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I Am a Former Debt Settlement Salesperson and Have Questions About the FTC Regulations

“Dear Steve,

I am a former sales person for several debt settlement companies-and have questions about FTC regulation.

Please DO NOT identify me by name or email on your site-I have many friends still working for this one company.

FTC regulation forbids deception-would enticing a lead to sign an enrollment application by saying “I got our managers to reduce our fee from 15% to 12%-so you need to sign as soon as possible” be deceptive IF the fee was always 12%?

Would using phrases like “attorney in fact” be violations as they are intended to confuse and manipulate the lead/customer?

If the company is getting around the recent FTC ruling by changing their marketing efforts to Direct Mail marketing-would it be an FTC violation to be calling all their old leads-previously generated from other marketing efforts-and pitching the lead AFTER emailing the direct mail catalog and having them call back on a “qualified traceable toll free number.”?

Anonymous”

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The Answer

Dear Anonymous,

Thanks for reaching out for some answers. I’ll see what I can do to add at least my point of view but hopefully others will weigh in with their impression as well.

As far as the fee question I’m not sure that rises to a level of deception but rather seems to be general sales hyperbole. I have not had the impression that the FTC or any regulator is concerned about the fee as long as the fee is clearly stated and that allows a consumer to know the fee in advance and use that information to make an informed decision.

My bigger concern would be if this was a fee that was charged in advance or front loaded before the service was delivered. I’m not convinced that a company that is attempting to avoid the rules or bend them, places performance and satisfaction of clients ahead of anything else.

Using phrases like “attorney in fact” in an effort to give the impression that there is some sort of legal representation would be more problematic for me. If that is the intent then I think that is something to be avoided as it would confuse the average consumer unless they were first clearly educated about what “attorney in fact” really meant.

I think if you did a poll of random people on the street the majority of people would not understand that “attorney in fact” is a definition created by a power of attorney. If “attorney in fact” was used as part of a sales pitch without first telling the consumer what it meant and clearly stating there is no licensed attorney representation then I’d have a real problem with that. I really can’t even see a reason to use it in a sales pitch since talking about the need to sign a power of attorney is all that is needed.

Ah yes, the catalog approach. My opinion is that calling people previously solicited in some other fashion originally, would certainly create a technical problem with a FTC telemarketing sales rule (TSR) perceived loophole.

I’m constantly amazed by the efforts and hopeful circumventions of the rules that some companies engage in. If their effort was to provide the highest quality service and produce the most satisfied customers then all the effort and energy to confuse or mislead consumers would be better spent just doing the right thing.

I hope that helps.

I Am a Former Debt Settlement Salesperson and Have Questions About the FTC Regulations
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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • Ballsuv Sumyungdog

    Marie-good thought but unrealistic. Having sold the program for several years, and being in collections a decade before that-I know that as soon as the client stops willfully making payments to a creditor-depending on circumstances and the whim of the creditor-the client can potentially end up “in court.” Now-whether this means IN COURT or a settlement adviser negotiates an Agreed Order-that’s splitting hairs.

    I’m the guy that posed the question to Steve in the first place-and to give a bit more info–the company is still collecting fees up front, based on sending a catalog out to targeted consumers. The company has been MUCH talked about in this forum. Anyway-when you have commission sales people striving for bonus, the “pitch” and 100% accurate representations are often the first casualties..followed by realistic expectations.

  • Mariemegge

    Why can’t these debt settlement companies simply operate within the law? At Donaldson Williams we would never take steps to could possibly land our company in court.

  • http://www.donaldsonwilliams.com Mariemegge

    Why can’t these debt settlement companies simply operate within the law? At Donaldson Williams we would never take steps to could possibly land our company in court.

    • Ballsuv Sumyungdog

      Marie-good thought but unrealistic. Having sold the program for several years, and being in collections a decade before that-I know that as soon as the client stops willfully making payments to a creditor-depending on circumstances and the whim of the creditor-the client can potentially end up “in court.” Now-whether this means IN COURT or a settlement adviser negotiates an Agreed Order-that’s splitting hairs.

      I’m the guy that posed the question to Steve in the first place-and to give a bit more info–the company is still collecting fees up front, based on sending a catalog out to targeted consumers. The company has been MUCH talked about in this forum. Anyway-when you have commission sales people striving for bonus, the “pitch” and 100% accurate representations are often the first casualties..followed by realistic expectations.

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