Debt Relief Services & the Telemarketing Sales Rule: What People are Asking
October 2010
In October 2010, the Federal Trade Commission (“FTC”) published a supplementary guide to address additional questions raised by debt relief providers regarding the Telemarketing Sales Rule (“TSR”) amendments. These amendments aimed to curb deceptive practices within the debt relief industry, which has seen growing concerns over companies offering assistance to individuals struggling with credit card debt. The earlier publication, "Debt Relief Services and the Telemarketing Sales Rule: A Guide for Business," provided detailed guidance on compliance with the rule, and this new document offers further clarification on several key aspects.
One major area of clarification involved determining which businesses are covered by the rule, emphasizing that the TSR applies to debt relief services, including both companies that initiate calls and those that receive calls in response to advertisements. The guide also addresses the "face-to-face exemption," which may apply to certain businesses not involved in telemarketing, thereby excluding them from some TSR provisions.
Another critical topic covered is the collection of fees. The FTC reiterated that debt relief companies cannot charge upfront fees for services before they have successfully settled or renegotiated a customer's debts. This prohibition aims to protect consumers from companies that collect payments without delivering results.
The guide also notes the effective date of the rule, which was an important point of reference for businesses seeking to understand when they must comply with the new regulations.
For more information, see here: https://www.ftc.gov/tips-advice/business-center/guidance/debt-relief-services-telemarketing-sales-rule-what-people-are
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