On November 13, 2010 we held the Rally in Raleigh, a meeting of debt relief professionals. At the meting we talked about a number of issues.
Below you will find the video of the 3:00 p.m. session with Allison Brown from the Federal Trade Commission.
The agenda:
10:00 – 10:30 Welcome and Who’s Here.
10:30 – Noon – Is There a Need for Honesty and Integrity in Debt Relief? How Does the Group Think the Reputation of the Debt Relief Industry Can Be Improved? Where is it Now?
Noon – 1:00 – Where to Start in Delivering Exceptional Debt Relief Services. What Does the Group Think is Required to be a Debt Relief Leader?
1:00 – 2:00 – Lunch
2:00 – 3:00 – Regulation and Compliance in Debt Relief. A Need or a Nuisance? Can It be a Benefit? Are Regulators to Be Feared?
3:00 – 4:00 – Advertising and Selling Debt Relief Services. What Works and Why. What to Avoid. Video below.
4:00 – 5:00 – What Does the Group Think Needs to be Done to Make Sure Consumers Continue to Have Access to Debt Relief Services? What Happens Next?
In her sharing of information with the attendees she said the FTC has their eyes on companies that are doing the following:
- Attorney Models – Not a loophole approach in mass marketed debt settlement services using affiliates and distant marketers. If a local attorney is a “small town player” sitting down face-to-face with a local consumer and has established a traditional attorney client relationship then that is a different matter. But, if an attorney model debt settlement company is using marketers, telemarketers and runners to sell debt relief services, these attorneys and/or firms are NOT exempt under the FTC TSR.
- The Runner – Companies that are doing the sales pitch for debt relief services over the phone or with internal representatives and then sending out a “runner” to visit the consumer in their home or place of business, typically at a Starbucks, are NOT exempt from the FTC TSR and “will fail as a loophole”, said Allison Brown from the FTC.
- Debt Relief Services Other Than Debt Settlement – Companies selling debt relief services or alteration of debt such as contract validation or Fair Debt Collection Practices Act trip-up suits, that are not local attorneys representing local clients, is NOT a loophole and is fully covered by the FTC TSR regulations.
- Bundled Products – Selling products or services other than debt relief services in order to then offer debt relief services is NOT a loophole. The FTC has a long history of targeting the bundled product approach and has specific written guidance covering these activities from their experience in going after credit repair services.
- Marketers – The FTC is planning to take action against companies that market debt relief services using unsubstantiated claims on the web, over the phone or via mail. Enforcement actions are already in the works. These will be against companies that collect leads, prepare mailers, and otherwise attract consumers for debt relief services.
Allison Brown mentioned that they already have a number of companies on their radar that are operating as “loopholers” and will begin enforcement actions soon.
I asked Allison Brown what companies should do to not be on the enforcement radar of the FTC and avoid massive fines. Her response was that companies need to pay close attention to their advertising and marketing material. Ms. Brown said,
We’ve seen so many companies that over-promise and under deliver. Some claims that raise red flags are “become debt free”, we’ll be asking companies to substantiate that the typical customer becomes debt free. Another one is save 60% off your credit card debt, we have not seen a company that can substantiate that for the typical consumer across the board.
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