Risk Management & Mitigation Flashcards

Under the 2024 TSR amendments, how long must telemarketers generally keep required records?

Answer: 5 years

The FTC's 2024 TSR amendments raised the record-keeping period from 24 months to five years.

A client gets a 1099-C but was insolvent right before the debt was canceled. Which form would usually be used to claim the insolvency exclusion?

Answer: IRS Form 982

Taxpayers use IRS Form 982 to exclude canceled debt from income, including under the insolvency exclusion.

Which fee structure is allowed under the TSR for debt relief services?

Answer: A fee proportional to the settled debt's share of total enrolled debt, or a percentage of the amount saved

The TSR allows fees that are either proportional to the enrolled debt settled or a percentage of the savings achieved.

An effective complaint-management program helps reduce risk mainly by:

Answer: Tracking, investigating, and finding root causes of complaints so systemic problems are fixed early

Root-cause analysis of complaints finds compliance gaps before they become enforcement or litigation problems.

A sales rep tells a prospect, 'You'll be debt-free in 24 months, guaranteed.' What compliance risk does this create?

Answer: A misrepresentation of results or timing that may be deceptive under the TSR and FTC Act

Guaranteeing outcomes or timelines the provider can't ensure is a misrepresentation regulators actively pursue.

Which internal control best detects unfair sales practices by agents during enrollment calls?

Answer: Recording and regularly monitoring calls, with QA scorecards and corrective action

Call monitoring and quality assurance catch misrepresentations and missing disclosures before they turn into widespread violations.

A client wants to enroll a secured auto loan in a debt settlement program. What is the main risk to explain?

Answer: Stopping payments on a secured debt can lead to repossession of the collateral, so such debts are usually not suitable for settlement

Secured creditors can repossess collateral when payments stop, which is why settlement programs usually focus on unsecured debt.