Freedom debt relief says upfront fees help consumers-I say Bullshit-What say you?

Freedom Debt ReliefIf you have been remotely following the debt settlement industry these past few months, you undoubtedly know that some serious regulation is coming its way. From my point of view it is actually quite entertaining to watch most of these scammer companies scatter like cockroaches as the regulatory light starts to peek into the dark corners of their world.  However a few brave (pronounced “foolish”) companies are actually trying to defend their blatant rip off, front loaded fee debt settlement programs. 

One such company that caught my eye, simply because they are spouting off in press releases and news articles lately, is Freedom Debt Relief.  I have noticed, that they are trying to advance an argument that by front loading their fees (charging all of their fees in the beginning half of their program), consumers will benefit by better settlements down the road. Huh? Oh, the premise of this one should be good.

A few weeks ago, debt settlement companies were all hot and bothered about how many jobs will be lost if the advance fee ban was passed.  Well that didn’t work, so now they have a new theory.

It appears their new theory is that if they didn’t charge consumers all of their fees upfront then creditors will play hardball and offer consumers settlements that are much worse than they would offer if the debt settlement company was paid first.  So in order to protect consumers, it is vital for debt settlement companies to charge all of their fees before preforming the actual service.  If the debt settlement company is not paid first, it will create a power shift and the creditors will squeeze debt settlement companies and offer higher settlements knowing the settlement company won’t get paid until they accept an offer.  So you see, they are just trying to look out for consumers here.  This has nothing to do with their own self interests I guess.

Hmm, that sounds plausible, but there is just one flaw in their argument.  It is total Bullshit! Freedom Debt Relief and anyone else with an ounce of common sense knows it is bullshit, but what are they supposed to say?  Yes, we have been ripping people off for many years and we now admit that there is no reason to charge consumers all of this money upfront, other than, we know most of them will drop out and we want to bilk them for every last dollar we can before they realize we are screwing them. I haven’t seen a press release from TASC, USOBA or any front loaded fee debt settlement company admitting that yet.

They are “all in” now, they have no choice but to fabricate some sort of B.S. pro consumer argument.  They know it will not fly with the regulators.  They have to know.  I don’t think they even believe their own B.S. any more.  At this point it isn’t about keeping the law from passing, it is about trying to cover their butts and save face, so they don’t have to admit that they have known from the beginning that what they were doing was very damaging to consumers, and hurting a lot more people than they helped.

Sorry.  Not good enough for me.  Companies like Freedom Debt Relief have been charging these B.S. fees and not producing promised results for the majority of their clients for years according to the GAO and regulators currently looking into the industry.  To add insult to injury, they are continuing to enroll people into these programs even after they have been caught with their hands in the cookie jar.  The reality is that these companies simply have a flawed (Ponzi ish) business model, and rather than correcting the model, they would prefer to continue to put consumers at risk to protect their river of ill gotten gains.

Freedom Debt Relief AwardI warned companies a few weeks ago that I wasn’t going to keep reading these press releases that they have been putting out in an attempt to confuse, mislead and take advantage of consumers looking for legitimate help, without calling them out on their Bullshit.  So here I am calling you out on your BullshitIf someone from Freedom Debt Relief or any other debt settlement program that front loads their fees, wants to leave a comment and explain to consumers how front loading all of your fees and putting the consumer at further risk of being sued by their creditors is actually in the consumers’ best interest, then by all means the door is open

Until such time though, my recommendation to all consumers, is to not even consider hiring a settlement company that has a front loaded fee structure. 

A word of warning to consumers.  Some unscrupulous sales people will claim they don’t have any upfront fees.  To be clear, when I say “front loaded” I am talking about the fact that they charge you most or all of their fees over the first half of their program.  So you are paying most or all of your fees before most of the work (settlements) are done.  They will roll these fees into your first 18 or 24 months of payments and claim it isn’t upfront.  That is B.S., so don’t fall for it.  If their fee is not spread out evenly over the entire program, and/or specifically based on the savings that they will achieve for you, then it is front loaded and it is not in your best interest to hire that company, regardless of what the sales person claims.

About Damon Day

As a Debt Coach and a Financial Advocate, I have saved my clients Millions of Dollars by exposing the debt relief scams that other consumers fall victim to. I work directly for my clients to create custom debt relief strategies based on their own unique circumstances. Consumers who speak with me first, come out far ahead of those who don't, every single time. Guaranteed. +Damon Day

15 Responses to “Freedom debt relief says upfront fees help consumers-I say Bullshit-What say you?”

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  1. Ilyse Klavir (5 comments) says:

    You are in rare form calling these guys on their BS yet again. There is no defensible reason to charge upfront fees nor the various ways upfront fees are disguised. This pro-consumer argument is just revolting. No comments yet from the pro-debt settlement lobby I see.

  2. JG (2 comments) says:

    Im wondering why all the press is about shutting down the debt settlement companies, when the credit card companies are the one’s getting the people into these situations in the first place. Then charging 30% interest when a person has never been late on a payment?!?

    I work for a debt settlement companie and I will most likely be out of a job, aliong with the 50 other people I work with, because of this law…when i have had MANY cleints call me after there debt was settled thanking me for getting them out of debt.

    Putting thousands of people out of work buy passing this law is hurting the economy more than helping the people that ran up their credit cards and didnt continue to pay on the program….If a consumer signs up for a DS program and continues to pay, they will have their debt settled…Thos that stop paying half way through the program and wonder why their debts arent settled, then blame the DS company for oweing all this debt.

    I guess if the debt settlement companies had lobbyists filling lawmakers pockets like the credit card companies, this law would have never been passed.

    Now I will most likely be living off my cc until I find another job. Thanks FTC!

    • JG (2 comments) says:

      Sorry for the misspelling/mistypes….I type fast and didnt go back and reread.

    • Damon Day (116 comments) says:

      Hello JG,
      Thank you for coming on to share your thoughts. I am sorry about your employment situation, I know it can be rough, but I must respectfully disagree with you.

      The facts are that most debt settlement companies hurt a lot more people than they help. There are many reasons for this, but the biggest reason of them all is the front loaded fee structure that many of these programs use.

      The industry is always so quick to blame the failures on the consumers themselves. Sometimes that can be the case, but a majority of the time, the reason a consumer fails, is because they should have never been enrolled into a settlement program in the first place. Having a front loaded fee structure provides no incentive to properly screen clients. The company makes money on everyone that can make some payments, even if they don’t have the financial circumstances that would likely dictate success with the settlement process.

      It is also a fact, that sending cease communications letters to creditors, and then front loading your fees puts off settlements longer than you should and DRAMATICALLY increases the likelihood of lawsuits for the consumer.

      These are facts and there is no evidence to point to the contrary. So while I certainly feel for you, as I believe most debt settlement sales people are good people and just trying to earn a living. I also believe that they think they are helping, but they simply don’t have a complete understanding of the damage that is being done, and the financial background to understand why their program is very harmful to most consumers.

      I know you want to place the blame on the FTC, but the truth is, the only reason the FTC had to step in was because there were so many consumers getting hurt and TASC and USOBA (the self proclaimed regulators) were actually supporting and encouraging this harmful behavior.

      So if your company goes out of business, you can first blame the owner of the company because he wasn’t running his business with a proper cash reserve, nor was he running it to help consumers. Then you can blame TASC and USOBA, but the FTC was just doing its job. The industry had years to fix the problems and the irony is that even now, they are trying to deny that the problems even exist. The first step to fixing the problem is to admit that you have one, and they can’t even do that.

      Also, I need to mention that having clients call to thank you for getting them out of debt is not a very good barometer of success. For instance, if 10% of the clients settle all of their debt and 90% end up in worse shape, you can’t point to the 10% and use that as an example of the great work a company is doing.

      That would be like celebrating the accomplishments of Bernie Madoff, after all, he did actually make a few thousand people very rich. Was he doing a good thing?

  3. Tia (2 comments) says:

    Yes, the arguments they’re presenting are totally illogical. I would have more respect if they just said, “We prefer to get our fees upfront.” Many services charge that way. Then rather than defending when/how they charge, all they’d have to do is defend what they charge, and they could surely come up with better B.S. for that.

  4. Kirby Spencer (2 comments) says:

    This is not an attack just a question, being that you charge a consult fee, which is essentially and upfront fee for debt services don’t you fall under the same new guidelines? If not why?

    • Damon Day (116 comments) says:

      Hello Kirby,

      That is a valid question and I certainly didn’t take it as an attack. To answer your question. I am not a debt settlement company and do not provide debt settlement services. I am a financial consultant. What I sell is advice and information. Consumers pay me directly for my time.

      Thank you for taking the time to visit my blog.

      • Kirby Spencer (2 comments) says:

        Thanks for the reply. Do you have any concerns that some settlement companies may try to reclassify themselves as finacial consultants as a way of continuing the upfront fees? Forgive me if this question is illogical as I’m not fully aware how the fees are charged by them currently.

        • Damon Day (116 comments) says:

          Hello Kirby,
          No, the question is not illogical at all. I think a few people might try to do this but I think it would be very hard for them to pull off if all they were doing was pushing people into debt settlement.

          For one, there is a limit to what you can charge a consumer for a consultation and it certainly is a lot less than the 1,000’s of dollars these guys collect on the front end now. Plus I don’t think most of these guys could charge a consumer money upfront and then simply provide a sales pitch for settlement as opposed to good, honest financial advice, and not see a lot of unhappy consumers right away.

          For two, the regulators are still going to need to enforce the laws. If they look at an operation that is billing itself as a financial consultant, and then they see that all or mostly all of the clients where just pushed into a debt settlement program, it won’t be too hard to expose that.

          Great question, it will be interesting to see how all of this plays out in the next 12 months or so.

  5. (1 comments) says:

    I never knew they were chargin up front fees, but in short – i say its bs. Good for outing them Damon. Many people like to keep quiet on the subject. I dont think upfront fees will help anyone, except the company trying to line its pockets.