Where is the Debt Lead Market Headed?

I would be misleading you if I suggested I knew where the debt industry will land. But I am certain that mounting debt settlement legislation and FTC tightening and targeting regulation aimed at debt settlement companies, will bring change. The last several months have injected lots of anxiety into the debt industry. They are the latest segment of the financial services industry to land in the cross-hairs of a government reeling from their own debt problems.

At the center of all the doom and gloom in the debt industry are two principle documents: The FTC’s proposed amendments to the Telemarketing Sales Rules (TSR) and Senator Charles Schumer’s (D-NY) latest financial services watchdog bill, the Debt Settlement Consumer Protection Act.

Historically the debt settlement business has been lucrative with upfront fees and low capital start-up costs. This naturally brings in the crooks. However, the debt settlement business is not without its risks to ethical players. Consumers in debt are often without the discipline required to complete a debt relief program and not all creditors are willing to compromise. That leaves debt relief businesses with a long and uncertain road to payment, after hours of work and negotiation.

The FTC’s proposal to elimination of fees collected before debts are settled will necessarily alter debt settlement practices, customer debt relief options, and debt lead generation.

Add to this the Debt Settlement and Consumer Protection Act, which adds a heavy layer of beefed up disclosures, marketing requirements, and a broadened definition of “debt relief.” The debt industry and the lead generation industry that supports it will change.

This leads to the really big question: Is the ecosystem of debt settlement companies and debt lead generation a sustainable model in its current form? Or will it need to be re-engineered?

What are your thoughts and predictions? What should debt lead generation companies be doing to prepare?

Here are a few good resources to read through and consider before commenting:

• Threat to Debt
• Threat to Debt – Part 2
• Will the Debt Relief Vertical Survive?
• Why I Love Debt Settlement and Debt Settlement isn’t Going Away