A confidential tipster (send in your tips here) has sent in the following document that appears to cover the marketing operation of Legal Helpers Debt Resolution following the implementation of the Federal Trade Commission Telemarketing Sales Rules that cover debt relief service providers.
The tipster (send in your tips here) asked the following questions. Seeing that I’m away right now I thought I’d just post this for your review and discussion. Maybe you can offer a point of view in the comments to the tipster (send in your tips here) questions.
It certainly looks like LDHR has made it very clear to affiliates what is and isn’t permitted.
The one line that surprised me was the one where they say they will provide legal representation. “…and LHDR will represent the client in court.”
Anonymous Tipster Says:
Attached is the latest operating standards from Legal Helpers Debt Resolution.
The first question I have is LHDR has been buying/using leads from these companies (who are now part of Legal Services Support Group) for the past 6 months, nothing substantively has changed, why hasn’t LHDR been required to comply with State Bar Rules up until now?
And if they have why hasn’t any State Bar brought actions against LHDR ?
Second LHDR says they are exempt from the FTC rule in regard to an advance fee ban because of the face-to-face exemption, well what about the new Consumer Financial Reform Act, there is no face to face exemption how do they explain this?
I can always use your help. If you have a tip or information you want to share, you can get it to me confidentially if you click here.
LEGAL SERVICES SUPPORT GROUP, LLC
DEBT RESOLUTION OPERATING STANDARDS
Marketing and Front End Services
- FTC Rule Compliance
The FTC Amendment to the Telemarketing Sales Rule (“TSR) applies to all operations, policies and procedures, including advertising and marketing (e.g., websites, inbound telephone scripts, print, radio, television and Internet advertisements, affiliate relationships, lead generation relationships, back-office provider relationships).
Although LHDR will be exempt from the rule in regard to advance fee bans as of October 28, 2010 because of our new face to face protocol, we still intend to adhere to all the requirements below in regard to marketing
Effective September 27, 2010, all LHDR marketing of any type and in any media, as well as sales scripts, must comply with the standards below and in the Marketing section that follows without exception
Under FTC rule, an act or practice is deceptive if: (1) there is a representation or omission of information that is likely to mislead consumers acting reasonably under the circumstances; and (2) that representation or omission is material to consumers.
- Absolutely no use of government or implied official symbols or text that may lead a consumer to believe that the marketing is for a federal or state program or in regard to any statute or law regarding debt relief.
- The Final Rule prohibits sellers or telemarketers of debt relief services from making misrepresentations regarding any material aspect of any debt relief service and it provides several illustrative examples, including misrepresentations of:
- the amount of money or the percentage of the debt amount that a customer may save by using such service;
- the amount of time necessary to achieve the represented results;
- the amount of money or the percentage of each outstanding debt that the customer must accumulate before the provider will initiate settlement attempts with the customer’s creditors or debt collectors or make a bona fide offer to negotiate, settle or modify the terms of the customer’s debt;
- the effect of the service on a customer’s creditworthiness;
- the effect of the service on the collection efforts of the customer’s creditors or debt collectors;
- the percentage or number of customers who attain the represented results; and
- The FTC requires that representations promising specific savings or other results be truthful, and that the provider have a reasonable basis to substantiate the claims. For example, the Rule implies that when a debt relief service provider represents that it will save the consumer money, the savings claims should reflect the experiences of the provider’s own past customers and must account for several key pieces of information.
In addition to the above debt relief-specific misrepresentations, existing prohibitions found in the TSR will now apply to the inbound or outbound telemarketing of debt relief services including the following:
- How much the service costs and other important terms.
Before someone signs up for your service, you must disclose all fees. If you charge a specific dollar amount, you must disclose that amount. If you charge a percentage of the amount a customer would save as a result of your program, you have to disclose both the percentage and the estimated dollar amount it represents for that customer. In addition, before someone signs up, you must disclose any material restrictions, limitations, or conditions on your services.
- How long it will take to get the advertised results.
You must give a good faith estimate of how many months or years the consumer will have to wait before you’ll make an offer to each creditor that’s likely to result in a settlement. You have to have a reasonable basis for any statements you make.
- How much money a customer must save before we will make a settlement offer to creditors.
For example, if someone owes $10,000 to a creditor and your data shows that this creditor is likely to settle the debt for $6,000, you must tell the potential customer before he or she signs for your program that he or she will have to save about $6,000 to settle the debt.
- The consequences if the customer fails to make timely payments.
If you tell consumers to stop making timely payments to their creditors – or if your program relies on that practice – you must tell them about the possible consequences of doing so, including damage to their credit report and credit score; that creditors may sue them or continue with the collections process; and that they may accrue new fees and interest, which will increase the amount they owe.
The FTC Rule mandates four specific disclosures that must be made before a customer consents to pay for the goods or services offered. Before the customer consents to pay, we must disclose to the customer, clearly and conspicuously:
- the amount of time necessary to achieve the represented results;
- the amount of savings needed before the settlement of a debt;
- if the debt relief program includes advice or instruction to consumers not to make timely payments to creditors, that the program may affect the consumer’s creditworthiness, result in collection efforts, and increase the amount the consumer owes due to late fees and interest; and
- if the debt relief service provider requests or requires the customer to place funds in a dedicated bank account at an insured financial institution, that the customer owns the funds held in the account, may withdraw from the debt relief service at any time without penalty, and then may receive all of the funds in the account.
According to the SBP, the above disclosures are required “to the extent that any aspect of the debt relief service relies upon or results in the customer failing to make timely payments to creditors or debt collectors.”
- How much the service costs and other important terms.
- Marketing Responsibilities
The following steps will be required in regard to ANY lead purchased or used by LHDR:
Step 1: Lead Generation Registration
Any third party lead generators that are marketing on behalf of the support entity members will be required to register all creative marketing with LHDR compliance. When an appointment is set with an LHDR attorney, LHDR support members will be required to input a lead ID from their CRM system, and a creative ID as to the source of the creative marketing, if it is generated by the Support Group member. If the creative was generated by a third party lead generator, then you will be required to input an ID for that campaign that LHDR staff can track back to the Lead Generation source.
We will require Lead Generators to tie a creative ID to that lead. In an effort to ensure that Lead Generators are not privy to close rates, we will randomly assign leads to them. Not every “appointment” will be audited, so you can be assured that no lead generator will be able to determine any campaign performance from the use of this system.
LHDR compliance will contact consumers with a “Customer Service Call” to confirm the appointment, and inquire about how they contacted the company. In the event that the consumer’s story does not match with the information provided to LHDR compliance, LHDR compliance will initiate a inquiry and enforcement action may follow.
Step 2: Mystery Shopping
LHDR is also building a team of shoppers that will fill out lead forms on the Internet, and track landing pages, and lead buyers to ensure that no leads from non-compliance sites are ending up with LHDR members. We believe this will target non-compliant Internet campaigns, and companies that buy data for use in non-compliant auto-dialer campaigns.
Step 3: Direct Mail
The following are the standards that must be followed for all LHDR direct mail campaigns. This includes any use of the LHDR brand or any campaigns exclusively for use by LHDR, even if generic in content and text:
National Direct Mail Disclaimer
No two states have adopted the same advertising rules. While many states have similar requirements, strict compliance with every rule in every state would lead to disclaimer language that would take up more space than the actual advertisement. Therefore, the following national disclaimer seeks to include relevant disclaimer language for every jurisdiction and we believe that it makes a good faith effort to comply in every state.
The below national disclaimer should generally be presented in the same manner and with the same prominence as the communication:
THIS IS AN ADVERTISEMENT
Legal Helpers Debt Resolution, LLC
Macey, Aleman, Hyslip & Searns
233 S. Wacker, Suite5150, Chicago, IL 60606
Prior results do not guarantee a similar outcome.
WHILE THIS FIRM MAINTAINS JOINT RESPONSIBILITY, PRIMARY RESPONSIBILITY FOR CASES OF THIS TYPE MAY BE PERFORMED BY OTHER ATTORNEYS.
COURT COSTS AND CASE EXPENSES WILL BE THE RESPONSIBILITY OF THE CLIENT.
Direct Mail Solicitation
State rules regarding direct mail solicitation are much stricter and harder to rectify than those governing general television and billboard advertising. Many states have specific wording that must be placed in specific parts or sentences of the mailing. Many also require that specific words be placed in particular places on the communication or envelope, and have specific restrictions as to the font size and capitalization of these words. It is important to note that any direct mail solicitation, regardless of the media in which it is sent, may not express any predetermined evaluation of the merits of the recipient’s case and must include LHDR’s national disclaimer.
With respect to the content of a direct mail campaign, you should not include any sample contracts including retainer agreements unless they are marked “SAMPLE” in red ink on each page of the sample contract in a font size that is at least one size larger than the largest font used in the contract, and the words “DO NOT SIGN” appear on the client signature line.
B. To Whom a Direct Solicitation May Be Sent:
You may not send a direct solicitation to anyone that it knows is already being represented in the matter by another lawyer. Additionally, a direct solicitation may not be sent to a person that the firm knows, or reasonably should know does not want to receive the communication, or to a person who is a minor or is incompetent, or to a person who’s physical, emotional or mental state makes it unlikely that they could exercise reasonable judgment in employing a lawyer.
All direct mail solicitations should be sent only by regular U.S. Mail. They may not be sent by registered mail or by other forms of restricted delivery. Obtaining or responding to any direct mail solicitation may not impose any involuntary economic cost on the prospective client.
D. Format & Content:
Any envelope or packaging containing a direct mail communication must have the word “ADVERTISEMENT” printed on the lower left hand side of the front of the envelope in red ink. This statement must be in a font size that is at least twice as large as either the largest font being used in the body of the communication or that which is being used on the envelope for the name and address of the recipient, whichever is larger. The firm name and address must also appear on the front of the envelope. The front of the envelope must not contain any other printing than the name of the firm, the return address, the name and address of the recipient and the advertising notice. The envelope must not reveal the nature of the client’s legal problem.
- Written Communication
Any direct solicitation in the form of a written communication that LHDR sends must include the word “ADVERTISEMENT” in red ink in 18 point font or in a font size at least one size larger than the largest type used in the written communication (including that used in the firm name in the letter or masthead), whichever is larger, at the on the top of each page of the communication. A direct mail solicitation must not have the appearance of a legal pleading or official, government or legal form or document.
- General Prohibitions
A direct mail solicitation must not make any reference to the fact that it has been submitted to, or approved by any state bar. The communication must not contain any statements which vilify, denounce or disparage any potential party. Additionally, LHDR should not send, or allow for any written communication to be sent on its behalf which involves coercion, duress, overreaching, harassment, intimidation, undue influence, compulsion, threats or false, fraudulent, deceptive unsubstantiated, misleading or unfair statements or claims. The communication must not make any claims about the comparative quality of legal services, assert any opinions about the liability of a current or potential defendant or offer any assurance of client satisfaction.
- Mandatory Content
The first sentence of any direct solicitation in the form of a written communication must be: “IF YOU HAVE ALREADY HIRED OR RETAINED A LAWYER IN CONNECTION WITH DEBT RESOLUTION, PLEASE DISREGARD THIS MESSAGE.”
If the communication is being prompted by a specific occurrence it must disclose how LHDR obtained the information prompting the communication. This disclosure must be specific enough to help the recipient to understand the extent of the lawyer’s knowledge regarding the recipient’s particular situation.
- Self-Mailing Brochures
If LHDR sends any pamphlets or self-mailing brochures, the word “AVERTISEMENT” must appear in red ink on the address panel in 14 point font or in a size at least 3/8” vertically or 3x the vertical height of the letters used in the body of the communication, whichever is larger. The same shall appear on the inside of the brochure or pamphlet. The outside of the self-mailing brochure or pamphlet must not reveal the nature of the client’s legal problem.
LHDR may never send a direct solicitation in the form of a postcard. Any postcard solicitation must be generic, not mention or imply the case will be sent to LHDR and such leads cannot exclusively be provided to LHDR.
LHDR will monitor direct mail by requesting that consumers that sign up for LHDR, who are often recipients of direct mail, send along any and all direct mail sent to them. LHDR will pay a bounty to consumers who forward their mail. If upon calling non-compliant mailers, LHDR finds a LHDR support entity member on the other end of the line, then enforcement action will follow.
- Other Media Compliance
All other media including television, radio, print and websites must be approved by the support entity compliance department under the supervision of LHDR’s General Counsel. The above disclaimer for direct mail should be used in television and print media as well as on appropriate websites.
In addition any marketing of the law firm must include none of the following: (1) testimonials or endorsements; (2) background sounds or music; (3) actors or dramatizations; (4) any implication that the lawyer is certified or is a specialist or expert in any field; (5) references to the lawyer’s foreign language abilities; (6) comparisons to other lawyers or law firms; (7) statements regarding prior results; (8) any affiliate funding of the advertisement.
- General Prohibitions
Front End and Affiliate Representatives
Representatives contracted to provide qualified leads of consumers who require legal services associated with resolving unsecured debt issues agree that they:
- Will use only contracts, scripts and enrollments forms reviewed and approved by the LSSG.
- Will not make any representation that Representative is an agent, attorney or legal assistant of the law firm or provide any legal advice.
- Will maintain compliance with the Fair Debt Collections Practices Act, Fair Credit Billing Act, the Gramm-Leach-Bliley Act, and Fair Credit Reporting Act,
- Will not act as a Credit Repair Organization. Further, in the event it becomes necessary, it will take all actions necessary to advise and inform clients that it is not a Credit Repair Organization as defined by the Credit Repair Organization Act,
- Will abide by all rules and regulations promulgated under the terms of the, Telemarketing Sales Rule, Telephone Consumer Protection Act and CAN-SPAM Act of 2003,
- Will accept no payment or other thing of value in exchange for debt negotiation and resolution services, except for that cost paid under the terms of their contract with the LSSG.
- Will implement policies and procedures with a goal of maintaining security of clients’ nonpublic information under the strict supervision of the LSSG.
- Will not engage in any sales or marketing that uses any unfair or deceptive representations.
- Responsibilities in Explaining the Debt Resolution program
When explaining the program to a consumer, the Representative will deal fairly and forthrightly with each and every client, making certain that among whatever other information may become necessary to inform the client of the qualities, conditions, terms and limitations of the debt negotiation and resolution services to be provided. In addition, the Representative will clearly describe the methodology of the program to each potential client so that he/she can make an informed decision as to whether or not a debt resolution program is a viable and affordable option.
In addition to the FTC disclosure listed in Section 1 above, the Representative must verbally disclose the following to the client, prior to the signing of any agreement:
a) LHDR does not clean up, fix, or repair credit. The goal is to seek, assist and implement an appropriate debt resolution program based on your circumstances, financial hardship and personal objectives.
b) Enrolling into a debt resolution program will have a negative effect on their credit.
c) LHDR cannot stop interest, late fees or penalties from accruing on their accounts, but we will settle on the amount owed at the time of resolution and will comply with LHDR’s Minimum Performance Standard.
d) If LHDR’s Minimum Performance Standard cannot be met, they will receive a full refund of the 15% Service Cost on the account in question, subject to the conditions in the retainer agreement and will also have the account in question settled on their behalf for no additional Service Cost.
e) LHDR cannot stop or eliminate creditor calls, but can address creditor harassment and FDCPA (Fair Debt Collections Practices Act) violations with collection agencies. In addition, letters of representation will be sent to each creditor on your behalf.
f) LHDR does not provide tax advice or tax services unless specifically included in their retainer agreement.
g) Creditors may take legal action regarding the accounts that are enrolled into the LHDR program and LHDR will represent the client in court. There is the possibility of a wage garnishment, a lien on real property, or a seized bank account. The option of discharging the debt in bankruptcy may be discussed with any client who faces such potential legal actions.
h) Resolution savings and forgiven debt may be taxable by the IRS. They should consult with a tax professional.
LHDR does not hold their resolution funds in trust, nor does LHDR disperse funds to their creditors. Rather, if they choose, they can hold their resolution funds in an account that they elect to establish with a payment processor and approve the disbursement of those funds once LHDR negotiates a resolution term.
- Requirements of Representation
a) Members shall only use a form of a Retainer Agreement that is approved by LSSG.
b) Programs shall only be offered to a consumer who is qualified based upon the financial and other information provided to the Representative.
c) Programs must provide for the estimated accumulation of at least $1,500 in savings by the end of the seventh program payment month, unless the total enrolled debt is less than $25,000, for which the minimum required savings amount is $750.
e) Amounts charged to the client must be in accordance with LSSG requirements and not exceed any limit set by LSSG.
- Program Administration Responsibilities
Members shall ensure that:
a) Services provided are in accordance with legal requirements and generally accepted sound business practices.
b) Services provided are done so in a professional and ethical manner consistent in working with a consumer’s finances.
c) Necessary licenses, bonds and insurance are appropriate to the business and are in place.
d) State or Federal record keeping requirements are being followed.
e) Company finances are being administered in accordance with generally accepted financial principles.
- Periodic Review and Audit
Members and front end/affiliates will be subject to mystery shoppers on a monthly basis and are accountable for their conduct in these reviews.
Members shall be reviewed and audited by LSSG and the General Counsel of LHDR as appropriate for compliance with approved Standards on a semi-annual basis or more frequently as determined by LSSG and the General Counsel of LHDR. The expense of such audits will be borne by LSSG or LHDR.
Membership status shall be reviewed at least annually by LSSG.