Legitimate Credit Counseling Services

In the course of your life, the payment of a lower interest could help reduce a large part of the cost of the shift. Your payment will also be on schedule every single year. This kind of services has some disadvantages.

The Federal Trade Commission publishes notice on the proposed rulemaking amendment to the telemarketing sales rule to address forgiveness services.

The Federal Trade Commission ("FTC" or "Commission") on 30 July 2009 stated that it would obtain an opinion on a regulatory proposal to change the Telemarketing Sales Rule ("TSR") to include "debt forgiveness services" covering credit advice, credit regulation and negotiations. It is a crucial deviation from the actual scope of the telemarketing sales rule to the deleveraging services.

On the basis of the Commission's September 2008 workshop on "Consumer protection and the debt regulation industry"[1] and the implementation of measures against advertising and marketing companies of public service obligations, the proposal builds on the Commission's September 2008 workshop on "Consumer protection and the public service industry". In the Commission's Communication on the proposal for a rule ("NPRM"), advice is sought on provisions that provide for tariff limitations, reporting obligations and the prohibition of a variety of practices which, if adopted, would have a significant effect on the way in which and when public debt forgiveness services can be promoted and commercialised.

The TSR is a traditional system that regulates the practice of enterprises that conduct telephone conversations. They prohibit improper practice, include making false declarations to clients, and require disclosure of information. The FTC has for some considerable length of becoming a major provider of commercial services for the promotion and commercialisation of credit recovery. In recent years, the FTC has filed a number of lawsuits against advertiser and marketer of financial services alleging that the firms and persons providing services have adopted dishonest or misleading practice in breach of the FTC Act.

As regards changes to the TSR relating to the definitions of remission of debts and to a number of misleading and improper telephone marketing measures or practice, the Commission invites the general public to submit comments, in particular on disclosure, misrepresentation and charging. Define and extend the concept of "debt servicing " to mean "any services which are directly or implicitly intended to re-negotiate, pay or in any way modify the conditions of repayment or other conditions of the indebtedness between a customer and one or more uncollateralised lenders or collecting agencies, thereby reducing, but not limiting to, the amount of the outstanding amount, the interest or the charges due by a customer to an unscollateralised lender or collecting agency".

Furthermore, the FTC recognises in the NPRM both differences and resemblances between the services provided by charitable credit advisory firms, commercial payers, credit regulation firms and credit negotiators. Requires six separate disclosure requirements on the relief services offered: Disallow enterprises of discharge services from making particular false representations regarding an essential aspects of the discharge services provided, to include but not be restricted to:

a) the amount of cash or portion of the amount of indebtedness that a client can conserve by using such services; b) the amount of expenditure of patience required to obtain the results presented; c) the amount of cash or portion of each indebtedness that the client must raise before the waiver vendor initiates efforts with the client's debtors to bargain, pay or change the conditions of the client's indebtedness;

d ) the effect of the services on the credibility of a client; e) the effect of the services on the collecting effort of the consumer's payors or collecting agents; f) the percent or number of clients that achieve the results presented; and g) whether a services is provided by a not-for-profit organisation.

13 ] This suggested regulation would also prevent Telemarketern of deleveraging services from making similar false representations. The Commission envisages, in complement to the above mentioned proposals for amendment, amending the derogations for general purpose broadcasting and advertising so that they are no longer available to telecommunications marketers of remission services. In general, these exceptions use a four-point methodology to make sure that legitimate businesses are not overburdened by the TSR.

Bonafide charitable organisations offering credit waiver services, such as charitable credit advisory services, will be excluded from the scope of the TSR and thus from the revised suggested regulations. Furthermore, the TSR and the suggested set of regulations continue to apply to third parties carrying out Telemarketing activity on account of good faith non-profit organisations, as well as to other for-profit organisations contracted by non-profit organisations (e.g. marketers, back-end processors).

As a result of the above mentioned regulative evolutions and ongoing legislation evolutions (including the FTC's call for a larger regulator for relief services), suppliers of rescheduling services and related industrial services, as well as leading generator and marketer firms promoting the provision of rescheduling services, face significant challenge. Promoters and sellers of relief services should be cautious and seek advice when promoting remission services in this developing Regulatory and Juridical environment.