A reader just brought this press release to my attention.
Federal Judge Rules in Favor of Financial Freedom Processing, Debt Consultants of America and Debt Professionals of America, Finding that the Federal Trade Commission Failed to Prove its Claims
DALLAS, March 21, 2012 /PRNewswire via COMTEX/ — In a stunning rebuff of the Federal Trade Commission’s (FTC) attack on the debt settlement industry, a federal court judge rejected the case against three Dallas-based companies. United States District Judge David C. Godbey of the Northern District of Texas delivered a verdict in favor of Financial Freedom Processing, Inc., Debt Consultants of America, Inc., and Debt Professionals of America, Inc.
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Debt settlement companies, for a fee, negotiate discounted settlements with a consumer’s creditors after the consumer has saved enough money in a special purpose account to fund each settlement. The companies advertised that, through their programs, consumers can save 30 to 60 percent of their credit card and other unsecured debt. Upon completion of the program, usually in 36 months or less, the consumer will be debt free.
The Federal Trade Commission (FTC) complaint alleged that the companies’ savings and timing advertising claims violated the Federal Trade Commission Act and sought more than $58 million dollars in restitution. However, Judge Godbey found that the claims “were true for a majority of the customers of the Companies who completed the program.”
Bob Wise, of the Dallas law firm Lillard Wise Szygenda PLLC and the companies’ lead trial attorney, was pleased by Judge Godbey’s decision, pointing out that “the FTC failed to prove its case. To the contrary, as Judge Godbey found, the companies and their officers and directors used their best efforts to comply with the law and acted in good faith at all times.”
Corey Butcher, a founder and CEO of FFA, said, “Even though the FTC had no evidence of wrongdoing, the collateral damage from this meritless prosecution is huge: 300 employees lost their jobs, hundreds of thousands of dollars in revenue was lost, and thousands of consumers overwhelmed by debt were deprived of a viable option to bankruptcy. This is a gross example of over-reaching by a runaway government agency that has nearly derailed an entire industry.”
Butcher continued, “Debt settlement companies fill a critical need that no one else is providing. Consumers need help in learning how to manage their spending and save money. When credit card companies raise interest rates on debt to 28 or 30 percent, consumers get caught in a vortex they can’t escape. Debt settlement companies help educate consumers and give them an opportunity to avoid bankruptcy and get their lives back on track.” Butcher concluded, “There was a lot at stake, and we’re thankful that justice prevailed in this case.”
Financial Freedom Processing is the Dallas-based parent company for Financial Freedom of America, Debt Consultants of America and Debt Professionals of America. The Dallas-based companies have helped thousands of clients settle more than 30,000 accounts, and eliminated more than $150 million in unsecured debt.
SOURCE Financial Freedom Processing
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Why does it appear that FFD testimonials provide evidence they are operating illegally?
“Before Financial Freedom, I had tried on my own to consolidate my credit card debt. The combined payments were more than any other bill I had (approximately half my monthly income at that point and twice my rent). None of my credit card companies would take all the debt and none (of my credit card companies) would lower the rates. I was desperate. I heard about FFP on the radio and figured I’d give it a shot (better for my credit and cheaper than bankruptcy). The FFP staff was very helpful and was able to give me a clear understanding of the process. In a year and a half, I am credit card debt free. The process had its ups and downs, but just making one reasonable payment a month instead of three ridiculous ones, and then actually seeing the savings through the settlement process, was well worth it. FFP is an option that should be seriously considered. Thank you FFP.”- Jacques, Thibodaux, LA
331. Prohibition of debt adjusting when conducted for profit A. Except as otherwise provided herein, no person shall engage in the business of debt adjusting. B. As used in this section, the following words and phrases shall have the following meaning, unless the context clearly indicates otherwise: (1) “Person” means an individual, corporation, partnership, trust, firm, association or other legal entity.
“When I heard about FFP on the radio, I was behind on my credit cards and couldn’t afford the payments. It was getting worse and worse. Due to my divorce, I was getting further and further behind. I was struggling to make the monthly payments. At that time I felt I needed to carry the credit card debt just to live day to day. This was a problem that I needed to have taken care of. When I found out about FFP and that I could get a better payment arrangement with a better time frame for payoff, I was very excited. When the first settlement came through, there was a weight lifted off my shoulders and I knew this program would work. I had completed the program within 30 months. FFP is the perfect program for people in my situation who cannot do lump sum settlements and who don’t have time to deal with the creditors. I would recommend FFP to my friends and family.”- Jeff, Strasburg, CO
http://www.coloradoattorneygeneral.gov/sites/default/files/uploads/uccc/DMReport.pdf
not listed as a provider
“I got over my head in debt between job loss and things like that. I couldn’t make the payments anymore and I had to find an alternative to bankruptcy because I didn’t want to do that. I tried FFP and it worked. I heard the commercial on the radio and I thought I’d call to see what it was all about. I made the phone call and what they had to say sounded pretty good, so I signed up. Debt made me feel like I was just drowning and something was out of control I couldn’t get a handle on at all and it just kept getting worse. FFP’s customer service team was supportive – any questions I ever had, I called and asked and they answered. They told me to stick to my guns and that’s what we did and we came through. They did an excellent job. I was very surprised at the percentages they got on my final account. Now I have relief, which is what I was hoping it would be like – I don’t have to worry about my debt anymore. This process teaches you a little bit of a lesson. Afterwards, you look more in depth into things, not just at the surface – you look at the long term effects.”- Craig, Fairview, WV
§61-10-23. Debt pooling; definition; offenses; penalty; jurisdiction; pleading and proof.”Debt pooling” shall mean the rendering in any manner of advice or services of any and every kind in the establishment or operation of a plan pursuant to which a debtor would deposit or does deposit funds for the purpose of distributing such funds among his creditors. It shall be unlawful for any person to solicit in any manner a debt pooling.
“I think at first I was a little tentative because the process took a little while. When you want something to end as soon as possible, it can become a little nerve racking. I can’t say anything better about the people at FFP, you did exactly what you advertised. I think everyone was upfront with me and everything happened just the way they said it would. Everyone worked hard to get me the lowest rates that they could.”- Gerald, Akron, OH
(C)(1) “Credit services organization” means any person that, in return for the payment of money or other valuable consideration readily convertible into money for the following services, sells, provides, or performs, or represents that the person can or will sell, provide, or perform, one or more of the following services:(f) A budget and debt counseling service, as defined in division (D) of section 2716.03 of the Revised Code, provided that the service is a nonprofit organization exempt from taxation under section 501(c)(3) of the “Internal Revenue Code of 1986,” 100 Stat. 2085, 26 U.S.C.A. 501, as amended, and that the service is in compliance with Chapter 4710. of the Revised Code;
why there is no trust in Debt settlement this company got caught on there web site saying 74 million settled made press releases saying the settled 150 million now there web site says 171 million which is it an why are you surprised the FTC went after them saw a note at the bottom on a guy name paul thinking that a district court is the highest in the land and why having to defend hi statement -public statements and figures will be vetted all the time and his comapny still has not proved the 40% graduation
I think it is funny that people are asking Corey to still defend himself. Why aren’t people asking why the FTC failed. Corey doesn’t owe anyone on this board anything. He won is the highest court. It would nice for the FTC to appeal, and lose again, but time will tell.
Corey, Psuedo Journalists? Or FTC Attorneys?
I think you’ve done enough explaning.
Paul
Scott Johnson & Steve,
Can you both please give Corey Butcher some kudos for actually getting the work done and having a judge recognize the hard work of the 300 employees of Corey’s company?
Thanks,
Previous Employee
OK, kudos for that. Since you worked for the company and want to participate, maybe you can answer Scott’s question.
It’s not an attack. It appears Scott is just asking for help on how the math worked. It’s a reasonable question that should have been discussed at length during the case.
Corey are you hiring? I’ve always wanted to work there again.
If the statement in the article about accounts are directly related to a creditor, than it suggest that FFP clients on average only settled 1 out of 6 accounts or 16.66% of accounts enrolled 30,000 clients 30,000 accounts
30,000 clients previous post x $30,000 debt load = 900 million in debt x 1.22% accretion Rate (reported by TASC) 1098 million
Percent of debt settled 150 million/1098 million = 13.66%
So the Data indicates that if all the debt settled was applied to Graduation of clients FFP could not have a success rate higher than 13.66% but claims a 40% graduation rate. FFP would have needed to settle 439.2 million an allocate 100% of that settlement to just graduates to achieve a claim of 40% graduation rate
Granted enrollment time frames are staggered but math does not lie
Guest,
I appreciate your math but it does not include all the variables. It is like you work for the Obama administration when releasing unemployment statistics. The most glaring figure is that you left out the still active clients as did the FTC. 2) You left out how many of the enrollees never made a single payment to the firm or to their own account. 3) You left out how many clients had the majority of their debt settled and decided to complete the process on their own. Lastly your observation of total debt is completely wrong, as TASC’s numbers are not a good measuring tool for all firms. Why don’t you write a response about those that completed the process? Why the FTC could not find one client who completed to say they didn’t get the advertised results? Why that the FTC doesn’t count active clients that are currently in the program? I appreciate your comments but it would be nice if you would work with the correct numbers before posting a biased algorithm.
Respectfully,
Corey
Corey
I collect data and conduct analysis to performance of debt
relief companies. I was hoping that you could share your math to how you
arrived at a 40% graduation rate. This will give a lot of clarity and maybe
even create a standard for the industry on graduation rates. Thanks in Advance
Scott
Did you hear back from Corey yet on this?
Nothing as of yet – In addition the article misrepresents Freedom Financial Processing as it states 150 milllion settled and they clearly have on their web site that the number is 74 million Corey might want have that corrected
Maybe he missed the questions. I’ll go post a comment on that previous article so he can see it. You’d think he’d want to address the apparent discrepancy.
Scott,
First of all thanks for pointing out the error on the website as I am having it looked into now.
If you look throughout the several previous posts that I have made on this site I have broke down the numbers in various ways. I believe the most effective way to analyze completion rates are by qualifying who is an enrolled client. This is the way I define an enrolled client
1. Funds savings account.
2. Made some form of payment to firm for service.
3. Fully executed all required enrollment documents.
4. Excluded 3 day right of rescissions and 30 day money back guarantees.
Although many clients do achieve settlements and go on to complete the process on their own using the education of the settlement program. I do not exclude these clients from the completion rates.
The facts are that debt settlement with no protection by law or fair share from creditors out performs the alternatives. I will be releasing a book over the next couple months on the ways to resolve a debt crisis. The information will be supported by very well known economists that have done multiple studies in debt resolution.
I can assure you that it was proven in court that our completion rates were comparable if not better than all of the debt management programs. This was even including the consumers that I would exclude in the above points.
Although I am thankful for all of those who support me, I do disagree that I don’t need to prove myself on these types of forums. However, it is very frustrating when the facts are repeatedly produced and the critics do not acknowledge them. This is exactly why we ended up in a court. When emotions come before facts many individuals and organizations suffer dearly.
Corey
Thank you for the response – Website maintenance is a
challenge all in its own I have found areas on our pages that were maybe questionable or only accurate at the time they were written – If I remember correctly I wrote a story on this in 2007 for the USOBA’s newsletter stating bottom line better to hear from a peer than a regulator on a oversight on content.
As to your other posts I will try to go back and read those
over the weekend – I like your statement on defining enrollees and would like to see others contribute to defining what an enrollee is both in DSP and DMP adding more bullet points should create a objective discussion on differences on performance versus difference on definitions.
Congratulations on the book sounds interesting – will look
forward to the not only your perspective but that of the economists
As far as the documentation and analytics that you prepared to get a favorable ruling my question was really driven to what should DSP companies be tracking and representing not only to handle what happens when they ( regulators ) knock on the door but how to avoid it. Maybe that’s a chapter in your book or could be added.
Best of Luck
Scott
Corey would like to offer you a subscription to our Compliance Software as a way to thank you for the time you have dedicated to reponding to everyone both in forums and the media -it is an online version that consolidates everything debt related such as time barred garnishment privacy udmsa gives a quick review of any state – For the record Corey and I worked together on legislation TX stakeholder meeting 2007 – my email is scott@usdr.us