Its true that no CID’s were sent out. But there is a lot of talk about the FTC requesting information on settlements being paid by [an escrow company]. (this is first hand from a company I work for regarding a settlement I negotiated.)
I have been in the industry for over 5 years, and to see the amount of companies in Arizona running and going broke is alarming.
The said part is after reading your article on the CID’s and finding out that between GCS and Noteworld there are over 700,000 customers. I will be the first to say they better brace themselves. No regulation or oversite of the industry has lead to this point – implosion.
I guess that’s what happens when you allow mortgage brokers to open DSA.
Keep up the good work!!!!
Thanks for contacting me. I’d love to hear from more employees of companies in the debt relief world.
The whole CID issue got sidetracked by long discussions over if NoteWorld or Global Client Solutions received them. And while I’d love to know the exact number of consumers those companies serve, it would only be academically interesting, it doesn’t matter and it’s not important. I think we can safely say they probably serve the majority of debt settlement clients.
This is a time of great uncertainty in the debt relief world for debt settlement companies and consumers. In fact for those of us in or who watch the industry, this isn’t a surprise at all. Back in November 2009 I published “85% of Debt Settlement Companies May Be Closing Soon and Taking Your Money With Them” where I talked about a debt settlement trade association saying way back then the majority of companies would close. So part of what you are observing in Arizona today is exactly what was predicted to happen way back then.
business models, profiteering, shortcuts, lies and greed.
Good companies are disheartened they are being punished for the actions of bad companies around them. Regulations protecting consumers are impacting all companies and proposed state legislation seems unpalatable to the remanning companies. This is a critical time of upheaval in the debt settlement world.
It’s not NoteWorld or Global Client Solution that is the heart of the story. And while those two companies probably do handle the majority of third-party accounts on debt settlement programs, they are going to suffer just as consumers and employees of debt settlement companies are as the inevitable unfortunate outcomes happen.
You can only imagine the financial impact both NoteWorld and Global Client Solutions are going to face as the number of consumers they assist begins to drop when debt settlement companies fail. Consumers that are cast out by debt settlement companies that fail, probably don’t need a third-party escrow company anymore. And each consumer that seeks a different solution takes income away from NoteWorld and Global Client Solutions.
This entire developing situation needs to be refocused back to the real culprit, the fundamental failure of the advanced fee debt settlement company business models and the untrue deceptive marketing that was flowing like a cold Seattle rain.
The reality in the consumer protection world is if consumers are not feeling ripped off, get refunds for services not rendered and don’t have a reason to complain, then there is no need for regulations and legislation. But that’s not what happened here. Is it?
Fast and loose companies paid marketers big bucks to basically tell people lies to sucker them in and seal the deal. Those companies then took big fees early from those disadvantaged clients and spent the cash before providing the services consumers paid for. The companies relied on new advanced fee sales to keep the ball rolling and grow the operation. As Michael Bovee of Consumer Recovery Network said in my 2009 article, “The current debt settlement industry is a massive Ponzi scheme.” That was the underlying problem, not NoteWorld or Global Client Solutions.
Based on previous investigations, the industry as a collective would be hard pressed to show that any more than 10%-20% of all enrolled debt settlement accounts were actually settled. But let’s say that number was higher, say 30%. That still means that 70% or so of enrolled accounts were never resolved for whatever reason, even though consumers may have paid advanced fees for them to be taken care of and did not get refunds for services not delivered.
It was the advanced fee model that always a house of cards. It was always going to tumble down.
And the sad fact is none of the failures and debt settlement job losses had to ever happen. If debt settlement companies had focused on doing the right thing and earning their fees when they actually provided the service, there probably would not be any recent state or federal legislation and employees of debt settlement companies would not be losing their jobs. Even if they had taken advanced fees, if they had just escrowed those fees and taken them when earned they could have refunded consumers who did not receive the promised service. The irony is that it was the very service the advanced fee debt settlement companies needed was to be clients themselves of NoteWorld and Global Client Solutions.
I wish this situation could be a lesson for future opportunists to learn from but it won’t be. In fact the very same greed, exaggeration, and profit over people mentality is surging right now in the new field of mass joinder mortgage litigation marketing. If you take an early seat in the bleachers and watch that mess grow and then collapse, it will look fundamentally familiar to you.
Both Global Client Solutions and NoteWorld deny they received a CID, and like I said before, it really does not matter if they did, do or don’t. It is simply not material at all to the implosion of the industry.
In the end, in a way, they will most likely both be victims of this huge mess as well.
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