Operations & Process Management Flashcards

Under the FTC Telemarketing Sales Rule, when may a debt settlement company first collect a fee for settling a specific enrolled debt?

Answer: After a settlement is reached, the client agrees to it, and at least one payment has been made to the creditor

The TSR advance-fee ban requires a renegotiated settlement, client agreement, and at least one payment to the creditor before any fee.

A client enrolls five debts, and one is settled. How may the company calculate its fee for that settlement under the proportional method?

Answer: Charge a fee in proportion to that debt's share of total enrolled debt

The proportional method ties the fee for each settled debt to that debt's share of the total enrolled debt.

Which is the OTHER fee method the TSR allows for debt settlement besides the proportional method?

Answer: A percentage of the amount saved on each settled debt

The TSR allows a fee calculated as a fixed percentage of the savings achieved, with the percentage staying the same for every debt.

If a company uses the percentage-of-savings fee method, what must stay the same across all of a client's settled debts?

Answer: The percentage applied to the savings

The TSR requires the same savings percentage to apply to every individual debt settled.

An operations manager wants to batch fee withdrawals and take fees for settlements the creditor hasn't been paid on yet. What is the compliance problem?

Answer: Fees can't be collected until at least one payment has been made to the creditor under each settlement

Fee collection for each debt depends on at least one payment to that creditor under the agreed settlement.

Which workflow step BEST shows the client agreed to a settlement before the payment is processed?

Answer: Documented client authorization of the specific settlement terms

Documented client authorization of the specific terms shows consent, which the TSR requires before fees.

Why do debt settlement operations usually track a 'settlement-ready' balance for each enrolled account?

Answer: To figure out when enough money has built up to fund a realistic offer

Tracking the funds available against likely settlement amounts helps decide when to start negotiating.