you can have a peace of mind knowing they will only contact us and not you. lol. My approach would be, well sir/ma’am you have an option when they do call you, one if you sincerly feel you can make a payment arrangement and its affordable to you to do so, than please pay them. If not then please let them know there is nothing you can do right now because of your situation. And if the client goes, than why am I paying you for help than? Well sir/ma’am you are hiring us to work out the best settlement offer we can get for you, so you also have a choice, try to work it out on your own with your creditors or allow us with confidence to do it for you but it will not be an easy process to deal with so I just want to be upfront with you. We cannot stop creditors from calling, and any letters to tell them to call us instead of you will be ignored, and we cannot stop legal actions or any aggressive collections effort, but what we can do is that have you log every harrassing phone calls so this way if we find any violations on their part we can use that as a leverage to get you a better settlement because of their wrong doings for violating the FDCPA. Problem is your original creditors know the FDCPA by heart so they well trained under their company policy to not intentionally break it, now a third party collection co that bought that old debt from you don’t care if they do because they were told that most debtors don’t even take the time to read the FDCPA or understands it. So its best if you can’t pay your bills, read up on your rights first.
I love how they say they will not take any action to disrupt the relationship between the client and the creditor, and then say, within 72 hours of midnight of the date of effective agreement, we will contact your creditors, inform them of your enrollment and tell them to communicate directly with us. Uhhhhhhh? So they are going to take action that disrupts the relationship between the client and the creditor? And they are going to take action that says don’t pay your creditors, put the money into this account? Or they are not doing that? They are doing that? Remind me why consumers get confused by this stuff again?
The funny thing is that Credit Solutions sent me a Cease and Desist letter a few months ago, claiming I was defaming them because I said they were ripping consumers off with their front loaded fee model. Now they are switching it because they have to, not because they want to. So funny that this sales person feels this is such a great thing for them. If so, then why didn’t they do it last year when I clued them in that their clients were getting ripped off?
I love how they say they will not take any action to disrupt the relationship between the client and the creditor, and then say, within 72 hours of midnight of the date of effective agreement, we will contact your creditors, inform them of your enrollment and tell them to communicate directly with us. Uhhhhhhh? So they are going to take action that disrupts the relationship between the client and the creditor? And they are going to take action that says don’t pay your creditors, put the money into this account? Or they are not doing that? They are doing that? Remind me why consumers get confused by this stuff again?
The funny thing is that Credit Solutions sent me a Cease and Desist letter a few months ago, claiming I was defaming them because I said they were ripping consumers off with their front loaded fee model. Now they are switching it because they have to, not because they want to. So funny that this sales person feels this is such a great thing for them. If so, then why didn’t they do it last year when I clued them in that their clients were getting ripped off?
I bet you when the client speaks with credit solution and ask them,” what do I do when they call me for a payment to them?” and credit solutions response,’ don’t worry sir/ma’am, once you enroll with us we will take it from here and you will no longer are required to pay them directly and our cease and desist communication form will reroute all communications away from you so this way you can have a peace of mind knowing they will only contact us and not you. lol. My approach would be, well sir/ma’am you have an option when they do call you, one if you sincerly feel you can make a payment arrangement and its affordable to you to do so, than please pay them. If not then please let them know there is nothing you can do right now because of your situation. And if the client goes, than why am I paying you for help than? Well sir/ma’am you are hiring us to work out the best settlement offer we can get for you, so you also have a choice, try to work it out on your own with your creditors or allow us with confidence to do it for you but it will not be an easy process to deal with so I just want to be upfront with you. We cannot stop creditors from calling, and any letters to tell them to call us instead of you will be ignored, and we cannot stop legal actions or any aggressive collections effort, but what we can do is that have you log every harrassing phone calls so this way if we find any violations on their part we can use that as a leverage to get you a better settlement because of their wrong doings for violating the FDCPA. Problem is your original creditors know the FDCPA by heart so they well trained under their company policy to not intentionally break it, now a third party collection co that bought that old debt from you don’t care if they do because they were told that most debtors don’t even take the time to read the FDCPA or understands it. So its best if you can’t pay your bills, read up on your rights first.