by Robert Anglen - Sept. 19, 2012 10:57 AM
The Republic | azcentral.com
The letter comes self-sealed and stamped with the words "final notice enclosed" in big block letters. Below, a warning states that tampering with this letter could subject you to a $2,000 fine and five years imprisonment.
Inside, the letter references an account number, advises that you have not responded to earlier mailings and says that your " renegotiated credit card balance" is set to expire.
But the sender of the letter says they aren't out to frighten you. Instead, representatives of Credit Resolution Advisors say they want help you pay your bills.
It turns out the notice, which has hit the mailboxes of some Valley residents, is part of a marketing strategy for a Texas debt-modification company.
The letter, which looks quasi-official, has no official significance. You don't have an account (the number is for internal reference only), your credit cards haven't been renegotiated (yet), and the final notice refers only to the mailings themselves (the company will stop sending them if you don't respond).
"A scary, bad notion" is not what Credit Resolution Advisors is attempting to accomplish, Vice President Rick Burton said. Nor is the company attempting to scare you into dialing the 1-800 number that the letter advises you to call before a specified date.
Debt-consolidation companies help consumers settle credit-card debt for pennies on the dollar by negotiating directly with credit-card companies.
Industry experts, however, say consumers should do research before responding to any company that offers to pay down debt for a fee.
"Obviously, the advertising practices are questionable," says Jim Triggs, Phoenix vice president of Money Management International, the largest non-profit credit counseling agency in the nation.
"If you are going to deal with any kind of consolidation, whether it is housing issues or credit counseling, you should always use a non-profit," Triggs says. "We will help free of charge ... or for a nominal fee."
Some companies such as Credit Resolution Advisors say they lower credit-card debt by as much as 60 percent. But the service isn't free. In some cases, the company charges 12 percent of the total debt load it helps to reduce.
That means customers will have to pay extra money to help settle bills they can't afford to pay in the first place.
Burton says his company offers customers expertise in dealing with credit-card companies. He also says the volume of deals his company negotiates puts it in a position to get better settlements for customers.
Burton acknowledges that consumer-protection agencies have raised issues about his business, but he says the number of complaints is low given its number of clients.
The Better Business Bureau gives Credit Resolution Advisors an F rating, its lowest, citing as many as 49 complaints in the past 12 months. Most of those complaints concern the mailing.
"The mailing includes the use of a financial balance and client account numbers which consumers have complained are fictitious," the BBB states. "The company responds to complaints and admits that the consumer is not a customer and agrees to remove them from future solicitations."
By comparison, the BBB gives the non-profit Money Management International its highest rating, an A+.
Gail Cunningham, vice president of the National Foundation for Credit Counseling in Washington D.C., which represents accredited, non-profit credit-counseling agencies, says that recent federal crackdowns have put many unscrupulous operators out of business.
She says non-profit credit-counseling agencies don't base their services on steep fees that many consumers can't afford. She says many non-profits offer counseling services as well as debt relief.
Cunningham said her agency isn't opposed to private debt-consolidation business. "We are opposed to the practices used by some."
20 Sep, 2012
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Source: http://www.azcentral.com/business/articles/2012/09/13/20120913anglen-debt-consolidation-letter-mere-marketing.html
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