Debt Settlement Companies Caught Violating New FTC Rules Better Prepare to Pay Really Big Fines

To be honest I really had not thought about how much the fines per violation were going to be for companies that were found to be not in compliance with the new Federal Trade Commission telemarketing sales rules covering debt relief organizations. I mean how much could they really be?

Well, thanks to the FTC for clarifying the fines for me it looks like the penalty is a whopping $16,000 “per violation” and that’s not chump change.

Debt settlement companies might want to hustle to comply with the rules that become effective on September 27, 2010 to avoid a $16,000 fine per violation. Those marketing and good faith fines will be easy to nail you on if you are not in compliance. All the FTC needs to do is grab a cup of coffee and pull up a web browser to catch companies not in compliance.

Too bad they didn’t outsource that stuff, with fines that large the FTC could create a cottage industry of violation hunters. Imagine if the FTC paid a bounty of 10% of the fine to the first person to report a particular violation? The industry would get cleaned up in a big hurry.

And unless debt settlement companies don’t jump to comply with the new rules it will be like shooting fish in a barrel, an analogy I need to look up the history for. Maybe in the future that will change from a description meaning something really easy to accomplish to, “Like catching debt settlement companies violating the FTC TSR.”

The Telemarketing Act says that “Any violation of any rule prescribed under subsection (a) of this section shall be treated as a violation of a rule under section 57a of this title regarding unfair or deceptive acts or practices.” 15 U.S.C. 6102(c). The schedule for civil penalties under section 57a is found at 16 CFR 1.98 and copied below.

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§ 1.98 Adjustment of civil monetary penalty amounts.

This section makes inflation adjustments in the dollar amounts of civil monetary penalties provided by law within the Commission’s jurisdiction. The following civil penalty amounts apply to violations occurring after February 9, 2009.

(a) Section 7A(g)(1) of the Clayton Act, 15 U.S.C. 18a(g)(1)–$ 16,000;

(b) Section 11(l) of the Clayton Act, 15 U.S.C. 21(l)–$ 7,500;

(c) Section 5(l) of the FTC Act, 15 U.S.C. 45(l)–$ 16,000;

(d) Section 5(m)(1)(A) of the FTC Act, 15 U.S.C. 45(m)(1)(A)–$ 16,000;

(e) Section 5(m)(1)(B) of the FTC Act, 15 U.S.C. 45(m)(1)(B)–$ 16,000;

(f) Section 10 of the FTC Act, 15 U.S.C. 50 — $ 110;

(g) Section 5 of the Webb-Pomerene (Export Trade) Act, 15 U.S.C. 65 — $ 110;

(h) Section 6(b) of the Wool Products Labeling Act, 15 U.S.C. 68d(b) — $ 110;

(i) Section 3(e) of the Fur Products Labeling Act, 15 U.S.C. 69a(e) — $ 110;

(j) Section 8(d)(2) of the Fur Products Labeling Act, 15 U.S.C. 69f(d)(2) — $ 110;

(k) Section 333(a) of the Energy Policy and Conservation Act, 42 U.S.C. 6303(a) — $ 110;

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(l) Sections 525(a) and (b) of the Energy Policy and Conservation Act, 42 U.S.C. 6395(a) and (b), respectively–$ 7,500 and $ 16,000, respectively;

(m) Section 621(a)(2) of the Fair Credit Reporting Act, 15 U.S.C. 1681s(a)(2)–$ 3,500; and

(n) Civil monetary penalties authorized by reference to the Federal Trade Commission Act under any other provision of law within the jurisdiction of the Commission–refer to the amounts set forth in paragraphs (c), (d), (e) and (f) of this section, as applicable.

[65 FR 60857, 60858, Oct. 13, 2000; 65 FR 69665, 69666, Nov. 20, 2000, as corrected at 65 FR 70761, Nov. 27, 2000; 69 FR 76611, 76612, Dec. 22, 2004; 74 FR 857, 858, Jan. 9, 2009]

28 U.S.C. 2461 note.

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[EFFECTIVE DATE NOTE: 74 FR 857, 858, Jan. 9, 2009, amended this section, effective Feb. 9, 2009.]

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12 thoughts on “Debt Settlement Companies Caught Violating New FTC Rules Better Prepare to Pay Really Big Fines”

  1. I reported you to the FTC as well Mr know it all Steve…We will see who gets fined & ran out of business by the FTC!

  2. Ok, so I left a voicemail for the guy who set me up yesterday and then I called the customer service to cancel they let me have another month to think about it before they charge me my first month thank god. They said as long as I stay commited to them and pay them the payment of 515 a month then in four years I will be debt free and will have paid altogether 24720 instead of 39860 with their fee included of like 5970 so it sounds like a good deal, but I feel skeptical reading all of these comments….Argh!!

  3. So how are you going to monitor the ads on your website? You know on Sept 27th every company you bashed will be reporting your website to the FTC for showing companies that aren’t in compliance with the new laws, hope you saved some adsense money youre going to need it to pay the fines.

    I for one will report you for free, no need to give me 10%

    • I enjoyed how you used my name and this site as your email address. What, afraid to say who you really are?

      So who are you going to report to the FTC? You’ll have to start every television station, all the talk radio stations, newspapers, etc. In fact I’m further removed than those other outlets are. The advertising relationship is between the advertiser and Google, not me. I don’t control who appears on the site and I have no contractual relationship with any of those advertisers.

      So seriously, why are you mad at me about this issue? I didn’t make the fines, I don’t enforce the rules, the FTC created the telemarketing sales rules and I don’t have a relationship with any debt settlement company.

      Are you upset that companies will be fined by the FTC for violating the rules?

      What gives?


      • Ignorance is not an excuse according to the new law and since your website is such an authority the FTC will expect you to police Google

        Unfortunately its how the new administration feels, if youre in the chain youre responsible too. Claiming to just be an affiliate is not the safe harbor it once was.

        Ill report you too on Sept 27th. You cant have your cake and eat it too, you wanted regulation you cant profit from those breaking the rules just like a lead broker, a processing company, or anyone else in the chain can. You need to be responsible too, youll blast the bad actors but happily accept their money for advertising on your site. I think its time you get rid of the double standard, otherwise youre the joke i am trying to make you in to. Bash the industry to rank for jeywords you can make money off of, youre profiting from those who claim they were ripped off, in that chain you actually ripped them off, how does it feel to be part of the problem?

        Hopefully your readers see this site for what it is, another way to suck money out of the debt space. If everyone else is profiting from scamming consumers why cant good old Steve?

        • It seems like the issue you object to will take care of itself. If, as the debt settlement industry predicts, 85% of debt settlement companies will go out of business. If the assertion is that ALL the advertisers that signup with Google and appear on this site and others are debt settlement companies then about 85% of those advertisers would go out of business.

          If you feel I have unfairly bashed a particular company I’d be happy to discuss a specific situation in which you feel I was unfair or incorrect.

          What ads, based on the content of the site, do you think should appear? You do understand that the ads you may see in your browser may not appear to any other person and are selected by Google based on surf history, Google’s magic and the context of the page.

          Your point of view is heard but how is the fact their are ads on this site much different from the ads on CNN Money for brokers, IRAs, online trading? All of these are companies that a consumer might use incorrectly and lose money with them. Or how about the google ads that appear on newspaper archive sites based on the same contextual formula?

          I’m reading an article right now on the Washington Post that has ads on it for debt consolidation, credit reports, credit score, mortgage, penny stock picks, etc. A debt story over on the FOX news site has ads for debt consolidation, car insurance, refinance your mortgage, and other money, credit, or debt advertisers. A similar story on the New York Times has ads for bankruptcy, debt settlement, and debt consolidation. Smart Money Magazine on their website for another similar debt story has ads for debt settlement, debt relief company listing, and some company named jgdebtsolutions.net. They also have ads for American Express, E*TRADE, student loans, and all those ads are on the same page. And by the way, the search I conducted on all those sites was for an article about debt settlement. Are those other media outlets intentionally writing those stories just to get those ads to appear or could it be as I say, they appear based on the content of the page they are on.

          If you feel compelled to report this site to someone, then are you going to report all those other sites as well?

          I’m curious, is your concern more about there are ads on this site or that you don’t like what I have to say about a particular debt relief company or a particular industry at large and you would prefer I was silenced?

          Outside of the fact there are ads on the site, what is the issue? If it’s just the ads and you object to seeing them, can I suggest you either don’t visit this site if they irritate you or realize that ad supported websites, newspapers, television stations, and radio is just the way the media helps to fund what they do.


          P.S. I noticed that in looking at your comment history on this site you have posted four comments, three of which you mentioned the ads on this site. Do you have anything else you want to share except for your unhappiness about the ads?

        • For the sake of argument I am going to assume you have never read the FTC guidelines with regards to advertising. Which I would like you to note is a completely separate set of rules outside the TSR ruling. With respect to advertising rules on the internet that the FTC has authority over, sellers are responsible for claims they make about their products and services. “Third parties – such as advertising agencies or website designers and catalog marketers – also may be liable for making or disseminating deceptive representations if they participate in the preparation or distribution of the advertising, or know about the deceptive claims. In determining whether an ad agency should be held liable, the FTC looks at the extent of the agency’s participation in the preparation of the challenged ad, and whether the agency knew or should have known that the ad included false or deceptive claims.” In this case Steve’s site could probably be considered a 4th party, as well as he has no control over what Google is doing.

          Below is text from the 2006 amendment regarding the safe web act:

          TITLE 15 CHAPTER 2 SUBCHAPTER I § 54
          False advertisements; penalties

          (b) Exception of advertising medium or agency

          No publisher, radio-broadcast licensee, or agency or medium for the dissemination of advertising, except the manufacturer, packer, distributor, or seller of the commodity to which the false advertisement relates, shall be liable under this section by reason of the dissemination by him of any false advertisement, unless he has refused, on the request of the Commission, to furnish the Commission the name and post-office address of the manufacturer, packer, distributor, seller, or advertising agency, residing in the United States, who caused him to disseminate such advertisement. No advertising agency shall be liable under this section by reason of the causing by it of the dissemination of any false advertisement, unless it has refused, on the request of the Commission, to furnish the Commission the name and post-office address of the manufacturer, packer, distributor, or seller, residing in the United States, who caused it to cause the dissemination of such advertisement.

          The FTC staff has issued a “white paper” on dot com advertising but it is appx 80 pages long (with endnotes etc), that helps companies understand what they should do. But from the little interaction I’ve had with individuals from the DS industry if it’s more than 5 pages long and doesn’t begin “See Dick and Jane” it usually goes unread.


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