I just got off the phone with Alex Viecco, the VP and Co-Founder of New Era Debt Solutions. He and the President of New Era, Dan Smith, just recently attended the debt settlement leadership conference in Las Vegas where it seems the topic of discussion was how debt settlement companies could best get around the new FTC telemarketing sales rules rather than comply with them.
Apparently what was discussed at the conference was the straw that broke the camels back for New Era and they are now willing to stand up and speak out that opportunists in the debt settlement industry are operating not with the best interest of the consumer in mind. Alex predicts that only about 40 debt settlement companies are really the good guys. He also predicts that regulators are not stupid and will be ready to pounce on debt settlement companies that will not be operating with the consumers best interest in mind.
You can read the New Era Debt Solutions resignation letter to TASC, here.
After you listen to my interview with Alex below, please post your comments and feedback below.
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Steve Rhode: Hi, this is Steve Rhode from Get Out of Debt.Org, your get out of debt guy. I just had some breaking news; I need to share it with you. It’s only a few minutes old, and it’s pretty important, actually, because in the debt settlement industry there have been very few companies that have been willing to take bold steps, and to speak out against some of the bad actions in the debt settlement industry. New Era Debt Solutions has just returned from the Debt Settlement Leadership Conference in Las Vegas, is totally disgusted, has submitted their letter of resignation to the Association of Settlement Companies, and I am going to talk to them right now.
I’m here with Alex Viecco from New Era Debt Solutions, and Alex has just dropped a bombshell. Apparently, after attending the Debt Settlement Leadership Conference in Las Vegas last weekend, you came to some pretty stunning conclusions about the debt settlement industry, didn’t you?
Alex Viecco: Well, we came to the realization that the industry, or the vast majority – the bulk of the industry is going to try to continue to operate in ways that we don’t agree with, which is trying to find a way around the FTC ruling. I know the FTC ruling is a little bit harsh because it doesn’t all us to collect any fees up front, considering the cost of marketing, but it is certainly something that you can live with and work with. We’ve been working with a performance model for – now – over ten years, and certainly are still here. And I think it’s a great solution for everybody.
Steve Rhode: You are not only are the vice president of New Era, but you’re also the co-founder. New Era Debt Solutions has been your baby from the beginning; you’ve had input, and you’ve always done this on a performance-based model; you’ve seen the debt settlement industry change a lot over the past five or ten years, and by your actions today, I don’t think you thought that was for the best.
But right now, who do you think makes up the bulk of the industry? Are there guys that want to do good? Or, guys that are just trying to make a profit on the back of consumers?
Alex Viecco: I, honestly, at this point I have to believe that it’s just people that are looking out for their pocketbooks. I don’t think that, for the most part, a lot of these groups are looking at it from the perspective of a hardworking consumer that’s run upon hard times. It appeared to me more like they were looking at: How am I going to make my next big house payment? Or nice car payment? As opposed to: How am I going to help consumers get out of debt?
We come from a financial planning background – my partner and I – therefore we’ve always looked at helping people get out of debt as a tool to help them improve their finances. So it wasn’t far-fetched for us to be able to go out there and do a performance model – we don’t have any problem with performing.
Steve Rhode: So listen, you already turned in your resignation to the Association of Settlement Companies – TASC.
Alex Viecco: That’s right.
Steve Rhode: And you’ve told them: “We’re out. We’re not playing this game anymore.”
So let’s just lay it on the table and talk honestly: What was it specifically, at the conference, that turned your stomach?
Alex Viecco: I think more than anything is that everybody’s trying to go to what’s called an “attorney model,” which they pretty much – they’re trying to find the loopholes within the law to try and make attorneys exempt. I think the spirit of the law is pretty clear when they do talk about a face-to-face meeting with a consumer, they mean a face-to-face meeting in the course of regular business. You know, as an attorney you would meet with your clients, but when you’re dealing with debt settlement and you’re going to have a notary or a third-party just show up to get the signatures, I don’t think that’s what the law intended, and I don’t think the FTC is going to take that lightly. And I definitely want to separate myself – and ourselves – from anything remotely close that is not in compliance with the FTC ruling.
Steve Rhode: So these guys that don’t want to play by the rules, and they want to go their own way, do they not think that regulators are not watching out for them?
Alex Viecco: I think that what happens is egos get in the way, and they’re looking at getting opinions from people that maybe tainted, you know, to a certain degree, because they want these loopholes to be official loopholes. But I think if we’re not careful as an industry, my biggest fear is that obvious the Schumer bill would be passed, and if the Schumer bill gets passed, everybody in this industry is going to shut down – both the good and the not so good. It’s real simple, because there’s no way to do proper debt settlement without the overhead that it takes.
So with the Schumer bill, it would put such a restriction on fees that just about every company would not be able to survive under that format.
Steve Rhode: So in debt settlement today, you’ve got the good guys that are complying, and then you have the opposite of the good guys doing the rest of the stuff.
Alex Viecco: It was a very small room, in comparison.
Steve Rhode: Well, that’s true my friend, I’ve been telling you that. But do think the bad guys that don’t want to comply, they’re just look at it as a pump ’em and dump ’em operation right now; that they’re just going to –
Alex Viecco: I think they may have intentions of settling the debt, but I don’t know that they’re going to have the opportunity to do so. I’m very confident that the FTC is going to come out blazing. My only concern is that hopefully they understand that there is a group of people, and particularly we have always been outspoken about doing things the right way since we became compliant from the moment it got announced – we didn’t have to become compliant until the end of this month.
But there’s a group of people that do want to reach out and help consumers. The bottom line is, we can all get in the mix and say it’s about me, it’s about me, but it’s truly about the consumer. If the consumer doesn’t have debt settlement as an option, what option do they have? It’s a bankruptcy or credit counseling, and neither of those two are the answer to most of America’s problems today. People can pay back some of their debt; they have just to find somebody that can negotiate effectively on their behalf, and strike a happy medium ground for everybody.
Steve Rhode: Now just recently I published the marketing rules for an attorney model debt settlement company Legal Helpers Debt Resolution. And the rules were very specific, and they made a lot of sense, but do you think these affiliates out there – these associated companies that are trying to get around the rule, do you think they’re going to play by the rules?
Alex Viecco: I think they’re going interpret the laws to be those rules. I guess every human being is somewhat guilty of that, you know, to draw a circle around themselves and kind of say, “Everybody else is not complying with this.”
But I think in this case the reason we are going to be far more outspoken than we ever have is because now the FTC has set a rule in place where we can certainly be outspoken and know that we are complying with everything that the FTC has asked. If you do so, you can still operate: you can operate a successful business and help a lot of people. And there’s nothing wrong with making money by performing a true service for people – I don’t believe so.
Steve Rhode: No, there’s nothing wrong with that.
Alex Viecco: And I think that consumers not only want this kind of service – need this kind of service, but they’re willing to refer people to this type of service, they just don’t need to be taken advantage of.
Steve Rhode: I think the issue is that it’s not if a fee is charged, it’s if the consumer receives value for what they’re paying for.
Alex Viecco: Exactly! Yeah, and there’s the ideas that came out of that meeting, to me, were beyond belief how people were trying to sell. Some of the concepts are: Well, we’ll just sell some kind of an education kit and mark it up, you know, 900 – 1,000 percent, and then do debt settlement as the side, and it won’t tie one to the other.
The FTC, these are not dumb people. They’re hard working attorneys that work for the government, and you’re not going to pull the wool over their eyes so easily.
So I think it’s ludicrous for people to think that they can just get an opinion from somebody and say, “Oh, yeah, that makes sense.” Full compliance is what I believe everybody’s going to have to go through, or the people are going to, at last, are going to have to go through full compliance. I think that’s actually a good thing, because in some of the states where debt settlement is not welcome right now, with full compliance maybe the FTC ruling (now that it’s a federal ruling) might open up some states that currently are not open to debt settlement.
Steve Rhode: Well, I agree – I fully agree. Did you see the product – the iPad education course there? Was that marketed?
Alex Viecco: Yes. There’s the iPad. There’s the different educational kits. You know, jokingly around, I mean, somebody even threw out the term, “Well, we can sell them a toaster.”
Steve Rhode: Yeah.
Alex Viecco: So for me, those things, you know, I believe in high ethics. Every one of us, regardless of what business we run, or what have you, we’re all consumers. And for a moment we have to put ourselves in the consumer’s state of mind when they’re looking for this type of product, particularly – you’re dealing with peoples’ finances, it’s not something you can take lightly.
Steve Rhode: No, no. I believe that you have a fiduciary duty to do the right thing. On the iPad kit, I wrote about that in the past week, but I didn’t know what the sales price of that was. I knew that the commission was $300, and they were talking about $30 a month, or something. What was the suggested retail price for that thing?
Alex Viecco: I think – if I’m not mistaken – it was somewhere around $350, or something along those lines.
Steve Rhode: Hm?
Alex Viecco: Yeah.
Steve Rhode: All right, so what other things were discussed on how to get around the law, besides –
Alex Viecco: I think, you know, like anything else, I think there was more like clear dividing guidelines. I think it’s how you read an interpret the ruling. The ruling states that if you alter the debt in any way, that’s when you can go ahead and trigger the fee. Well, anything could be “alter the debt,” but I think the FTC was not pinpoint clear on what that meant. And when we’re talking about debt settlement, I think that’s exactly what they meant.
Steve Rhode: What were some of the interpretations of “altering the debt”?
Alex Viecco: Changing the interest. Lowering the payment.
Steve Rhode: Yeah, yeah.
Alex Viecco: All the things that any of us with common sense would say, “Well, that’s not really what was intended there.” I think the FTC’s not going to take this lightly.
I had the opportunity to speak to a gentleman who is with a government agency, and has mentioned to me that the FTC is packed and ready, if you will.
Steve Rhode: Oh, yeah, absolutely!
Alex Viecco: And those are the things that, you know, I believe for us to be an industry leader, we have to take that extremely serious, and I certainly don’t want to be associated with anybody who’s not going to comply 100 percent with the ruling.
Steve Rhode: So what’s your best guestimate – out of all the debt settlement companies that are operating right now – what number do you think are good compliance companies like yourselves?
Alex Viecco: It will probably fall in less than the 50s – less than 40 rank.
Steve Rhode: Um-hm.
Alex Viecco: Of all the companies that are out there, I think less than 50 companies will come out and say, “Okay, we’re going to go ahead and be compliant.” There is a slight adjustment that all of us have to make, and if you run a good business you have to just bit the bullet for a few months, but if you’re focusing on doing what the consumers are hiring you for, they’re hiring you to settle debt. So that’s what we should be doing, settling debt.
Steve Rhode: So what’s your –
Alex Viecco: They’re not hiring us to enroll people.
Steve Rhode: Since the conference was in Vegas, I’m going to ask you for a betting answer from you: What’s your estimate of these cowboys screwing things up and killing the industry altogether because of their bad acts?
Alex Viecco: Oh, I’m a betting man in the positive sense, because I’ve been doing this, like I said, for over a decade. So I’m going to bet that the good people will prevail; I think this is a vindication for any of us who have always performed based on results. I think more than ever, the FTC wants to see that.
I think in due time, probably within the first six months of next year, you will see a clear indication of those companies that will survive, and a clear indication of those companies that will be shut down or will be shutting down on their own.
Steve Rhode: All right. Well, Alex Viecco from New Era Debt Solutions, I want to welcome you to the good side. Not that you haven’t always been there, but it –
Alex Viecco: Yeah, I was going to say, wait a minute, we’ve always been on the good side.
Steve Rhode: But you’ve taken some very brave and decisive action to put your name and reputation out there as, you know, we’re not going to take it anymore. And I applaud you for that.
Alex Viecco: Well, I thank you, and I hope to keep helping consumers in many ways. So if we can keep getting the word out about the ruling, that’s something that every consumer needs to be made more aware of, because I don’t think there’s been enough coverage on that.
Steve Rhode: All right. Well, thank you, Alex.
Alex Viecco: All right. Thank you, Steve.
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