The Federal Trade Commission (FTC), the nation’s consumer protection agency, has amended the Telemarketing Sales Rule (TSR) to add specific provisions to curb deceptive and abusive practices associated with debt relief services. One key change is that many more businesses will now be subject to the TSR. Debt relief companies that use telemarketing to contact potential customers or hire someone to call people on their behalf have always been covered by the TSR. The new Rule expands the scope to cover not only outbound calls – calls you place to potential customers – but in-bound calls as well – calls they place to you in response to advertisements and other solicitations.
If your business is involved in debt relief services, here are three key principles of the new Rule:
• It’s illegal to charge upfront fees. You can’t collect any fees from a customer before you have settled or otherwise resolved the consumer’s debts. If you renegotiate a customer’s debts one after the other, you can collect a fee for each debt you’ve renegotiated, but you can’t front-load payments. You can require customers to set aside money in a dedicated account for your fees and for payments to creditors and debt collectors, but the new Rule places restrictions on those accounts to make sure customers are protected.
• You have to disclose certain information before signing people up for your services. Before people sign up, you must disclose fundamental aspects of your services, including how long it will take for them to get results, how much it will cost, the negative consequences that could result from using debt relief services, and key information about dedicated accounts, if you use them.
• You can’t misrepresent your services. The new Rule prohibits you from making false or unsubstantiated claims about your services.
For more information, see here: http://www.business.ftc.gov/documents/bus72-debt-relief-services-telemarketing-sales-rule-guide-business
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