In this post I’m not going to label the parties involved. Frankly, it’s potentially too explosive and it’s more important to get the information out rather than identify the companies.
I get lots of tips and many of those tipster (send in your tips here)s are inside companies and they feel compiled to speak out to help protect consumers from what they see as bad things happening.
What you are about to read is the feedback and advice from one such management person inside an advanced fee attorney model debt settlement firm that has been exempting itself from the FTC Telemarketing Sales Rules against advanced fees because they are a law firm.
The setup of this firm is similar to others that exist. In this case the firm does not actually process the accounts and instead hands the work off to a service provider which they claim to supervise.
Those in the debt settlement world are very familiar with the setup I’m describing.
Debt Settlement Insider Speaks Out
I’m very appreciative of this insider for speaking out about the practices in place and the realities of life inside the advanced fee debt settlement operation these days.
I you would like to speak up anonymously, please feel free to contact me here.
- Do the attorneys at the firm advertised actually settle the debt?
“The attorneys do not settle the debt ever, [x] has staff in their office that do that. The supervision from lawyers is a joke. They dont supervise anything other than having to get the marketing approved that you will be utilizing. The lawyers that [x] signs up most have no idea about how the program works, etc. They started giving out a DVD and front end companies emplore reps to give out their number if the client has any questions in fear the [x] lawyer will botch it up. All the attorney really does is go over the income and expense and make sure its accurate based on asking the client if it is and that the DSC filled out info for car, mortgage etc.
The problem is that clients think an attorney is representing them and will be doing the work, that is just not true. They now say the are represented if they get sued. That is what part of the retainer fee is, and reps say the lawyer will even go to court with you. I dont know of any case yet where that has happened.”
- How is the service sold to the consumer?
“The entire sales presentation is done by the rep over the phone. The lawyer does not do that.”
- What kind of program are consumers sold?
“The clients are put into a low settlement savings plan and the typical settlement percentage is much higher. So that means client stays in longer. Most reps don’t disclose that of course. Many sales reps lied selling the program, they still do. The sales reps that lied I only heard of 1 that ever got let go.”
- What can you share about the effectiveness of the back office process?
“The settlement process is a joke in most aspects. The software system used is not that good so many times clients have plenty of funds to settle or work on one but the creditor is not flagged. Its not until the client calls complaining that it would get escalated and then called. They talk about wanting to settle the clients account, but on more than one occasion [x] mentioned its more cost effective if clients cancel around the two year mark. That way dont have to service them and the fees are collected.”
- What is the success rate of the program?
“Most clients do not complete the program if over 20 percent did I would be shocked.
At then end of the day the service is terrible, most clients dont complete the program and they are in worse shape.
Most clients just pay fees. They don’t save crap until like a year out, by then creditor has gotten to them, or they are sued, etc and they freak out.”
- Do you get a kickback from the escrow company the client funds are placed with?
“We absolutely do. This was an issue when a client questioned the [x] doc says the fee is 9.95 but on the schedule of payments was 12.95. If anyone traces it, I guarantee it will be there.”
- What about client data security?
“They don’t even keep their server rooms locked which is a MAJOR violation. Anyone can go in there and take data of clients, social, credit card numbers etc.”
- What is happening these days with all the suits against advanced fee debt settlement companies?
“[x] has contacted the marketing companies that are sending us clients to now help pay for lawsuits agains the law firm. One DSC told me [x] would just remove the money from the escrow account if they did not pay which technically is illegal. [x] is not supposed to have access to that money OR influence the owners on what to do which [x] does both of.”
- So the customer service representatives are the ones really do the work. What’s the experience level with them?
“Most customer service reps are kids, probably mid-20s max . They are clueless about debt and finances. and yet are on the phones with these clients. I know a lot of them, most people that work there hate the culture and environment of the company.”
It certainly seems like time is ticking down for the boiler room mass market advanced fee attorney model debt settlement firms. More and more information is being made public that raises concerns and issues.
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I’ll add some information on this subject sometime this weekend.Â
Also, Steve, would it be possible to add dates to your postings? I gather by the comments posted that this information was recently put onto your site but dating your article will help readers know if the information they’re reading is current. Thanks a bunch.
I think you just missed it. The date for all articles is at the top right under the author byline.
your other right I mean left yes top left is the date of articles
Yea, that right. LOL.
Steve, may I quote some of this in an article I’d like to publish? Please let me know. Thanks!
No problem, feel free, just link back to the story from what you publish.
Unbelievable. The FTC cracked down on debt settlement companies for charging up front fees, yet debt settlement attorneys were exempted from this ruling. Don’t get me wrong – I have no issue with prohibiting large up front fees, but it’s clear that by allowing debt settlement attorneys to continue this practice, naive consumers are still at risk of being taken advantage of. Sorry, but just because you have a law degree does not mean you are ethical. Remember, Mann Bracken, a national collection law firm, was shut down for illegal practices. I wish our government’s laws and policies would start making more sense. I was disgusted about the up front fees before I read this article, but now I’m even more disgusted. What a shame.
Marie Megge
Donaldson Williams, Inc.
Steve, just a few quick questions; (if the answer to the first two are yes then disregard the rest).
Do you personally know this tipster, have you met?
Have you “confirmed” this person is still employed with the firm in question? If not;
How did/do you verify that the information you posted here is the real deal? You make it clear you are relaying something from a tipster so, how do you confirm the info as credible? Did you call the firm and secret shop it, did you ask to speak to an attorney and question him or her? Ask for a negotiator?
Did you verify the tipsters’ employment with the firm, maybe some old redacted pay stubs showing time in grade, I mean this guy or gal is throwing out statistics on success rates, walking through the server room etc..? What was/is the tipsters position of employment, you mentioned management are they still working with the firm and if not why?
I could go on but my point is, you’re not disclosing the firm or the tipster so what makes readers believe this is not just a story?
Don’t get me wrong, I do hope the up-front fee model dries up and blows away but, based on resources I don’t see that happening anytime soon.
MR
Take it for what it is. You are free to not believe it if you want.Â
There was detailed information that I was not able to include at the tipsters request for fear it would alert the company to their identity. Some of the information is intentionally vague to protect them.The issues raised have been told to me by a number of different sources, not just one person.
Is there something in the story which sounds out of place from what you’ve heard from others?
Not at al Steve, nothing suprises me any more! I must say though, if this person is in a management position it must be Head Janitorl because there was no mention of trying to correct these problems or bringing them to the attention of the owners. Among other things “Managers” are trainers…period! This dummy sets up the sword and then falls on it. Who ever it is better hope their name never get out.
Great management!
The tipster tried all that and was rebuffed by owners.
Q: If they are really this bad, why hasn’t anybody just shut them down?
A: How? They are compliant with all the regulations. They are in good standing with the bar. The bar regulates their fees.
Get it yet?
Take a look at recent actions.
I dunno Errick. The same cease and desist action against LHDR covered elsewhere on this site is a model that can be followed in several states.
Take NJ; there is a carve out for attorney, but are marketing companies partnered with law firms who rent the NJ attorney name doing so in a manner consistent with have an attorney client relationship? I dont know, but kinda doubt it.
How bout KS, MO, OR, VA, WV, and more…
The bar appears to be slow and loathe to move against their own more often than not. I dont think state authorities need wait and could be active in pusuit should they care to be.
So here is the inside deal on the attorney model action from my AG friends in several states.
All eyes are on the IL actions. With limited budgets they can’t all afford to tackle the same issue. Budget cuts and all. Even State Bar groups are fighting the same budget issues.
Illinois is going to be the template and everyone fully expects LHDR to fight hard. It will take time but the regulators in this space are all watching IL and they talk about it.
Yea… I am starting to understand while the world (our economy) is falling down around us, the bar associations and regulators have to pick and choose their fights. This is without considering whether or not the argument against LHDR is a slam dunk or not.. Believe it or not, the regulators, bar associations have a ton of issues outside of the debt relief world and there are only so many dollars to go around.Â
–> My conspiracy theory side says they want LHDR to continue to provide services as a reference for more regulation in the future. This would mainly come from the people who have vested interests (banks mainly)Â
Yes I am guilty of broad language again. Several states have INITIATED actions against many of these companies. But each of them only reach within that one state, and none of them have run their full course. The attorney exemption language is so vague that by the time it is fought to the end, hundreds of thousands more people will be swindled out of what few resources they have left.