Regulatory Compliance & Ethics Flashcards

Under the FTC's Telemarketing Sales Rule, which three conditions must ALL be met before a debt relief provider may collect a fee for settling a particular debt?

Answer: The debt is renegotiated, the consumer agrees to the settlement, and the consumer makes at least one payment to the creditor

The TSR advance-fee ban requires a renegotiated debt, consumer agreement to it, and at least one payment made under it before any fee is charged.

A debt relief company advertises on TV, and a consumer calls the toll-free number in the ad. Does the TSR apply to that call?

Answer: Yes, debt relief services are excluded from the general media advertising exemption

The 2010 TSR amendments removed the general media exemption for debt relief, so inbound calls responding to ads are covered.

Under the TSR, which fee structure for settling an individual debt is permitted when the client enrolls several debts?

Answer: A fee proportional to the share of total enrolled debt that was settled, or a fixed percentage of the amount saved

The TSR allows either a proportional fee based on the enrolled debt amount or a percentage of savings, and the percentage cannot change.

Which feature is REQUIRED if a debt relief provider asks the consumer to put money in a dedicated account before settlements are reached?

Answer: The account must be at an insured financial institution, and the consumer owns the funds and any interest

The TSR requires an insured institution, consumer ownership of the funds and interest, an unaffiliated administrator, and withdrawal at any time.

A client asks to leave the program and withdraw their dedicated account balance. Under the TSR, how soon must the funds (minus fees already earned) be returned?

Answer: Within 7 business days

Consumers may withdraw at any time without penalty and must get their funds, minus earned fees, within seven business days.

An agent tells a prospect, 'Once you enroll, creditors are legally required to stop calling you.' Why is this an ethical and regulatory problem?

Answer: It misrepresents the effect of the service on collection efforts, which the TSR prohibits

The TSR bans misrepresenting a debt relief service's effect on creditor collection efforts, including calls and lawsuits.

Which federal agency has rulemaking authority over the TSR and shares enforcement of it with the CFPB and state attorneys general?

Answer: The Federal Trade Commission

The FTC wrote and enforces the TSR, and the CFPB and state attorneys general can enforce it too.