Here is a copy of testimony that was presented in California today to support a debt settlement fee cap at 15% of savings.
The Honorable Ellen Corbett
State Capitol, Room 2187
Sacramento, CA 95814
RE: SB 708 (Corbett) – Support
Dear Senator Ellen Corbett:
On behalf of U.S. Debt Resolve (USDR) we support Senate Bill 708 (Corbett), which would put additional rules in place to prevent debt settlement companies from taking advantage of financially distressed consumers. USDR has performed debt relief services for over 6 years and has been recognized as an industry leader from a national bank based on the companies performance. In a Case study1 by the British Standards Institute USDR was once again acknowledge as a leader in producing some of the industry’s top results. A distinction of USDR is achieving and maintaining the only nationally recognized certification – the ISO 9001 standard. This has allowed us to operate on a performance basis and also in alignment with the proposed fee structure. We operate in California and offer debt relief services in alignment of the proposed 15% of savings model.
USDR has always been a supporter of regulation for the debt relief industry as we have supported the UDMSA and Debt Relief Acts in over a dozen states. Our involvement as panelists with the FTC for both the Debt Settlement Workshop in 20082 and amending the Telemarketing Sales Rule in 20093 demonstrates our commitment to ensure the best possible safeguards for consumer protection. The long practice of fee structures being collected in advance of services being performed has resulted in consumer fraud, high failure rates and putting consumers in a financial position worse off then when initially engaging with the provider that was offering assistance. Debt relief firms that have operated in a performance based fee model will have a seamless transition to adhere to new regulations as this practice of debt settlement indicates higher success rates and puts consumers at lower risk.
The Provisions of SB 708 compliment the TSR by providing the additional safeguards to protect consumers and would address licensing, certification, insurance and bonding.
Two other areas of crucial concern would also be addressed and that is improved suitability testing of enrollees and comprehensive data to evaluate the success of program results by a provider. Suitability testing of prospective clients will ensure that the client’s goals for debt relief are in alignment with the best options that are available to them and eliminate misdirection of being put in a settlement program when not qualified. Data evaluation has been a concern for regulators and consumer protection groups for years as the industry as a whole has neglected to provide any substantial information to support its claims that debt settlement is a viable option for consumers. Collection of data will allow successful providers of debt relief to continue to practice and the elimination of sub standard programs.
In closing this SB 708 will have additional benefits on the Debt Relief Industry
1. Simplified Consumer selection of qualified debt relief providers
Easy to identify the best of breed
2. Increased level of Education and Financial literacy
Continued pro active debt relief program designs
3. Strong enforcement of these rules will be important to ensure that predatory activities do not continue
4. Elimination of Flawed Debt Relief Programs
5. Non Qualified Consumers will not be solicited
Should you require any additional information, please do not hesitate to contact me at 214.732.0484 or firstname.lastname@example.org
/s/ Scott C Johnson
Scott C Johnson
cc: Senator Ellen Corbett
Honorable Members, Senate Banking & Finance Committee
Eileen Newhall, Staff Director, Senate Banking & Finance Committee
- BSI CASE STUDY – http://www.usdrinc.com/downloads/bsi-case-study.pdf
- Consumer protection and the Debt Settlement Industry http://www.ftc.gov/bcp/workshops/debtsettlement/index.shtm
- # 302; Project No. R411001; 16 CFR Part 310: Telemarketing Sales Rule: Notice of Proposed Rulemaking to Amend the FTC’s Telemarketing Sales Rule to Address the Sale of Debt Relief Services; Request for Public Comment, and Announcement of Public Forum http://www.ftc.gov/os/comments/tsrdebtrelief/index.shtm
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