Hi I'm Allison Brown, an attorney with the Federal Trade Commission, the nation’s consumer protection agency.
If you're in the debt relief services industry, you may have heard about amendments to the telemarketing sales rule that could affect your business. Here are answers to some questions people are asking.
The FTC amended the telemarketing sales rule to stop deceptive practices associated with debt relief services. One key change is that many more companies will be subject to the rule. The rule now covers not only outbound calls, calls that you make to prospective customers, but inbound calls as well, calls that prospective customers make to you in response to ads or other solicitations.
Businesses need to know three things about the telemarketing sales rule.
First, it’s illegal to charge upfront fees. So you can’t charge customers any fees until you've reduced or settled at least one of their debts.
Second, you need to give consumers important information before you sign them up for your services. For example, you need to tell consumers about how long it will take to get results, you need to tell them how much your services will cost, you need to tell them any negative consequences that may result from using debt relief services, and if you're using dedicated accounts, you need to provide them key information about those accounts.
Third, you may not make any false or unsubstantiated claims in your advertising. All of these provisions are in effect now, so it’s important that your company get in compliance.
There's no general exemption for attorneys in the rule. However, there are two reasons why many attorneys won’t be covered.
First, many attorneys don't use interstate telemarketing, if you're not making outbound calls to consumers or asking consumers to call you in response to an ad or other solicitation, then you're not covered by the rule.
Second, attorneys and other debt relief providers who meet to give sales presentations in person before signing consumers up for their services or charging any fees, are not covered by the rule.
The key to the face to face exemption is the direct and personal contact between the buyer and the seller. If you have face to face sales presentations with consumers before signing them up or accepting any fees, then you'll qualify for the face to face exemption.
On the other hand, you can't get out of the rule by hiring people to have cursory pre-enrollment meetings with consumers before signing them up. Webcam conversations and other online interactions do not count as person to person face to face meetings. Face to face meetings must be in person.
The FTC provides a plain language guide giving businesses information about how to comply with the rule. Its called Debt Relief Services and The Telemarketing Sales Rule: A Guide for Business, and you can find it online at business.ftc.gov.