In an effort to address "pervasive illegal conduct" in the sale of debt relief services, including debt settlement, debt management, and debt negotiation, the Federal Trade Commission today announced proposed amendments to the Telemarketing Sales Rule (TSR) which would


  • prohibit debt relief companies from charging up-front fees
  • require disclosures about the specific debt relief service being offered, including the cost and length of any debt relief program
  • prohibit specific misrepresentations about material aspects of the debt relief services being offered, including success rates
  • extend the reach of the TSR to include inbound calls from consumers in response to debt relief companies' advertisements
  • broadly define the term "debt relief services" to include debt settlement, debt negotiation, debt management, and any service that offers or purports to alter the payment terms or other terms of a debt between a consumer and a creditor or debt collector

While non-profit debt relief entities are exempt from the TSR, third-party telemarketers, even if engaged by a non-profit, are subject to the proposed rule.


The FTC is accepting comments on the proposed rule. The comment period ends on October 9, 2009. A copy of the proposed rule can be found here.


This Saturday, August 1, 2009, from 8:00 to 10:00 a.m. CT, nationally recognized consumer financial services and banking attorney Alan S. Kaplinsky will moderate a discussion of the proposed rule, and the debt settlement industry in general, at a CLE program at the following:

American Bar Association Annual Meeting
Sheraton Chicago Hotel & Towers
301 East North Water Street
Michigan Rooms A and B, Level Two


Beth Moskow-Schnoll, partner at Ballard Spahr Andrews & Ingersoll, LLP
James Wyman, assistant general counsel at JP Morgan Chase Bank
Rebecca Pruitt, assistant attorney general in the Consumer Fraud Bureau of the Office of the Illinois Attorney General
Carolyn L. Hann, attorney advisor with the Federal Trade Commission
Wesley Young, legislative director for the Association of Settlement Companies


About Ballard Spahr's Consumer Financial Services Group

Ballard Spahr's Consumer Financial Services Group is nationally recognized for its guidance in structuring and documentation of new consumer financial services products, its significant experience with the full range of federal and state consumer credit laws throughout the country, and its skill in litigation defense and avoidance (including pioneering work in pre-dispute arbitration programs).


Contact Information


For more information, please contact Alan S. Kaplinsky, 215.864.8544 or; or Beth Moskow-Schnoll, 302.252.4447 or

Copyright © 2009 by Ballard Spahr LLP.
(No claim to original U.S. government material.)

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of the author and publisher.

This newsletter is a periodic publication of Ballard Spahr LLP and is intended to alert the recipients to new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own lawyer concerning your situation and specific legal questions you have.