The Canadian publication Maclean’s has recently published a scathing article on the debt settlement company Cambridge Life Solutions.
But the underlying story here is how Cambridge Life Solutions just shifted a business model now prohibited in the United States to push on unsuspecting fun loving Canadians.
But the model Cambridge Life uses is a controversial one. The United States Federal Trade Commission (FTC) calls one of the core elements of its business “an abusive practice.” The model it uses, which relies on consumers paying fees to the company before it reaches deals with creditors, was outlawed in the U.S. in 2010 and is illegal in Manitoba. The company says its program takes discipline, and those who see it through often see outstanding results. Phill Allopenna, the company’s Toronto branch manager, says successful clients pay back an average of 40 cents for every dollar they owe. Critics, however, say the program can leave the unwary with more debt, less money and bad credit.
It would be interesting to see audited company data that supports the repayment claims in accordance with the proper way to calculate success rates laid out by the Federal Trade Commission. What I find curious is that the company spokesperson allegedly relates the success rate for a reduction in the debt to be 40%, a seemingly pulled out of the ass number that many shuttered debt settlement companies used. Is there any basis in fact for that assertion?
Clients also agree to pay service fees equal to about 15 per cent of their original debt. Most of those fees get paid up front, before Cambridge Life strikes a deal with creditors. For the first three months of some programs, every penny customers pay into the plan goes to the company. In one contract Maclean’s obtained, a customer paid Cambridge Life more than $2,000 a month in service and maintenance fees for the first three months.
This advanced fee model in the U.S. was horrible and helped consumers to get sued faster by their creditors rather than settle their debts. As far as I know there is no study that shows taking fees in advance from consumers and ignoring their creditors is beneficial to anyone other than the debt relief company.
Cambridge Life Solutions doesn’t operate in Manitoba or Alberta. But in the provinces where it does—all the others minus Nova Scotia and Newfoundland—Allopenna says clients have had their debts cut by as much as 90 per cent. He would not say, however, what percentage of clients who enrol in the program actually finish it.
And that’s the point, isn’t it. The true question is if the Cambridge Life Solutions program is beneficial to consumers. If it is then why not share that data and results in an open and transparent way. Some may feel that not sharing that data is a way for the company to shield itself from criticism.
As for Alan Thicke [celebrity spokesperson], he’s standing by the company. “Debt relief is a relatively new and growing product,” he said through a spokesman. “My due diligence clearly supports Cambridge as a leader in the field.” – Source
LOL.
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cambridge take thousands of dollars upfront without actually negotiating on my debt. all they do is send our a power of attorney. no work is done for 6 months and the interest and fees keeps accruing on all my accounts, if they go legal( i get sued) they will not help the bus stops there. they negotiate on the current balance not the original when i first signed on.. there negotiators are prior collectors who act like them when they called me for an offer once, and it was %80 of the debt, i owed $10k and offer was for $8k i was only 2 months into the program??WTF how am i suppose to have a savings when they take all my money in the first 3 months?? the guy said per your contract we tell you of all offers no matter what? whats the benefit in that?? they use this loophole to be able to argue there fees they have collected before canceling me..they collect more than half of a savings i am suppose to set aside to pay of the debt.. if they collect more than half there intention is to collect not help me pay off my debt. they charge me a fee plus a maintenance fee to work on my file?? really how much work is done?? do not use them!!! i learned my lesson i have to file PBK..
Call Alan Thicke and ask him to negotiate with your creditors himself
Steve,
I used to be the Director of Operations for the owners of Cambridge at a previous venture, same line of work. I have mixed feelings to say the least. There are clients that do see amazing success, but most I am afraid to say-do not-for a number of different reasons.
If you feel that my inside experience with the owners of this company would be advantageous to you and/or your readers, let me know. I will gladly share the pros and the cons, but I am sure you will find my story pretty interesting.
You can leave a reply here and figure out the best way to connect.
I tried to reach you at your comment email address and it bounced. You can reach me through this link. https://getoutofdebt.org//confidential-tip-form/
Steve,
The spokesperson said that customers who complete the program pay back 40% of their debts.
You stated that the spokesperson claimed a 40% success rate.
How long has cambridge been in business?
Thanks. I’ll clarify that. I was referring to a 40% success rate in debt reduction.
Tomatoes Tomatoes.
It would be a 60% reduction or a 40% payback. It’s important to make clear what they said. When the investigators need info we want to have it right and right here for them to see.
Any info on how long they’ve been in business?
Cambridge has been operating in Canada since October 2010 when their business model became illegal in the U.S. Before that time I understand that they operated under a different in the U.S.
They indicated in the article since 2010.
The other issue that makes the numbers offered up, suspicious, is that one is a range and the other one is a round even number. When have you seen a number over a wide range of clients result in a round even average number like 40%?
What’s the supporting data?
The FTC issues guidance on these types of measurements here http://business.ftc.gov/documents/bus72-debt-relief-services-telemarketing-sales-rule-guide-business
Important points not addressed by figures are if they include fees, factor in accounts not resolved, and are a sampling over a wide number of customers.
Actually Steve, whats suspicious is that you’re advertising on your site the very same companies your warning Canadians about! I see ads for Debtcare.ca offering “New Government Programs” to help get Canadians out of Debt, as well as Total Debt Freedom that offers the same ‘up front fee program’ as Cambridge, not to mention Debt180.ca which you wrote a blog about here
https://getoutofdebt.org//36922/bogus-debt-settlement-ads-from-debt180-ca-are-disturbing
A bit hypocritical of you don’t you think? I guess when it comes to ad revenue no paying customer is off limits no matter how questionable their business practices are?
ridiculous
I think you may not have an understanding how Google ads work. I provide a detailed description on how they work on this site at https://getoutofdebt.org//terms/
In a nutshell, I have no relationship with advertisers. That is all handled independently by Google. And Google is responsible how ads are served.
Ads that any viewer may see are dependent on where the person is accessing the internet from, the associated geo ip of that internet access point, targeted areas of advertisers on a time/day/geographic basis, and other sites a visitor may have previously surfed.
Since I’m in the U.S., even though I have visited the sites you mentioned, I never see ads for those companies. I suspect they are limiting their ads to Canada residents or tighter restrictive geographic presentation.
If you are in Canada, have visited those sites or other sites that Google determines you are a target for that ad, then you may see it.
Hope that helps clear up the misconception.