Bogus Debt Settlement Advertising Continues!

In January 14, 2010

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
(address omitted)
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:


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.



  1. Robin, glad you found this post and did not get tricked into a bogus program!

  2. Well I guess there hasn’t been enough shut downs because here it is almost a year later and I have just received the same letter in the mail. With my hopes being that it was true, I decided to search the internet to make sure it wasn’t a scam and found this blog. Thanks!

  3. Marianne, thank you for your comment. I wrote the above post in January 2010, and here in September you have received the exact same mailer. The new FTC rules go into effect on 9/27, so it will be interesting to see who gets shut down first. 🙂

  4. Thanks so much for posting this. I received the very official-looking “Fair Debt Assessment Notice” in today’s mail, and yet something looked a bit fishy about it. A Google search (until I added the word “scam”) turned up an equally official-looking Web site. I shudder to think how many people — especially the elderly — could be taken in.

  5. John, thanks for sharing that inside perspective on the advertising used in the marketing of debt settlement. You asked about where the 15% fee came from in the first place. See my blog post of July 25, 2008, for the history of debt settlement fees. And yes, people *do* respond to honesty, a point that is apparently lost on many people in this industry.

  6. Hello Charles,
    I used to work for a debt settlement marketing company that used this type of direct mail advertising. I left that company because among other issues the mailers made my stomach turn. In addition some reps would even say that the company was part of the government! I do believe that the program works for the right consumer. By the way who created the 15% plus junk fees’ model in the first place? Anyway, I am starting my own debt consulting marketing firm and I plan on using honest advertising, tangible benefits and more importantly much lower fees. Perhaps I am an idealist but I hope people will respond to honesty.

  7. Kate, thanks for your comment, as well as for referring potential clients to ZipDebt. Although I do often bash the settlement industry as a whole, you will notice that I did not name any specific debt company in the above post. I do realize that there are a lot of good people working in the industry. Some of them are still friends of mine, even though they disagree with me on what is or is not a reasonable fee for this type of service. So I can certainly understand why someone working for a third-party debt settlement company would be unhappy with my general position on the subject. However, I’m a bit stumped as to why you chose *this* particular post to comment upon. Are you saying that you find nothing wrong with the mailers that I quoted above? You have no problem with this type of advertising? Is this how you folks are getting *your* phones to ring? 🙂

  8. Charles, I find this bent on your blog unfortunate. I am a debt consultant who refers clients to your site if I feel that they are better suited to handle it on their own. There are times in life when paying a professional is money well spent. Our company does a phenomenal job of taking care of our clients at every level. I don’t think that it’s necessary to bash good companies that offer a service that works for the purpose of selling your product. The fact is that most people who attempt to set up their own savings plan fail. Are there some that succeed, of course. My point is, some people should not attempt to do this on their own. They don’t have the personality, stomach or time to play the creditor game. There is room in the niche for both.

  9. Jerry, thanks for your insightful comment. You just reminded me why I stopped using pay-per-click advertising a long time ago. 🙂 There’s no question that all kinds of bogus ads appear in the debt arena, and Google and the others are happy to pocket the revenue. And please don’t get me started on the credit bureaus!

    I’m not quite on the same page with you though about consumers not wanting to hear the truth. Obviously, this is true of many people, but not all. Most of the folks I’ve talked with over the past few years have been quite grateful to find someone willing to be truthful with them about their situation!

  10. Charles I have seen worse, and the amazing part is who is behind some of these ads.

    Lower My Bills uses these types of ploys in their online ads. Interestingly Lower My Bills is owned by Experian, the credit reporting agency! And where does the data come from when credit cards want to jack up consumers rates when they are in trouble? Experian of course. A nice viscous profit circle brought to you by the Credit Card Companies, Credit Agencies and yes, this “debt relief” solution. Of course all of these entities will sell your data for years to come to anyone with a dollar.

    Does it pay to tell the truth?
    Not when it comes to online marketing with Google, Yahoo and MSN. On these ad platforms advertisers are rewarded for a high click through rate CTR. This is the number of times an ad is displayed divided by the times it was clicked. The higher the CTR the more money Google makes and they claim means the ad must be relevant to the searcher. Thus, when you have a high CTR you get two bonuses. The amount you pay for each click decreases and the position on the page your ad runs in rises to the top resulting in even more low cost traffic. Google makes more money and the advertiser gets rewarded with more traffic and sales. All because of a great ad right?

    Wrong! Google does not monitor nor pull ads for false and deceptive advertising. So what happens? Companies that are willing to lie with amazing claims in their ads, they get the higher CTR, the lower cost, higher rankings and the bulk of the quality traffic. And the opposite is true for the companies who tell the truth. Their cost per click goes up, their ad position goes down, which means less traffic and fewer sales. Ultimately a costly advertising model.

    Just look at the claims these companies are making on Google.
    Cut your debt by 70% or 80%. Debt free in 12 Mo. Note that these are not all settlement companies, oh no, they run the gamut of Settlement, Management, Consolidation and all sorts of whacky variations in between.

    Google, Yahoo and MSN claim they are not responsible for, nor wish to review and rate ads for accuracy much less false advertising. Even though this would be a simple thing to do.

    So for now, advertising the truth costs real money. Compounding the problem is that honestly, consumers really don’t want to hear the truth, they want to hear a fantasy. Which is why we elect the people we do in this country.. but that is a different story on false advertising.

  11. Terry, you certainly have the right to cancel such a contract if you choose to. If you proceed with this, I recommend that you send the company a written notice of cancellation, with a request for a refund of fees paid. Send it certified mail with a return receipt required. The main difficulty will be the fact that your creditors may have received power-of-attorney documents from this company, and it’s possible that the creditors have already escalated their collection attempts in response. Hopefully that has not happened yet, and you can cancel and take over the creditor negotiations yourself, etc.

  12. Once a person has signed on with a debt elimination company, can the account or accounts be withdrawn? I’m just 4 months into a plan and I no longer want them “representing” me. Can I withdraw the account, limited power of attorney, and stop their automatic fee payments from my bank account?

  13. Totally agree, Judge Roy! You do a superb job of mole-whacking yourself. Thanks for stopping by at ZipDebt.

  14. There is no end to the scams – it’s like the “Whack-a-Mole” game and some of them are the same people just moving on to new web sites. The real problem is, law enforcement is never going to catch up with most of them and the only thing legitimate consumer advocates can do is just keep trying to get the word out.

  15. Tell us how you really feel!

    Great article!

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