Telemarketing Sales Rule: What Is It?

To protect consumers from unwanted telemarketing calls and deceptive sales practices, including debt settlement scams, the Telemarketing Sales Rule (T.S.R.) is a crucial regulation. You need to understand the T.S.R. before you decide to settle your debts so you can protect yourself from these scams. 

Under 16 C.F.R. Part 310, the Federal Trade Commission (FTC) created the Telemarketing Sales Rule (T.S.R.) in 1995 to protect consumers from unwanted telemarketing calls and deceptive sales practices. No matter if the call originates within the country or is placed from another country, the T.S.R. applies to all telemarketing calls made to consumers within the United States.

Among the actions prohibited by the T.S.R. are failure to disclose specific material information, misrepresentations, excessive call-backs, calling at particular times during the day, and contacting consumers who have requested that they not be contacted again. As part of the law, telemarketers are prohibited from selling particular goods and services, including debt relief, without payment.

This article will discuss how the T.S.R. applies to debt settlement services and how you can protect yourself from scams and unfair treatment if you struggle with debt.

The Telemarketing Sales Rules protect you

The T.S.R. includes several provisions to protect consumers, including:

• The National Do Not Call Registry (16 C.F.R. 310.4(b)(1)(iii)): Consumers can opt out of receiving telemarketing calls by registering their phone numbers with the National Do Not Call Registry, established by the T.S.R. Generally, telemarketers are forbidden from calling a number once it has been placed on the registry, with a few exceptions such as political or charitable calls, as well as calls from companies with whom the consumer has an established business relationship.
• Disclosure of information (16 C.F.R. 310.3(a)(1)): Under the T.S.R., telemarketers must disclose certain information during a call, such as the identity of the caller, the nature of the goods or services offered, and the price. Telemarketers are also prohibited from making false or misleading statements.
• Payment Restrictions (16 C.F.R. 310.3(a)(2)): In telemarketing transactions, the T.S.R. prohibits the use of certain payment methods, such as cash-to-cash transfers, wire transfers, and cash reload mechanisms.
• Abandoned Calls (16 C.F.R. 310.4(b)(1)(iv)): Abandoned calls are considered abusive acts by the T.S.R. An abandoned call occurs when a telemarketer does not transfer a call to a sales representative within two seconds of being greeted by the consumer.
• Call blocking (16 C.F.R. 310.4(b)(1)(vii)): By using caller I.D. blocking services, consumers can block unwanted calls, and telemarketers are considered to be violating the T.S.R. if they continue to call.

Also included in the T.S.R. are provisions that protect consumers from fraud and deceptive practices. For instance, telemarketers are prohibited from misrepresenting the call’s nature, the caller’s identity, or the goods or services offered. It is also forbidden for them to call consumers who have previously requested that they not call again.

The FTC’s Telemarketing Sales Rule and debt settlement

A debt relief program may be an option for you if you are drowning in debt and unsure how to manage it. To prevent unfair, deceptive, and abusive practices by debt relief services, the F.T.C.’s Telemarketing Sales Rule applies to the debt settlement industry in all 50 states.

How does a debt relief service work?

By the T.S.R., a “debt relief service” is any seller or telemarketer working for the following organizations:

• Debt settlement companies: These companies claim to be able to settle debts for less than the total amount due.
• Debt negotiation companies: Firms that claim to be able to reduce interest rates or fees by negotiating with creditors.
• Credit counseling companies: Organizations that serve as intermediaries between consumers and creditors or debt collectors to set up and administer payment plans (also known as debt management plans).

Now that you understand which organizations and services are regulated let’s look at how debt settlement companies are affected by the T.S.R.

Companies that settle debts cannot charge upfront fees

Before a consumer’s debt is effectively settled, reduced, or otherwise resolved, debt settlement companies cannot charge any fees. As a result, the consumer must have reached a settlement agreement with the creditor and have it in writing. No pre-approved fees are permitted in future negotiations or settlements.

Debt settlement companies must disclose certain information

A debt settlement company must provide consumers with specific information about its services before they enroll in the program. The terms include the service’s cost, the time it takes to achieve results, how much money must be saved before a settlement offer is made, the consequences if a consumer fails to make payments on time, customer rights, and other important information.

The debt settlement service may only be suitable for some consumers, and consumers may end up paying more than they would have if they had paid their debts in full.

Settlement companies cannot misrepresent their services

Debt settlement companies cannot make false or unsubstantiated claims regarding their services. This includes the amount of money a consumer might save by using the service, how much time it takes for results to be realized, how much money the consumer must save up before debt settlement negotiations begin, the potential impact on the consumer’s credit score, past success rates, and whether the business is a bona fide nonprofit organization.

To avoid fines and penalties for noncompliance, debt settlement companies must be aware of and comply with the T.S.R. and any other relevant regulations.

Is there a penalty for violating the Telemarketing Sales Rule?

The Federal Trade Commission (F.T.C.) and the Federal Communications Commission (F.C.C.) are responsible for enforcing the T.S.R., and they may take legal action against companies or individuals who violate it.

A telemarketer or seller can receive a civil penalty of up to $46,517 if they call a consumer who has requested not to be contacted or has failed to disclose any information required before the consumer pays for their goods or services.

In addition, telemarketing calls are only one of many ways telemarketers may contact consumers. Robocalls, text messages, and emails are other means by which telemarketers may get consumers. In addition to T.S.R., consumers should be aware that different regulations may apply to these forms of communication, such as the Telephone Consumer Protection Act (TCPA) for robocalls and text messages.

A business guide is available on the F.T.C.’s website for debt settlement companies to ensure they comply with the T.S.R.

Make sure you know the laws in your state as well

The T.S.R. is a federal regulation. Some states may also have their telemarketing regulations that may be more restrictive than the T.S.R. Telemarketing companies should be familiar with state and federal regulations that apply to their activities.

As a result of the T.S.R., consumers are protected from unwanted telemarketing calls and deceptive sales practices.