Consumer Warning
Charge up-front education fees, as a workaround to new FTC ruling
Most folks would agree, and perhaps expect to be charged a nominal fee in the commencement of various types of service contracts. For example, a mortgage company may charge an application fee in order to begin the process of a home loan. Similarly, most if not all attorneys require a retainer fee, to engage their services. However, companies who provide debt relief services that have practiced this very methodology for years, can no longer charge upfront enrollment fees or monthly management/maintenance fees, as set forth in a new ruling, recently adopted by the Federal Trade Commission. Under the rule, as of October 27, 2010 debt relief service providers (those providing debt settlement, debt arbitration, debt management etc...) must adhere to an advanced fee ban as well as many other rules and disclosures. Simply put, the bad actors must clean up their performance or risk enforcement action by the regulators.
We've kept our ear to the ground and have heard many industry participants discussing the workaround (loopholes) of the advanced fee ban ruling. It's important to understand the reason why many debt relief companies charged upfront fees in the first place, as well as their desire to continue this practice. Most will tell you, it's the expense of customer service that takes place early on; a cost they feel must be off-set by an enrollment or retainer fee. While there is a cost early on, the servicing costs are minimal in both debt settlement and debt management, as typically several months will go by, where very little is done on the part of most firms. This is because the consumer is in savings mode. Here's where the rubber meets the road... Many participants in the debt settlement/management industry are affiliates of larger firms. As an affiliate, there are costs associated with marketing or just simply keeping the doors open for business. Without the upfront fee structure it would require a large cash investment on the part of the affiliate or parent company to build an operation that can withstand the negative cash flow, until profitability is reached. Another major factor is the portfolio of debt under management and a firm's ability to service it. Most debt settlement companies who practiced the upfront fee structure model have stripped (in most cases) the portfolio or debt under management, of all its service and settlement fees, typically, within the first 15 months of a new enrollment. If there is no continuation in upfront fee enrollments or fees, how will the operation continue to service its clients, consumers who are in programs lasting 36 to 48 months? The answer is, most will fail and close operations.
Many consumers (especially in today's times) are overwhelmed with economic distress, leaving them vulnerable to unscrupulous enrollment/sales agents, and the associated practices of the debt settlement companies, that they represent. Enrollment agents (in most cases) fail to explain their program in detail, and when questioned, resort to "smoke and mirrors". We at Emerge America are here to tell you, their days are numbered!
If you have contemplated joining a debt settlement program, be sure to ask how the company's fees are collected, and request a detailed savings schedule. Most importantly, read the proposed contract thoroughly, then give us a call to compare the difference, you'll be glad you did. Remember we earn our keep, when we settle your debt!
Allow for undercapitalized affiliate offices - here today, gone tomorrow
The definition of “Affiliate” as defined by Merriam-Webster Dictionary: (1) to bring or receive into close connection as a member or branch (2) to associate as a member
Finding a reliable and ethical debt settlement company on the web or elsewhere can be a tricky process. One never knows where you may end up, unless, you apply patience and perform proper due diligence. Not long ago, debt settlement companies, in the pursuit of corporate growth, discovered that with little investment they could easily launch satellite offices, by allowing others to “foot the bill”, enter, The Affiliate! This business model opened the door to several problems, including;
(1) undercapitalized affiliate offices, as little or no investment is made by the parent company,
(2) loss of control over who is hired which causes problems with the education and enrollment of potential clients,
(3) false and or misleading statements made by agents in order to “close a deal” and
(4) questionable customer service provided to the client
In other words what Merriam-Webster could not possibly tell us is; who is running the show, how deep are their pockets and how much support they receive from the parent corporation. More importantly, what type of person is the affiliate hiring, how are they trained and what are they promising the consumer?
A good tip to follow in determining whether or not the company you choose is a branch or affiliate is to ask this exact question. This process could eliminate the potential of possibly ending up on the wrong end of a loaded gun.
Promise great customer service, until you try & get them on the phone
Once enrolled into a settlement program many questions will arise as your creditors continue their collection efforts. Having access to your settlement agent is paramount. Since many debt settlement companies operate as affiliate or branch offices (operated by independent contractors) they have no control over customer service, or those empowered to negotiate on your behalf. Additionally once the enrollment process is complete; it is of no further benefit to these entities to service you, as they have already been paid. This of course is further evidence why you should choose a performance based debt settlement program. Upon entering any Emerge program, you will have continued access to the debt specialist who enrolled you, your dedicated customer service representative and a case negotiator. Additionally you will receive updates every step of the way.
Make unsubstantiated claims that they frequently can't deliver
Whether watching a cleverly crafted television commercial (with a backdrop of the White House), listening to a radio advertisement or receiving an impressive document in the mail, many consumers are lured in by these flashy professional marketing campaigns. The fact remains that many of these advertisements are not what they seem. The world-wide-web can be just as tricky. Just perform a Google search, and you will quickly discover many potentially unsubstantiated claims such as “Pay pennies on the dollar”, “Save as much as 60% of your debt amount”, “We guarantee to get you out of debt in 36 months”, and so on. These are just some of the claims that many debt settlement companies make in an effort to attract consumers. Understand that debt negotiation/settlement is an ever evolving process, and results vary based upon debt type, consumer circumstance and creditor willingness, with no guarantee of success. For this reason, no one should fall prey to companies that make such unsubstantiated claims. Emerge America takes a more conservative approach in dealing with our clients, we prefer to under promise and over deliver. Remember, if it sounds too good to be true it probably is!
Hide behind (paid for) industry associations
Many debt settlement companies proudly display the logos of various industry associations on their corporate websites. At first glance these associations seem impressive, as they are frequently used to convey protection for the consumer, when in fact any debt settlement company can join these organizations, as long as they pay a monthly or annual fee. Additionally most consumers are not aware that many business rating associations, for example the Better Business Bureau is NOT a government agency. Instead the BBB is a private 501(c)(6) organization with $143 Million in annual revenues derived from membership dues it receives from the very businesses it reports on. Be sure to research these organizations and find out how they oversee the debt settlement industry. Upon investigation, you will find that these organizations, for the most part, were created as fee generators and nothing more. Remember the mark of a quality company should not be based upon frivolous ratings or affiliations, ask for references, customers you can call. If the company is truly doing right by their customers, asking for and receiving references should be welcomed.
Use high pressure tactics
Many creditors employ high pressure tactics in order to instill fear into consumers about paying their debts. They may threaten to litigate, garnish wages, even lien property. When seeking the help of a debt settlement company the last thing you would expect, is for that company and its agents to pressure you, using similar tactics as the creditors. Although keeping you aware of the remedies that creditors have at their disposal is important, using those threats to call you into action, in order to sell you their services, without proper research, is unscrupulous. Our debt specialists are skilled and professionally trained to understand exactly what you are going through. We take great pride, in allowing you to choose a program that fits your needs, and at your pace.
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