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What is the Telemarketing Sales Rule?

Hannah Locklear | January 18, 2023

Summary: The Telemarketing Sales Rule (TSR) is an important regulation that helps protect consumers from unwanted telemarketing calls and deceptive sales practices, including debt settlement scams. If you’re considering debt settlement, you should understand the TSR so you know how to protect yourself. SoloSettle can help you settle a debt, once and for all, and improve your financial wellbeing.

The Telemarketing Sales Rule (TSR) is a regulation established in 1995 by the Federal Trade Commission (FTC) under 16 C.F.R. Part 310. It protects consumers from unwanted telemarketing calls and deceptive sales practices. The TSR applies to all telemarketing calls made to consumers in the United States, regardless of whether the call originates within the country or is placed from another country.

The TSR protects consumers, like you, by prohibiting the following actions: failure to disclose specific material information, misrepresentations, excessive calling, calling at certain times of the day, contacting a consumer who has asked not to be called again. The law also outlines payment restrictions for the sale of certain goods and services by telemarketers. One of these services is debt relief.

If you find yourself struggling with debt, you may consider reaching out to your creditor or debt collector to settle the debt. In this article, we’ll discuss how the TSR applies to debt settlement services and how you can protect yourself from scams and unfair practices.

The Telemarketing Sales Rules is enacted to protect you

The TSR includes several provisions to protect consumers, including:

  • The National Do Not Call Registry (16 C.F.R. §310.4(b)(1)(iii)): The TSR established the National Do Not Call Registry, which allows consumers to opt out of receiving telemarketing calls by registering their phone numbers. Once a number is on the registry, telemarketers are prohibited from calling it, with a few exceptions such as political calls, charitable calls, and calls from companies with which the consumer has an established business relationship.

  • Disclosure of information (16 C.F.R. §310.3(a)(1)): The TSR requires telemarketers to disclose certain information during a call, such as the identity of the caller, the nature of the goods or services being offered, and the price. Telemarketers are also prohibited from making false or misleading statements.

  • Payment Restrictions (16 C.F.R. §310.3(a)(2)): The TSR restricts the use of certain payment methods, such as cash-to-cash money transfers, wire transfers, and cash reload mechanisms, in telemarketing transactions.

  • Abandoned Calls (16 C.F.R. §310.4(b)(1)(iv)): The TSR considers abandoned calls an abusive act. An abandoned call occurs when a telemarketer fails to transfer the call to a sales representative within two seconds after the consumer’s greeting.

  • Call blocking (16 C.F.R. §310.4(b)(1)(vii)): The TSR allows consumers to block unwanted calls by using caller ID blocking services, and if telemarketers continue to call, it is considered a violation of the law.

The TSR also includes provisions to protect consumers from fraud and deceptive practices. For example, telemarketers are prohibited from misrepresenting the nature of the call, the identity of the caller, or the goods or services being offered. They are also prohibited from calling consumers who have previously told them not to call again.

FTC Telemarketing Sales Rule and debt settlement

If you find yourself drowning in debt and feeling unsure how to manage it, you may consider enrolling in a debt relief program. You’ll be happy to know that the debt settlement industry is also regulated by the FTC’s Telemarketing Sales Rule, in all 50 states, in order to prevent unfair, deceptive, and abusive practices by debt relief services.

What is considered a debt relief service?

Under the TSR, a “debt relief service” is any seller or telemarketer that works for the following:

  • Debt settlement companies: Companies that claim they can help you settle a debt for less than the full balance.
  • Debt negotiation companies: Companies that claim they can negotiate a lower monthly payment by working with creditors to reduce interest rates or fees.
  • Credit counseling companies: Companies that work as a middleman between consumers and creditors or debt collectors to set up and administer payment plans (also known as debt management plans).

Now that you have a better understanding of which organizations and services are regulated by the TSR, let’s take a look at how the Rule applies to debt settlement companies.

Debt settlement companies cannot charge upfront fees

Debt settlement companies cannot collect any fees from a consumer before the debt has been effectively settled, reduced, or otherwise resolved. On top of this, the consumer must have reached a settlement agreement with the creditor and have it in writing. No “pre-approved” fees are allowed for future negotiations or settlements.

Debt settlement companies must disclose certain information

Before a consumer enrolls in a debt settlement program, the company must disclose certain information about its services. This includes how much the service costs, how long it takes to see results, how much money must be saved before a settlement offer is made, consequences that may occur if the consumer fails to make payments on time, customer’s rights, and other important terms.

Other important information includes the fact that the debt settlement service may not be appropriate for all consumers and that consumers may end up paying more than if they had paid their debts in full.

Debt settlement companies cannot misrepresent their services

No false or unsubstantiated claims can be made regarding a debt settlement company’s services. This includes the amount of money a consumer might save by using the service, the time it takes to see results, how much money must be saved up by the consumer before debt settlement negotiations begin, the potential effect on the consumer’s credit score, previous success rates, and whether the business is a bona fide nonprofit entity.

It is important for debt settlement companies to be aware of and comply with the TSR and any other relevant regulations in order to avoid fines and penalties for non-compliance.

What are the penalties for violating the Telemarketing Sales Rule?

Violations of the TSR can result in serious fines and penalties. The FTC and the Federal Communications Commission (FCC) are responsible for enforcing the TSR, and they may take legal action against companies or individuals who violate the rules.

For example, if a telemarketer or seller calls a consumer who has asked not to be called, or if they fail to disclose any of the required information before the consumer pays for their goods or services, they may receive a civil penalty of up to $46,517 for each violation.

However, it is important to note that telemarketing calls are not the only way in which consumers may be contacted. Robocalls, text messages, and emails are other ways in which telemarketers may reach consumers. The TSR does not cover all of these forms of communication, and consumers should be aware of other regulations that may apply, such as the Telephone Consumer Protection Act (TCPA) for robocalls and text messages.

In addition, the FTC has issued guidance to help debt settlement companies understand and comply with the TSR, including the Debt Relief Services & the Telemarketing Sales Rule: A Guide for Business, which can be found on the FTC's website.

Know your state’s laws too

It is important to note that the TSR is a federal regulation. Some states also have their own telemarketing regulations, which may be more restrictive than the TSR. Companies that engage in telemarketing should be familiar with both federal and state regulations that apply to their activities.

In conclusion, the TSR is an important regulation that helps protect consumers from unwanted telemarketing calls and deceptive sales practices, including debt settlement scams. SoloSettle can help you settle a debt without worrying about losing out on your money.

Check out this video to learn more:

SoloSettle can help you settle your debt for good

Debt settlement is an effective way to resolve your outstanding debts and give yourself a financial reset.

SoloSettle, powered by SoloSuit, is not like traditional debt settlement companies. Our tech-based approach to settling debts makes the process quicker, less painful, and more efficient.

Our software sends and receives debt settlement negotiations on your behalf until a settlement agreement is reached. Then, we help manage your debt settlement agreement documentation and transfer your payments to creditors and debt collectors, helping you keep your financial information private and secure.

Here are some other why consumers prefer SoloSettle over other debt settlement companies:

  • SoloSettle can help you settle a debt of any size. Most settlement companies require you to have a debt of $15,000 or more. SoloSettle doesn’t. Whether you owe a couple hundred dollars or thousands—we’ve got you covered.
  • SoloSettle is powered by SoloSuit, which is a legitimate company with a strong reputation for helping people resolve their debts.
  • SoloSettle has legal defense built in with SoloSuit. While settling, you can use SoloSuit to block lawsuits if you need. Most debt settlement companies don’t provide legal defense; if you’re sued for a debt you are on your own.
  • SoloSettle takes an active approach to negotiating a settlement, while many debt settlement companies wait for the creditor or debt collector to initiate.

Still not convinced? Check out this review from a real SoloSettle customer:

“I'm very thankful for SoloSettle.. Having a third party negotiate the settlement was instrumental in resolving this case and saved me from two giant headaches: 1) I didn't have to deal with the plaintiff's lawyer and 2) I didn't have to go to court. I also love that the payment was processed through SoloSettle. I was nervous about sharing my personal financial data with the other side, but SoloSettle protected that for me. I hope I never get sued again, but if I do, I would use SoloSettle again in a heartbeat.

SoloSettle really saved me a ton of time and heartburn and kept me from having to be my own lawyer in court.”

Now, let’s take a look at how to use SoloSettle to resolve a debt.

Example: Jaclyn is being sued by LVNV Funding for an old credit card debt of $4,000. She uses SoloSuit to respond to the lawsuit with a written Answer, buying herself time to work out a settlement arrangement. Jaclyn takes a close look at her budget and determines she can afford to pay off $3,000 (75% of the debt) right now. She uses SoloSettle to send a settlement offer to LVNV Funding, starting low at 50%, or $2,000. After a few rounds of negotiations and counteroffers, they reach a debt settlement agreement of $2,800 (only 70%). Jaclyn saves money, and LVNV Funding dismisses the lawsuit entirely.

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