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Notary Network Appears to Sell Way Around Telemarketing Sales Rules for Debt Settlement Companies

By on January 19, 2011
Notary Network Appears to Sell Way Around Telemarketing Sales Rules for Debt Settlement Companies

In a recent press release, NotaryLink, a document signing service, talks about how it can help debt settlement companies deal with new regulations by having the notary network go out and gather signatures.

The recent guidelines established by the Federal Trade Commission regulating the debt settlement industry have created an opportunity to help small business owners and solve the growing problem of financial hardships for American consumers.

NotaryLink, LLC is a comprehensive nationwide signing service bringing substantial added value to any industry where documents must be signed and validated. For more than a decade, NotaryLink has supported businesses, particularly in the loan documentation segment, driven by its proven, proprietary technology system and extensive nationwide database of notary signing agents.

NotaryLink has recently expanded its focus to meet the needs of debt settlement businesses that are also modifying their business models to adhere to the new FTC guidelines.

With NotaryLink, debt settlement businesses have a powerful tool to wade through the new regulations and ensure the legitimacy of their business practices. NotaryLink provides debt settlement companies with access to an unmatched technology system with feature-rich functionality to deliver substantial, quantifiable benefits to their bottom line. The embedded “quality of service” protocols guide user accountability to log all activities, appointments, confirmed document deliveries, and outcomes. – Source

The type of service promoted in the press release, where the visit consists of documents being “signed and validated” raises a bigger concern for the individual notaries that are delivering the actual service. It may simply not be complaint with FTC guidance on the telemarketing sales rules the company purports to assist with compliance of.

If a notary is acting on behalf of a debt settlement company that may not be playing by the rules then it is very possible that the notary could be snatched up in actions by the FTC for assisting and facilitating an enterprise in a deceptive telemarketing act or practice. These fines are $16,000 per occurrence so notary beware.

When reached for comment, Evan Zullow, of the FTC said,

Notaries or others hired by debt settlement companies should think twice before engaging in cursory face-to-face meetings merely to obtain consumers’ signatures on a service agreement. These sorts of meetings would be unlikely to qualify for the face-to-face exemption from the TSR and, therefore, the notary may be liable for assisting and facilitating the illegal collection of advance fees or other deceptive practices by the debt settlement provider.

Debt settlement companies using such face-to-face meetings should also be concerned if a third-party is representing they will make the full sales pitch to the consumer but fails to do so. This omission by the notary could very well drag an otherwise complaint company into a swamp of trouble along with a huge monetary penalty.

READ  Face to Face Meeting Companies May Just Be Partners in Debt Settlement Deception

I contacted Aaron King from NotaryLink.com for comment about his press release, and here is what he had to say:

My understanding of the FTC guidelines is that they’re restricting telemarketing and requiring in person meetings with clients because this will positively affect the debt settlement industry as a whole, and weed out some of the bad companies. However, it’s not the method of marketing that is the actual problem, and these guidelines are negatively affecting reputable companies as well. These guidelines have the potential to put reputable people and services out of business in their effort to clean up the bad guys.

For the past 10 years I’ve been working with notary publics and attorneys all over the country to get loan documents signed and notarized. I literally have relationships and work history with thousands of professionals all over the country. Because of my work history with these individuals, and because notaries by profession are screened with background checks and oaths, I think these agents can assist with the reputable and make them compliant with the guidelines.

There are a lot of logistics to work out, but if a company in Lincoln Nebraska wants to advertise elsewhere in their state or even in another state, I could put them in touch with an agent in that area that could be trained and versed in the industry. They can be educated and tested in honest debt settlement procedures and practices. With this field agent the customers can ask questions, get in person explanations, and it puts a face with the company increasing communication and liability.

Once I have a complete model together, I’ll contact the FTC and get their feedback and suggestions. From what I can tell, this service could provide the reputable debt settlement companies with what they need to be compliant with the guidelines.

In terms of making sure I am working with reputable companies, I think the FTC website has provided me with ample information to determine if their advertising and practices are legitimate and honest. I will be very careful in this regard. I’ve worked hard to build a reputable brand and business and the last thing I want is to be tarnished by working with a bad company. From what I can tell the FTC is good in providing feedback and I’ll make sure I’m complaint with their guidelines before moving forward.

Seems NotaryLink jumped the gun a bit by sending out the press release first and then heading into do the research.

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Hopefully this will help them to try again.

From the FTC:

Suppose my company hires someone to meet with potential customers before we sign them up for our service. Do we qualify for the face-to-face exemption to the TSR?

Under the Rule, whether a particular telemarketing transaction qualifies for the face-to-face exemption will depend on the facts of each case. A telemarketing transaction qualifies for the exemption if: (1) the face-to-face meeting takes place before the sale is completed and before the consumer is required to pay or authorize payment; and (2) the meeting includes an actual sales presentation to the buyer. The key to the face-to-face exemption is the direct and personal contact between the buyer and seller. You can’t get around the Rule by hiring representatives just to hold cursory pre-enrollment meetings with potential customers.

Keep in mind that, if you or your employee give a sales presentation away from your usual place of business, like at the consumer’s home, you must comply with the FTC’s Cooling Off Rule. This Rule gives customers the right to cancel agreements with you within three days of signing up. It also requires you to tell customers about their right to cancel and to give them a cancellation form to use if they decide to exercise that right. Note that even when the TSR doesn’t apply to a transaction, Section 5 of the FTC Act and state laws do, and compliance is your responsibility. – Source


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About 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.

10 Comments

  1. SeanDSLegalPlan

    January 20, 2011 at 1:44 pm

    In reply to New Steve…
    New Steve- Is Global disqualifying all advance fee companies?

  2. Steve Rhode

    January 20, 2011 at 10:16 am

    For the record, the comment above from ‘Steve Rhodes’ is not from me. But whoever posted it, interesting information.

  3. Steve Rhodes

    January 20, 2011 at 9:59 am

    Global Client Solutions has already begun disqualifying accounts for setup that have gone through this process. Notary or any FACE TO FACE transactions still do not exempt the company from the TSR. In the interest of the sales process with the cleint most compliant companies are selling the no-advance fees and those that have are seeing a double jump in sign up number simply because the program bears no costs to the customer.

  4. Steve Rhodes

    January 20, 2011 at 2:59 pm

    Global Client Solutions has already begun disqualifying accounts for setup that have gone through this process. Notary or any FACE TO FACE transactions still do not exempt the company from the TSR. In the interest of the sales process with the cleint most compliant companies are selling the no-advance fees and those that have are seeing a double jump in sign up number simply because the program bears no costs to the customer.

    • Steve Rhode

      January 20, 2011 at 3:16 pm

      For the record, the comment above from ‘Steve Rhodes’ is not from me. But whoever posted it, interesting information.

    • Anonymous

      January 20, 2011 at 6:44 pm

      In reply to New Steve…
      New Steve- Is Global disqualifying all advance fee companies?

  5. Bulb

    January 19, 2011 at 6:50 pm

    Ouch!

    Here is the deal:

    There is no justifiable reason to go through the expense of notary when marketing debt settlement unless you are charging advance fees.

    The charging of advance fees is now well documented by state and federal regulators as being problematic. There are now federal rules prohibiting advance fees except in the narrowest of circumstances. These narrow circumstances are not consistent with advertising and selling debt settlement in the same way it was predominately done prior to 10/27/10.

    Reaching as far as some companies, advertisers and marketers have in order to fit their square butts into a round hole is, and will continue to be, silly.

    The risks and potential costs when you are found wrong in your assumptions are just too high.

    Adapt to the new business realities and do a great job for your customers, or go away.

    Involving notaries for advance fees to pay sales commissions and advertising costs is not part of the solution, it will be shown in all likelihood as a furtherance of what is and has been part of the problem.

    Bulb

  6. Bulb

    January 19, 2011 at 11:50 pm

    Ouch!

    Here is the deal:

    There is no justifiable reason to go through the expense of notary when marketing debt settlement unless you are charging advance fees.

    The charging of advance fees is now well documented by state and federal regulators as being problematic. There are now federal rules prohibiting advance fees except in the narrowest of circumstances. These narrow circumstances are not consistent with advertising and selling debt settlement in the same way it was predominately done prior to 10/27/10.

    Reaching as far as some companies, advertisers and marketers have in order to fit their square butts into a round hole is, and will continue to be, silly.

    The risks and potential costs when you are found wrong in your assumptions are just too high.

    Adapt to the new business realities and do a great job for your customers, or go away.

    Involving notaries for advance fees to pay sales commissions and advertising costs is not part of the solution, it will be shown in all likelihood as a furtherance of what is and has been part of the problem.

    Bulb

  7. Damon Day

    January 19, 2011 at 6:46 pm

    The problem is these so called good companies, don’t seem to grasp the fact that it is the front loaded fees that are bad for consumers. Sending some notary to get the papers signed for a bad financial program does not change the fact that it is a bad program. Regardless of whether or not it complies with the FTC ruling. Mr. King might want to take a little time to study what these debt settlement companies are doing to people before he helps them continue to do it.

    If they would just comply with the law then they wouldn’t have to find creative ways to get around it. The law was designed to protect consumers. None of these companies where meeting with clients face to face prior to this law. So if they are doing it now, it is simply so they can continue to charge clients all of their fees upfront and that, by definition makes them bad news for consumers. So by further extension, anyone that wants to pay Mr. King for a service that is not necessary, but for a possible loop hole is a company that is going to be hurting consumers. No matter, I am sure the ftc is going to shut down whatever he proposes and come to the exact same conclusion.

  8. Damon Day

    January 19, 2011 at 11:46 pm

    The problem is these so called good companies, don’t seem to grasp the fact that it is the front loaded fees that are bad for consumers. Sending some notary to get the papers signed for a bad financial program does not change the fact that it is a bad program. Regardless of whether or not it complies with the FTC ruling. Mr. King might want to take a little time to study what these debt settlement companies are doing to people before he helps them continue to do it.

    If they would just comply with the law then they wouldn’t have to find creative ways to get around it. The law was designed to protect consumers. None of these companies where meeting with clients face to face prior to this law. So if they are doing it now, it is simply so they can continue to charge clients all of their fees upfront and that, by definition makes them bad news for consumers. So by further extension, anyone that wants to pay Mr. King for a service that is not necessary, but for a possible loop hole is a company that is going to be hurting consumers. No matter, I am sure the ftc is going to shut down whatever he proposes and come to the exact same conclusion.

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