This is an interesting article, written by a New York Times writer, on her personal experience with debt settlement solicitation. Her reaction is to be suspicious of the upfront fees that the debt relief counselor requested for their services.

She turns it into a story about the upcoming FTC TSR/Debt Relief public forum, with an interview of The Consumer Federation of America:

“‘People are given false hope,’ said Susan Grant, director of consumer protection at the Consumer Federation of America. Ms. Grant said she planned to participate in a public forum the Federal Trade Commission was holding in Washington today to discuss amendments to its Telemarketing Sales Rule to cover for-profit debt counseling, debt negotiation and debt settlement services. The Consumer Federation of America and 18 other organizations also recently filed comments with the F.T.C. on the issue”

The blogger offers some good advice to consumers. She encourages them to first do a bit of their own debt settlement work by calling the creditor and attempting to negotiating some relief on their own.

However, I think this is a bit naive of what the average consumer in debt trouble is really experiencing.

Most likely the consumer is already in severe trouble (or at least it feels hopeless) by the time they realize they are in trouble. Chances are their first wake-up call is when they can’t make minimum payments. That means their debt-to-income ratio is already way out of whack.

At this point a calm and rational conversation with a creditor is way past due. Chances are the harassing phone calls are already beginning and your call is not going to be routed to a helpful customer service rep, but rather a hard-nosed collector.

I’m not saying reform in the debt settlement industry isn’t necessary, but I do think this article is far too simplistic in covering the issues. Thoughts?

If you liked this post please sign-up to the RSS feed or get them via email and avoid missing the next Aged Leads Strategies best practice.

CALL 949-861-3122

Although a full and complete transcript is not available the FTC has posted some portions of the proceedings on debt settlement reform.

Here are some important pointers:

• FTC TSR/Debt Relief Forum full agenda [PDF] and panelist
• Press Release announcing the FTC public forum on debt settlement
• Proposed rules from the FTC regarding debt settlement and TSR reform [PDF]
• Complete list and attachments of all TSR/Debt Relief public comments received by the FTC
• Limited release of some webcast coverage of the TSR/Debt Relief forum

I haven’t quite consumed all of this information, but it certainly gives you the impression that the FTC is resolved to do something aggressive in this area. Likewise, the debt settlement industry is mounting an equally aggressive campaign to defend the industry as essential to helping consumers and the economy recover.

Take a look and tell me what you think.

If you liked this post please sign-up to the RSS feed or get them via email and avoid missing the next Aged Leads Strategies best practice.

CALL 949-861-3122

This almost seems a silly topic, but I think it is often overlooked and regularly kills deals. Your customers come to you or buy from you because of your knowledge. After all if they could do it themselves they probably would. The question is-are you staying competent enough to do them a service?

Most of you have been in the business for a long time. You know that mortgages and debt solutions as a big concept don’t change all that much. However, this market has created an avalanche of new products, qualifications, and ways to “skin the cat” so to speak. That means if you want to maximize your business and your service to customers you need to bone-up on your product knowledge.

How do you do this?

1. Regulators - I always suggest starting here because these are the guys that can instantly shut down or change your business. You need to be constantly monitoring government legislation, as well as key regulators (depending on your business), like the FTC, FDIC, OTS, OCC, and others.

2. Lenders and Creditors - Again, depending on whether you are in the mortgage or debt business you should consider what your lenders or creditors that you work with or against are doing and how this affects your products. For mortgage, this is pretty straightforward as you get new rate sheets. However, in the debt business you are constantly negotiating with creditors-knowing their goals and objectives are great for your business.

3. Industry Groups and Associations - I have been blogging a lot more about these lately. They can add significant value to you business. Good ones are doing most of this monitoring for your-watching out for you best interests, battling for positive change, and blocking bad. Getting involved can put you closer to having direct impact.

4. Social Networks - Much like industry groups and associations these are networks of like-minded individuals. Add to that the growing power of social media for industry impact. It also gives you a great chance to learn more about your products, industry, and opportunities. LinkedIn groups are where I have been spending a lot of my time learning and participating.

5. Competitors - Don’t discount competitors as a resource for enhancing your own product knowledge. Learning what your competitors are doing and offering can spark ideas and make you more competitive for your own customers.

6. Customers - It is amazing what your customers can tell you about your own products and services. Listening is a great way to learn what your customers want. As you explain your offerings their responses and questions can improve your knowledge and presentation.

Staying competitive in the mortgage and debt business is all about tweaking your sales presentation. So, becoming more knowledgeable about your products, services, and the market that drives them will make your pitch better and higher converting.

Related articles by Zemanta

• Define Your Digital Footprint – Lacing the Shoes (myventurepad.com)
• Stop Those Harassing Debt Collectors (abcnews.go.com)
• Venture partners now wonder (theolympian.com)
• FTC Makes Sears Destroy Web Tracking Data (marketingvox.com)

The FTC has significantly altered the Telemarketing Sales Rule (TSR) with two amendments. The first prevents unsolicited robocalls and the second modifies the method of calculating the maximum permissible “call abandonment” rate.

Both went into affect on September 1, 2009. And you can read the press releases from the FTC directly here and here.

“After September 1, sellers and telemarketers who transmit prerecorded messages to consumers who have not agreed in writing to accept such messages will face penalties of up to $16,000 per call.”

This significantly stiffens an earlier TSR restriction on robocalls:

“Under a previous rule that took effect on December 1, 2008, telemarketing robocall messages by businesses covered by the TSR must tell consumers how to opt-out of further calls at the start of the message, and provide an automated opt-out mechanism that is voice or keypress activated. Prerecorded messages left on answering machines must also provide a toll-free number that connects to the automated opt-out mechanism.”

Needless to say if you are in the telemarketing business then make sure not to leave prerecorded commercial messages, especially if you are a lead vendor or client of ours.

Interestingly enough it does not prohibit these types of calls of “informational” calls, like flight updates or other customer service related courtesy messages. The amendments also continue to exclude certain organizations that are not covered by the TSR, like politicians, banks, telephone companies, and charities.

I am not sure prohibiting the technology is fixing the behavior. If they are concerned, as their press release indicates, about harassing and malicious telemarketing calls then they should define and ban those.

Unfortunately, by banning the technology for all for-profit businesses you are penalizing legitimate efficiency for the sins of a few bad apples. Meanwhile, the offending businesses will just simply look for cheap call center solutions to live dial the same calls they were pre-recording.

Sometimes these laws hit the symptoms and not the problems. What do you think?

Related articles by Zemanta

• FTC drops the banhammer on prerecorded “robocalls” (arstechnica.com)
• FTC Rules Outlawing Robocalls Go Into Effect Next Week (yro.slashdot.org)
• The End of Robocalls? (abcnews.go.com)
• Robocalls Banned By Government? Not So Much (huffingtonpost.com)
• Robocalls About to End – Sept 1 !!! (lockergnome.com)
• New rule prohibits robocalls (seattlepi.com)
• FTC declares war on car warranty ‘robocalls’ (money.cnn.com)

According to a recent New York Times article the FTC‘s effort to shutdown misleading debt relief companies may reach too far.

Initiatives underway are calling for debt settlement to fall under the umbrella of debt collection style telemarketing rules. In addition, it will target many of the up-front fees that sustain debt-relief companies. According to the New York Times the proposal looks like this:

“The proposal calls for a regulatory switch that would apply telemarketing rules to debt relief companies that receive telephone calls in response to advertising, as well as to those that reach out to consumers. It would ban debt relief companies from charging fees before providing services; prohibit them from making misleading claims about how fast they can help or how much money they can save for someone, and from masking for-profit companies as nonprofit agencies.”

Many debt settlement businesses think that the FTC lacks an understanding of their business model and may end up hurting people that need their services.

One representative of the debt industry explained it like this:

”Our goal is to try to get people out of debt, but in a sense this would make us a creditor as well,” said Wesley Young, the legislative director for The Association of Settlement Companies, a trade group for the industry. He noted debt settlement can take two or three years, leaving companies providing lengthy services without taking in any revenue, and possibly then being left holding a bill if the consumer doesn’t pay.

A case involving numerous creditors and substantial debt could require numerous phone calls for settlements to be arranged, Young said. ”We think this will hurt the service we provide to the consumer and they’ll be less successful in the programs.”

What do you think? Is the FTC protecting the consumer or potentially wiping out the viability of the businesses that can help them?

Related articles by Zemanta

• TASC’s Legislative Director to Speak at American Bar Association Annual Meeting (prweb.com)
• Stop Those Harassing Debt Collectors (abcnews.go.com)
• The Debt Settlement Industry Is Busy, but It’s a Bit Nervous, Too (nytimes.com)

Having been around the debt industry for a while I know that the mention of the FTC can bring chills to many in the debt industry. There has long been a perception that the FTC has a negative policy attitude towards debt settlement as a consumer service. However, recent statements by J. Thomas Rosch, FTC Commissioner, would suggest otherwise.

Real Benefits to Consumers?

More than ever consumers are finding themselves squeezed by multiple sources of debt that in a better economy they were able to service. Unfortunately, turns of fate–many out of their control–have thrust good consumers into an unlikely spot. Who is to be the trust advocate of the consumer in these confusing and desperate times?

Commissioner Rosch seems to think the Debt Settlement industry has a role to play:

“For example, a debt settlement firm can advocate on the consumer’s behalf, especially in cases where consumers are reluctant, embarrassed, or even afraid to contact their creditors directly,” Commissioner Rosch said to the conference attendees.  “A debt settlement firm also may be able to provide individualized attention to consumers, taking a holistic approach to all of the consumer’s unsecured debt owed to several creditors, rather than just the amount owed to a particular creditor.

“

Managing the complete debt picture and focusing on restoring the consumer’s financial health has always been a critical value proposition of debt management professionals–nice to hear it from the FTC.

Recommendations to Debt Industry

Now of course it is our turn to listen…what should the debt industry be doing better? There is always room for improvement. Incorporating a primary regulator’s suggestions in your debt business strategy can make a lot of sense in reinforcing your “trusted advocate” position with customers.

Commissioner Rosch makes four specific best practices recommendations to the debt industry:

• “limit their performance claims to those they can adequately substantiate”;
• not “misrepresent the benefits of debt settlement”;
• “disclose, clearly and conspicuously, the negative impact that participation in a program may have on a consumer’s credit score, and how long that impact may linger.  This disclosure should not be made only in the written contract, but in the ad itself”; and
• “if a debt settlement firm promises to refund debt settlement service fees to consumers if their debt settlement negotiations are unsuccessful, the firm must honor that promise.”

I would venture that none of these are new to the more reputable firms in the audience. However, if you are missing the mark–bring up your game.

Review of Debt Industry Self-Regulatory Efforts

Now for the bitter medicine. Commissioner Rosch was not so impressed with the debt industry’s current self-regulatory efforts. Arguably, these types of efforts are always tough to get perfect. Balancing participation and enforcement is a delicate tight-rope to walk.

Despite his charge of being imperfect he did acknowledge that each have some attributes of best in class self-regulatory agencies. So, if you are looking to tighten up your compliance efforts and improve your service to consumers in the eyes of the FTC–these organizations might be a good start.

Related articles by Zemanta

• Credit Solutions of America Review (helpwithdebtnow.com)
• Identifying a Legitimate Credit Repair Firm (creditra.blogspot.com)
• Your Rights Concerning Consumer Debt (refinanced.blogspot.com)

Have you ever been tempted to consider payday loan leads? Regulators and legislators have payday lending in their sights for major reform and crack-down. Marketing practices are sure to be a big part of that crack-down. So, beware of payday leads.

Laden with Privacy Issues

To start with, most of these payday leads are full of sensitive consumer information–social security numbers, bank account numbers, routing numbers, and birthdates. This type of information dramatically increases the handling requirements of these leads to maintain privacy compliance.

Leads with detailed personally identifiable information is likely to trigger bank-type privacy compliance standards. That raises the bar way above Excel spreadsheets and email. Don’t that that chance with your business.

Deceptive Marketing Practices

Not only are payday leads fraught with privacy issues, they are probably also targets for FTC investigations. Many of these types of leads were generated with what most marketing regulars and consumer advocacy organizations would consider deceptive marketing practices.

Leads generated with deceptive marketing practices can bring legal issues and hefty fines. But, that is not the only problem–they simply are less likely to convert. Consumers that are enticed with incentives and promises that are unrealistic are uphill battles in solving the customer’s real financial problems.

Debt Collection Rules

So, payday leads bring privacy issues, regulatory and legal risk, and are hard to close. But, that’s not all. Many of these types of leads and customers are likely to trigger debt collection rules and regulations as well. There are a plethora of rules and regulations around how you can call, when you can call, and what you can say.

Legalized Loan Sharking?

The bottom line is that many states and legislatures are looking at payday lending as legalized loan sharking–and they don’t like it. So, payday operations have been reported to charge up to 700% on late accounts and a study in California shows that it  $247 million a year from targeted minorities.

These leads are nothing but trouble–steer clear of them. Next Wave Marketing Strategies never has and never will sell these consumer damaging leads.

Related articles by Zemanta

• California Looks to Expand Data Breach Notification Law (wired.com)
• Fearsome New FACTA Red Flags Rules Will Impact Small Business (myventurepad.com)
• FTC warns of “day of reckoning” for online advertisers (arstechnica.com)

The Federal Trade Commission (FTC) is one of the primary policing agencies for online marketing compliance. If you are marketing online it is smart to get familiar with their guidelines for compliance.

Getting educated on these guidelines is as simple as researching FTC’s “Advertising and Marketing on the Internet: Rules of the Road.” However, getting the general concept is even easier–it boils down to two primary principles:

• Advertising must tell the truth and not mislead consumers
• Claims made must be substantiated

The FTC’s mission is simple and outlined in the Federal Trade Commission Act, which allows the FTC to act in the interest of consumers to prevent deceptive and unfair practices. So, what is a deceptive or unfair practice?

A deceptive practice is one that:

• Misleads consumers
• Affects consumers’ behavior or decisions

An unfair practice is one that:

• Causes substantial injury
• Injury is not outweighed by other benefits
• Injury is not reasonably avoidable

If you are responsible for marketing products and services to consumers it is important to conduct some due diligence:

• Review material that substantiates claims, products, and services
• Disclaimers and disclosures must be clear and conspicuous
• Demonstrations must show products and services under normal conditions
• Refunds, if promised, must be made on request
• Advertising directed at children has special rules

Marketing compliance is really a simple exercise in using good, honest judgment and talking to consumers is a clear way. Take a close look at FTC guidance to stay on the straight and narrow.

Related articles by Zemanta

• Scott Ballum: Kids Learn Target Marketing from the FTC (huffingtonpost.com)
• Privacy’s Next Battleground Will Be Your Phone (gigaom.com)
• Obama picks Leibowitz as FTC chairman (news.cnet.com)
• FTC sues internet ‘loan sharks’ for deceptive lending (theregister.co.uk)

CALL 949-861-3122