Pretend for a moment that you are the CEO of a debt settlement company, or a company that is in the business of generating “leads” for the settlement industry. You know that a regulatory freight train (called the Federal Trade Commission) is headed your way, and that within a matter of months the entire industry may be effectively run out of Dodge. (See my blog post on recent FTC scrutiny of the industry.) You also know that regulators are watching very carefully during this period between the FTC conference (held in November 2009) and the actual vote by the Commission on their proposed rule change to ban “advance fees” for debt settlement.
What do you do while you are waiting to find out if you still have a viable business model? Well, for starters, you would think that the smartest thing would be to begin making changes now, in advance of regulations you know will be coming down the road in a matter of months. You would also think that a smart CEO would take extra care with any advertising during this crucial period, right? I mean, that *is* one of the key reasons the FTC is looking at the industry – massive consumers complaints about deceptive advertising.
With that in mind, take a look at this little gem, reported to me by a client who received this solicitation in his mailbox in December, well after the FTC conference was held:
Stimulus Plan Center
Case # (omitted)
Dear (client name),
This announcement is to inform you that you may be eligible to receive as much as $28,942 in debt relief through the Economic Stimulus Act of 2009.
The Consumer Debt Initiative instituted a plan on April 27, 2009. To qualify you must meet the following conditions:
(1) You must have at least $10,000 in unsecured debt,
(2) You are employed or you must have a viable source of income,
(3) You are in a financial hardship, or have great stress in your current situation.
If you meet these conditions, please contact us immediately at 1-888-XXX-XXXX.
This program applies to all unsecured debt types including, but not limited to; credit cards, medical bills, personal lines of credit, business lines of credit, and auto repossession loans.
Your debt relief amount may be as much as 50% of your total outstanding debt amount.
Please call the Stimulus Plan Center at 1-888-XXX-XXXX to speak to your assigned professional debt arbitrator to determine your total debt relief amount.
Debt Relief Division
Due to the high volume of calls, have your Case Number (omitted) available when you call.
Folks, this solicitation is about as deceptive and misleading as it gets. It’s 100% bogus from top to bottom. First of all, there is no such program, no “Consumer Debt Initiative.” It does not exist. Further, no part of the Economic Stimulus Act of 2009 had anything whatsoever to do with credit card debt relief for consumers. That is an egregious lie. There is no other word for it. The people who mail out this piece are bald-faced liars, period. They are nothing more than scam artists, and they are using this ad to get their phones ringing. Desperate consumers call them hoping for relief, only to run straight into a sales pitch for debt settlement — a pitch that omits virtually every negative aspect of it. And once you become a “lead” in the debt settlement industry, then sales people will start calling from multiple companies trying to sign you up, and it quickly becomes worse than the call bombardment from your creditors!
Now, take a look at this next masterpiece of creative baloney, which comes on an official looking form:
FAIR DEBT ASSESSMENT NOTICE
In response to the global recession concerns, banks being more strict on who and how they lend money, rising unemployment, rising credit card rates, declining property values and a national foreclosure problem the DDS program has been established to help consumers reduce the overall unsecured debt they have. It is now more important than ever for people with unsecured debt to participate in a program that will reduce the monthly expenses they have.
Our records indicate that you may be eligible to participate in the above DDS program, and possibly qualify to receive assistance to legally reduce the amount of your unsecured debt by up to 60%.
The DDS program was created to negotiate or settle debt for individuals with an unsecured debt amount of $8,000 or more and allow individuals who have little or no equity in their home to reduce their debt without refinancing or obtaining a new loan or line of credit.
There’s more, but you get the idea. It’s the exact same approach – let’s trick consumers into thinking this is some sort of “official” government sponsored program. If we don’t actually say it’s from the government, that’s not deceptive, right? Wrong! This ad is also 100% bogus from top to bottom.
What the heck are these people thinking? With ads like this are going out all across the country, is it any wonder that the FTC views the settlement industry as being totally out of control? Frankly, the industry has done a poor job of policing itself, and the chickens are coming home to roost any day now.
I do not yet know whether the FTC will act to ban the industry (or ban charging fees in advance, which amounts to the same thing). It make be many months before action is taken at a Federal level. In the meantime, I do not want consumers to be scammed by these rip-off companies. My sincere hope is that by publishing some of the solicitation text verbatim it will get picked up by the search engines, thereby making it easier for people to find this post and get the straight story.