Debt Settlement for Business Debts. One Step Ahead of Regulators Says Reorganization Management Group.

Thanks to a tipster (send in your tips here) I received the following notice from the Reorganization Management Group.

This is the second such organization that has been brought to my attention recently that claims to focus on business debts. The first was a business debt settlement company called Corporate Turnaround. More about them later.

Here is a document the Reorganization Management Group sent out recently. The arrows are mine.

Call me crazy but I can’t imagine saying “[we] remained one step ahead of regulators” is a great thing to put in writing. Maybe they meant it as a positive statement but that’s followed up later in the letter with a statement about how the telemarketing sales rules (TSR) does not apply to the services they provide and bravado about their large profit opportunity.

Operating Freedom– consumer regulations such as the TSR of 10/27 do not apply to businesses

And it seems they are bragging about being able to almost double charge for their debt settlement services.

Larger Profit Center– service fees are closer to 25% of the debt rather than the 15% associated with consumer clients

The pitch from Reorganization Management Group seems to be seeking out non-business accounts into their company through the purchasing of “client base of consumer debt settlement customers.” Their own website appears to solicit both types of accounts as well. This seems to confuse the focus of the company. Is this a business focused company or a consumer focused company?

A while ago a tipster (send in your tips here) sent in information that alleged another similar company, Corporate Turnaround, was taking on consumer accounts as long as the client “swore” they also used them for business. A slightly different twist. The tipster (send in your tips here), who claimed to be a previous employee, said Corporate Turnaround also charged 35% of the debt to settle debt and commingled client funds and business funds in the same account.

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Those are certainly some very serious allegations. So on March 7, 2011 I reached out to Corporate Turnaround for specific answers to the allegations and to date they have not responded except to acknowledge they received my request for information.

See also  Reader Reports Successful Refund From Reorganization Management Group

But it was the mailer from the Reorganization Group today that brought Corporate Turnaround story back to mind. It seems the claim is that by focusing on business debts, nearly unlimited fees can be charged and the telemarketing sales rules from the FTC does not apply.

I reached out to the FTC for a comment on this story but they elected to not comment at this time.

What’s your take on this approach?

Is this a legitimate loophole?

Is mixing consumer credit cards with pure business debts like mixing fertilizer and diesel fuel that can explode?

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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.
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