Regulatory Compliance & Ethics Flashcards

A sales script says, 'Our clients typically save 60% on their debt.' Under the TSR, what must be true for this claim?

Answer: It must be truthful and supported, reflecting actual results that consider clients who drop out

The FTC requires savings and success claims to be truthful and substantiated, which includes accounting for clients who drop out or never settle.

Which transaction is generally EXEMPT from the TSR's debt relief advance-fee ban?

Answer: A sale completed in a face-to-face meeting before any payment is required

Sales finished in a face-to-face presentation are generally outside the TSR, though state law and UDAAP still apply.

Under the TSR's dedicated account rules, which relationship is PROHIBITED?

Answer: The debt relief provider owns, controls, or is affiliated with the account administrator

The entity holding the dedicated account cannot be owned by, controlled by, or affiliated with the debt relief provider.

A client asks an agent to make their hardship letter claim a job loss that never happened so it will 'look better' to creditors. What should the agent do?

Answer: Refuse and help the client describe their real hardship accurately

Helping make false statements to creditors is deceptive and unethical, so hardship claims must be accurate.

Which disclosure must a debt relief provider give about money the consumer has to save?

Answer: The amount of money or percentage of each debt the consumer must save before the provider makes a settlement offer

The TSR requires disclosing how much money, or what percentage of each debt, must be accumulated before an offer is made to each creditor.

Under the FDCPA, within how many days after first contacting a consumer must a debt collector send a validation notice (if it wasn't in the first communication)?

Answer: 5 days

The FDCPA requires the validation notice within five days after the first communication with the consumer.

A prospect earns too little to make any program deposits and has very few assets. What is the most ethical action for the agent?

Answer: Assess suitability and, if the program doesn't fit, explain other options such as nonprofit credit counseling or speaking with an attorney

Ethical practice means enrolling only consumers the program can realistically help and pointing others to options that fit better.