As I write this article there are only 40 days till the first part of the new Federal Trade Commission telemarketing sales rules (FTC TSR) kick in on September 27, 2010 regarding truth in advertising and good faith estimates.
With all of the debt settlement entities that third-party escrow companies Global Client Solutions and NoteWorld provide services for, how in the world are these two companies going to audit and clear all their client debt settlement companies for compliance with the new rules before the effective date?
The FTC TSR guidance says, “If you work with debt relief companies, review their policies, procedures and operations to make sure they’re complying with the Rule. Willful ignorance isn’t a defense.”, so What are Global and NoteWorld going to do?
Even if you don’t directly sell or provide debt relief services, you may have obligations under the new Rule. Specifically, it’s illegal to provide “substantial assistance” to another company if you know they’re violating the Rule or if you remain deliberately ignorant of their actions.
It seems humanly impossible for Global Client Solutions and NoteWorld to be able to screen and audit their client debt settlement companies for compliance especially since the debt settlement companies themselves have not even gathered the data to complete their good faith estimates for consumers. The requirements under the good faith estimates that consumers must receive will require debt settlement companies to examine their historical data, data they were not able to previously produce.
I previously wrote a guide on the good faith data that must be provided to consumers, you can read that here.
So with 40 days left before the new rules go into force it seems that Global and NoteWorld are left with four choices:
- They could ignore the rule.
- They could drop debt settlement client companies that they felt posed the greatest risk of non-compliance.
- They could conduct audits of debt settlement companies to review their policies, procedures and operations and complete those audits before September 27, 2010.
- They could rely on debt settlement company clients to self report without checking or verifying that the companies are in compliance with the new rules. If they chose this route, it’s probably not going to workout well for Global Client Solutions or NoteWorld.
It’s going to be interesting to see what is going to happen.
I would suggest if you are a debt settlement company that utilizes either NoteWorld or Global Client Solutions that you reach out proactively and ask them how they plan to make sure your operation is in compliance to avoid being potentially dropped.
If you are a consumer and utilizing NoteWorld or Global Client Solutions you should contact the one you are working with and make sure they verified your debt settlement company is complying with the new rules to go into effect. If you don’t you might find your debt settlement company dropped and your plan in disarray. It does not hurt for you to be proactive on this issue.
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