(Free Press Release) Eclipse Servicing is pleased to put out the following guidance on the impact of the new debt settlement Amendment to the FTCâ€˜s Telemarketing Sales Rule (TSR)
Although Eclipse Servicing does not directly originate debt resolution contracts with clients, these rules and disclosures must be adhered to by any entity that wishes to retain our services for providing outsourced client services, negotiation and payment servicing.
The FTC Amendment to the TSR applies to all operations, policies and procedures, including advertising and marketing (e.g., websites, inbound telephone scripts, print, radio, television and Internet advertisements, affiliate relationships, lead generation relationships, back-office provider relationships).
All Debt Settlement Companies and Law Firms are required to adhere to all the requirements below in regard to marketing:
Effective September 27, 2010, all marketing of any type and in any media, as well as sales scripts, must comply with the standards below and in the Marketing section that follows without exception
Under FTC rule, an act or practice is deceptive if: (1) there is a representation or omission of information that is likely to mislead consumers acting reasonably under the circumstances; and (2) that representation or omission is material to consumers.
1) Absolutely no use of government or implied official symbols or text that may lead a consumer to believe that the marketing is for a federal or state program or in regard to any statute or law regarding debt relief.
2) The Final Rule prohibits sellers or telemarketers of debt relief services from making misrepresentations regarding any material aspect of any debt relief service and it provides several illustrative examples, including misrepresentations of:
the amount of money or the percentage of the debt amount that a customer may save by using such service;
the amount of time necessary to achieve the represented results;
the amount of money or the percentage of each outstanding debt that the customer must accumulate before the provider will initiate settlement attempts with the customerâ€˜s creditors or debt collectors or make a bona fide offer to negotiate, settle or modify the terms of the customerâ€˜s debt;
the effect of the service on a customerâ€˜s creditworthiness;
the effect of the service on the collection efforts of the customerâ€˜s creditors or debt collectors;
the percentage or number of customers who attain the represented results; and
3) The FTC requires that representations promising specific savings or other results be truthful, and that the provider have a reasonable basis to substantiate the claims. For example, the Rule implies that when a debt relief service provider represents that it will save the consumer money, the savings claims should reflect the experiences of the providerâ€˜s own past customers and must account for several key pieces of information.
In addition to the above debt relief-specific misrepresentations, existing prohibitions found in the TSR will now apply to the inbound or outbound telemarketing of debt relief services including the following:
1) How much the service costs and other important terms.
Before someone signs up for your service, you must disclose all fees. If you charge a specific dollar amount, you must disclose that amount. If you charge a percentage of the amount a customer would save as a result of your program, you have to disclose both the percentage and the estimated dollar amount it represents for that customer. In addition, before someone signs up, you must disclose any material restrictions, limitations, or conditions on your services.
2) How long it will take to get the advertised results.
You must give a good faith estimate of how many months or years the consumer will have to wait before youâ€˜ll make an offer to each creditor thatâ€˜s likely to result in a settlement. You have to have a reasonable basis for any statements you make.
3) How much money a customer must save before we will make a settlement offer to creditors.
For example, if someone owes $10,000 to a creditor and your data shows that this creditor is likely to settle the debt for $6,000, you must tell the potential customer before he or she signs for your program that he or she will have to save about $6,000 to settle the debt.
4) The consequences if the customer fails to make timely payments.
If you tell consumers to stop making timely payments to their creditors or if your program relies on that practice you must tell them about the possible consequences of doing so, including damage to their credit report and credit score; that creditors may sue them or continue with the collections process; and that they may accrue new fees and interest, which will increase the amount they owe.
The FTC Rule mandates four specific disclosures that must be made before a customer consents to pay for the goods or services offered. Before the customer consents to pay, we must disclose to the customer, clearly and conspicuously:
the amount of time necessary to achieve the represented results;
the amount of savings needed before the settlement of a debt;
if the debt relief program includes advice or instruction to consumers not to make timely payments to creditors, that the program may affect the consumerâ€˜s creditworthiness, result in collection efforts, and increase the amount the consumer owes due to late fees and interest; and
if the debt relief service provider requests or requires the customer to place funds in a dedicated bank account at an insured financial institution, that the customer owns the funds held in the account, may withdraw from the debt relief service at any time without penalty, and then may receive all of the funds in the account.
According to the TSR, the above disclosures are required Ã¢â‚¬Å“to the extent that any aspect of the debt relief service relies upon or results in the customer failing to make timely payments to creditors or debt collectors.Ã¢â‚¬
For more information, please contact Mr. Michael Smith (813) 367) 5100
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