They sound so helpful and concerned, and they claim to be able to solve all of your problems. All you need to do is give them your social security number, bank account information, and credit card number, and debt relief will be yours.
But like most things that sound too good to be true, these calls are often just that. Unsolicited phone calls offering credit help can leave you with a drained bank account and a credit rating that is no better than it was before.
New Ground Rules: What Debt Relief Companies Can’t Do
New amendments to the FTC’s Telemarketing Sales Rule (TSR) have changed the rules in favor of consumers, who in the past were frequently taken advantage of by unscrupulous debt relief companies demanding upfront payments and access to bank accounts while providing little legitimate service.
The rule requires debt relief companies to provide disclosures about how they work, how long the process takes, how much it costs, and what negative consequences may result. The rule also prohibits those debt relief firms from charging upfront fees before delivering results. If you do receive a solicitation over the phone, be aware that if the salesperson requests an upfront fee, they are in violation of the FTC rules.
Loopholes in the FTC Rule
While the amendments to the FTC rule gives consumers receiving these phone calls some added protection, it falls short in applying to all debt relief solicitations. The rules, as part of the Telemarketing Sales Rule, apply only to solicitations made over the phone. If you are face to face with a debt relief agent or responding through an online portal, the new protection rules don’t apply. Solicitors know this and may use the phone call to try to get you discuss plans in person or online where they don’t have to provide disclosures.
There is also no upper limit on the fees that can be assessed, even if the solicitation is made on the phone. As a result, service fees can vary a great deal. Even if it sounds like a good offer when they call, take time to do some comparison-shopping.
Is the Debt Relief Company on the Level?
Telephone solicitors, if they are good at what they do, can sound very convincing and legitimate. But they are on the phone, after all, so you cannot see them or where they are calling from. They could be calling from a fully staffed, legitimate office in a downtown building. Or, they could be calling from a call center in Bangalore. The caller could be phoning from a high-pressure bullpen at an unsavory company, or even from a cell phone. Before you get involved in what’s being offered, ask a few questions about the company. Find out:
- The full legal of the company
- How long it has been in business
- The city where is it located
- Its street address and telephone number
If the caller is not willing to give you this basic information (it’s surprising how many won’t), don’t go any further. If they do pass that first test, your due diligence is not done. You need to know the details of what’s being offered and how much it will cost you. Ask them:
- What exactly is the fee structure? Is it based on a flat fee or a percentage?
- How will the fees be collected?
- What specific debt relief strategy are they offering (debt consolidation, debt settlement, or credit counseling)?
And finally, if they ask for money up front, walk away. Under the FTC rules, that’s no longer allowed.