For a number of months now I’ve heard that Global Client Solutions has wanted to get into the credit counseling and debt management arena. To date I’ve not published anything about this but I just received a very interesting letter that appears to confirm that and also allege that Global Client Solutions is/was considering kickbacks on monthly fees.
This correspondence comes from Ira Frazer at Consumer Legal Services America and is dated March 5, 2011. It contains a number of other bits and pieces that others might be interested in as well.
Dear CLSA Affiliate:
2010 was a difficult year in the debt settlement industry. Those who have continued to work with us I am happy to report are surviving with strong prospects for the future. Over the last few months, we have weeded out a number of organizations who we believe did not meet our standards. Likewise, we have added and will add a select number of new companies to our family. Our longer term plan is to cap the number of our affiliates and focus on ways to offer more products and services.
We feel very comfortable with our approach and also feel that we have answers to all of the issues confronting Legal Helpers in the class action lawsuits filed against them and others in the State of Washington, the State of New Jersey as well as the lawsuit filed by the Illinois Attorney General Lisa Madigan.
We greatly appreciate everyone sticking with us through all of the turmoil of the last several months. As the new regulations from the Federal Trade Commission have come into place, we have been monitoring the sales presentations. Unfortunately, we acknowledge that they have not been as smooth as we have liked. We are in the process of addressing those problems. We have added a brand new organization on the East Coast. Within the coming months we will be revising the representative training and improve upon what we have. We are also exploring ways that we hope we can reduce the cost and offer you additional options.
As we grow, CLSA is adding more lawyers and more administrative staff. Michele Bosch has joined us to handle accounting and financial matters. She supplements our existing staff.
We have new and exciting developments. Each of these is more fully described below.
POSSIBLE PROCESS CHANGES TO IMPROVE CASH FLOW
In response to issues that many of raised regarding cash flow and the risks associated with paying for the legal evaluation and face-to-face presentations, we have developed an alternative approach whereby the consumer can pay up front for an educational course and a legal evaluation. The price for the service can be set at a level that will cover the cost of the legal evaluation, the face-to-face, the educational course as well as a small profit payment. I have also developed an approach if you wanted to work on a success based payment arrangement. Let me know if you want to learn more about any of these alternatives. We can schedule a meeting. It is too complex to explain in this general update. These alternatives are already to go and can be implemented very quickly.
Within the next few months, we will be implementing the education course requirement. I am looking for a full conversion by July 1, 2011. As noted in the previous section, we may be able to include the education course in a methodology that can improve your cash flow. The concept behind the education course is to better protect lawyers and everyone in the process. We will know with absolute certainty that every consumer has been fully informed.
I am happy to announce that we have finally developed a relationship with a lawyer admitted to practice in North Carolina who is willing handle debt settlement for residents of North Carolina. Chris Lane is the lawyer. Chris has extensive experience in the representation of financially distressed consumers. He has handled Fair Debt Collection Practices Act work, negotiated with creditors on behalf of consumers, litigated and defended consumers on debt matters and can also handle bankruptcy. In fact, he is admitted in all three judicial districts in North Carolina.
If you are interested in working in North Carolina, please let me know. The applicable requirements under North Carolina law are slightly different than other states. The North Carolina Bar takes the position that a consumer must speak directly with a North Carolina before they retain the services of any North Carolina lawyer. This conversation can be in person or by telephone. Our concept is to combine this required consultation with the compliance call. Likewise, provided prior to the call the lawyer has received the complete package of information, the lawyer should be able to approve the consumer during the telephone conversation. Since the lawyer will be more involved, it also may be possible to reduce the underwriting and rely entirely on the lawyer.
We also believe that to comply with North Carolina rules, the contract with the consumer must be in the name of a North Carolina law firm. Consequently, we are going to need have you sign an additional agreement with the North Carolina law firm. This is also going to require a separate accounting for North Carolina, a different payment processor account and a different sweep account. In essence, you will be working with an additional law firm under their own set of documents. The client document will however remain the same subject to adding a provision for the new North Carolina firm. It is imperative that you store the North Carolina files in a separate data base and do not combine them with your existing firm.
Because of the new requirement for the initial consultation, the cost will increase by $100.00. The $100.00 will be waived if the consumer does not end up joining the program. We will work with you on the timing of making this payment so as not to create too much of a burden on operations.
If all that you want to do is to market in North Carolina but do not want to set up the separate structure, this will also be possible. Again, please let me know what you would like to do.
Please also note that going forward without the additional cost, we are likely to change the way we handle Florida and a few other states. It will follow the same approach we are using in North Carolina. There is no time table on any such switch. We also feel that making such a change improves defensibility.
After many stops and starts, we finally have an arrangement to compensate for consumers enrolling in bankruptcy. The compensation would be available in every situation provided CLSA does not have an existing obligation to provide bankruptcy. Those situations where CLSA has an obligation include consumers who participated in our old ELS program and those consumers who are in a convertible program.
The primary place where the new bankruptcy program will be helpful will be in situations where someone cannot qualify for debt settlement or someone washes out of a traditional debt settlement program and wants to file for bankruptcy.
The only thing you will be required to do in the new program is to pass on contact information. There will be no other responsibility. There will be a way to compensate for participation in a meaningful way. Please understand that most of the current programs that pay parties for bankruptcy referrals we believe are not legal and will ultimately result in problems for everyone involved. We are confident that our approach addresses all of the issues and will pass muster with organizations regulating the conduct of lawyers and federal bankruptcy trustees if ever challenged.
Because of all of the complexities ensuring that we will not violate ethical rules involving fee sharing or referral fees, our solution it is too difficult to explain in this general update. It needs to be handled in person. Please let me know if you are interested and I will arrange to set up a time to discuss the program with you.
We are set up and ready to go. All that will be needed is completion of the paperwork and compliance with the terms of the program.
TAX RESOLUTION, LOAN MODIFICATION AND CREDIT REPAIR
The same opportunity that we are making available for bankruptcy we are also making available for Tax Resolution, Loan Modification and Credit Repair. Our methodology is the same as bankruptcy and again there will be an opportunity for meaningful compensation. The time table for each of these three is further out. Again, your only obligation will be to provide name and contact information. Loan Modification we expect will be available by early April and Tax Resolution and Credit Repair by May of this year. Again, because of the complexities, explanations are best handled in person or by telephone.
DEBT MANAGEMENT/CREDIT COUNSELING
Through Global Client Solutions, we hope to be able to offer an opportunity utilizing lawyers to allow you to offer debt management/credit counseling and make a meaningful return. This is still in the development stage and I am being told that Global will get a legal opinion from the Venable Law Firm in Washington, D.C. So far, I have been unable to talk with anyone at Venable. In the interim, I do have another source that will take raw leads in the debt management/credit counseling space that will pay you $50.00 per gross lead if the lead meets basic qualifications regardless if the consumer signs up for the program.
We have reached a tentative agreement with a new payment processor that will allow you to be paid $1.00 per month per account for each new consumer enrolling with the payment processor. I have one processor that is signed up to participate right now and are talking with several others. Although Global Client Solutions did not want to offer this, I feel confident they will. Similarly, I also believe SAS will follow suit. We hope to have this in place within the next few weeks. Again, the methodology is complex and does not lend itself to a brief explanation in this update.
SECURED CREDIT CARDS
Although I do not believe that the program is for everyone, I have also developed referrals for anyone looking to market a secured credit card that will allow a consumer to establish credit reporting while they are in the program. While I am not sure if it is truly appropriate for most consumers, it is another opportunity we can make available to you.
TELEPHONE DEVICE TO DEAL WITH CREDITOR CALLS
As you are all aware, our general rule of thumb is not use any device on the telephone to re-route collector calls. However, we have also developed a relationship with a company that distributes a device that when hooked up to the telephone will simply allow the call to ring without anyone answering it. They also have some technology for a cell phone that will play a recording stating the number reached is no longer a working number. Again, while this is an option I am not sure how much it helps. In addition, we would lose the log that could be helpful in proving an FDCPA claim.
I am awaiting a software program being developed by a law firm that will enable a consumer to generate a form answer in the event the consumer gets sued. The software is intended to work in every state and will even include instructions as to where and how to file the answer. Unfortunately, I do not have a time table or a cost estimate yet. Nonetheless, the anticipation is that it will be a one subscription fee that a consumer can use for anything even if they complete or drop out of the program.
Again, I personally want to thank you for all of your help and support. CLSA has turned into a rewarding experience for me. One of best aspects of it has been the friendships and the relationships we have formed with our lawyers and our affiliated partners. We are looking forward to long relationships with everyone and to profitable years for everyone in 2011 and beyond.
Denials All Around
I contacted Ira Frazer from Consumer Legal Services America who sent the email and attachment and asked him specifically about some of the information contained.
I’m looking for a comment from you about:
1. You were planning to promote a debt management plan by Global Client Solutions.
2. Attempting to get a kickback for CLSA affiliates of $1 per month from payment processor/escrow companies. The tipster (send in your tips here) states you had one one company signed up to give kickbacks and you felt confident Global would as well.
3. So who is the source that will pay $50 per lead for credit counseling leads?
Frazer’s entire response was, “The information you have is inaccurate.”
Then I emailed Frazer the two sections of his email and asked, “OK, I have your denial but how do you explain the email you sent out to your affiliates that makes those statements?” Silence.
So I then turned to Robby Birnbaum, Esq. for a comment since he’s reached out to me before when I’ve published information about Global Client Solutions. His response was, “The below is not accurate.”
So there you have it. I was also able to confirm the email and attachment was received by a second person from Ira Frazer at CLSA. So either someone created a problematic promotional attachment, hacked into Frazer’s email account, got his affiliate list and sent it out as an update to affiliates, or the email and attachment are legit. Which do you think is more likely?
So with the denials all around I’m left with either CLSA was making it all up and the information was not accurate when it was sent out or nobody wants to own up to it now.
Of interest in the plans allegedly laid out by Consumer Legal Services America is:
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- A way to step around the TSR with an educational course.
- A compensation arrangement for bankruptcy filings which seems to run afoul of fee splitting.
- Offering credit repair apparently for a fee which could get into sticky matters involving the Credit Repair Organizations Act.
- The allegation Global Client Solutions was going to get into the credit counseling arena.
- Credit counseling providers were going to pay for leads which lands them in hot water with the IRS.
- Kickbacks from escrow companies which is against most, if not all UDMSA states.
- The one thing that made the best sense, the secured cards, was dismissed.
Basically the email to affiliates appears to be a hot mess of things to not do and clever [or not so clever] ways to allegedly get around debt relief laws and regulations.
The website for Consumer Legal Services of America is presently being redirected to Google as I discovered in the research for Consumer Legal Services America Took Our Money But Doesn’t Help. – Donna.
Another proud moment in Debt Relief.
We can do better than this as we move the debt relief industry forward.
Let’s try this approach. How about we not try to be clever in wiggling around regulations that are designed to protect the consumer and instead work just as hard to create new transparent and effective solutions that allow us all to act collaboratively to best help the people turning to us. Let’s stand proud and tall.
The need at this point is to create new alignments and relationships that place the consumer at the center of a circle of for profit and nonprofit service providers with diverse skills that can deliver the best services possible and address the consumers situation now and moving forward. The goal should not be to close the sale at any cost, especially to the financial and emotional detriment of the consumer, but to do our level best to help people in trouble.
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