Start My Answer

The FTC Regulates Debt Settlement Through the Telemarketing Sales Rule

Hannah Locklear | August 15, 2023

Hannah Locklear
Editor at SoloSuit
Hannah Locklear, BA

Hannah Locklear is SoloSuit’s Marketing and Impact Manager. With an educational background in Linguistics, Spanish, and International Development from Brigham Young University, Hannah has also worked as a legal support specialist for several years.

Summary: The FTC's Telemarketing Sales Rule (TSR) serves as a powerful tool in regulating the debt settlement industry, protecting consumers from deceptive practices, and promoting transparency and fairness.

In the world of consumer protection and financial well-being, the Federal Trade Commission (FTC) plays a vital role in safeguarding individuals from deceptive practices. One of the areas the FTC focuses on is debt settlement, a process that can help individuals manage their debts more effectively. To ensure fairness and transparency in this industry, the FTC enforces regulations through the Telemarketing Sales Rule (TSR).

In this blog post, we will delve into the significance of the TSR in regulating debt settlement and explore how it works to protect consumers.

Sued for debt? Use SoloSettle to settle your debts for good.

Settle with SoloSettle

Make an Offer

What is the Telemarketing Sales Rule?

The Telemarketing Sales Rule (TSR) is a set of regulations enforced by the FTC to protect consumers from deceptive and unfair practices in telemarketing. Its primary aim is to establish guidelines that prevent fraudulent activities, ensure clear communication between telemarketers and consumers, and promote transparency in various industries, including debt settlement.

How does the TSR relate to debt settlement?

The TSR applies to businesses engaged in telemarketing activities, including those that offer debt relief and settlement services. As debt settlement involves negotiating with creditors to reduce a debtor's outstanding balances, the potential for unscrupulous practices can be high. The TSR helps combat these practices by setting forth rules that telemarketers must follow when offering debt settlement services over the phone.

The TSR regulates debt settlement communications

The Telemarketing Sales Rule (TSR) has been revised to incorporate specific measures aimed at curbing deceptive and harmful practices related to debt relief services. A significant modification involves the broadening of the TSR's applicability to a wider range of businesses.

Previously, the TSR encompassed debt relief companies employing telemarketing strategies to reach out to potential clients, or those contracting third parties to make calls on their behalf. Under the new regulations, this scope has expanded to encompass not only outbound calls—calls initiated by businesses to prospective clients—but also inbound calls—calls generated by individuals in response to advertisements and other solicitations.

The TSR outlines the specific rules that apply to debt settlement companies using outbound or inbound calls to promote their services. Some key provisions include:

  • It prohibits advanced fees. The TSR prohibits debt settlement companies from charging upfront fees before they've successfully negotiated, settled, or reduced a consumer's debt.
  • It requires disclosures. Telemarketers are mandated to provide clear and accurate information about their services, fees, and potential outcomes. This ensures that consumers have a complete understanding of what they're signing up for.
  • It prohibits misleading claims. Debt settlement companies cannot make false or deceptive claims about their ability to reduce debts or the overall benefits of their services.
  • It implements record-keeping requirements. Businesses are required to maintain records of their interactions with consumers, which helps ensure compliance and enables the FTC to monitor industry practices.

Now, let’s take a look at an example of how the TSR protects consumers from dishonest debt settlement companies.

Example: Jane is struggling with mounting credit card debt and decides to seek help from a debt settlement company after coming across their advertisement promising "quick debt relief." When she speaks to a representative over the phone, she's pressured into signing up for their services with the promise of reducing her debt by half within a month. Jane realizes that the debt settlement company's representative didn't provide clear details about fees, the duration of the process, or the potential outcomes. Jane decides to file a complaint with the Federal Trade Commission (FTC), who finds that the company violated the TSR by failing to ensure that consumers have a complete understanding of the services they are signing up for. As a result of Jane's complaint, the debt settlement company is held accountable for their actions. They are required to reimburse Jane for any fees she paid upfront and are fined for their violation of the TSR's regulations.


The Telemarketing Sales Rule protects consumers

The TSR's role in regulating debt settlement is crucial for several reasons, including:

  • Preventing deception: The primary goal of the TSR is to protect consumers from deceptive practices and prevent them from falling victim to scams or fraudulent services.
  • Transparency: By mandating clear and accurate disclosure of information, the TSR ensures that consumers have the information they need to make informed decisions about debt settlement services.
  • Fairness: The TSR's prohibition of upfront fees promotes fairness by preventing consumers from paying for services that haven't yet been delivered.
  • Industry integrity: By holding debt settlement companies to a high standard, the TSR helps maintain the integrity of the debt relief industry and fosters healthy competition among legitimate businesses.

As individuals seek ways to manage their debts and achieve financial stability, the TSR plays a vital role in ensuring that they receive genuine assistance without falling victim to unscrupulous actors. It's essential for both consumers and debt settlement businesses to understand and adhere to the regulations outlined in the TSR to foster a more secure and trustworthy financial landscape.

SoloSettle, powered by SoloSuit, isn’t like other debt settlement companies. Watch this video to learn more:

What is SoloSuit?

SoloSuit makes it easy to fight debt collectors.

You can use SoloSuit to respond to a debt lawsuit, to send letters to collectors, and even to settle a debt.

SoloSuit's Answer service is a step-by-step web-app that asks you all the necessary questions to complete your Answer. Upon completion, we'll have an attorney review your document and we'll file it for you.

>>Read the FastCompany article: Debt Lawsuits Are Complicated: This Website Makes Them Simpler To Navigate

>>Read the NPR story on SoloSuit. (We can help you in all 50 states.)

How to answer a summons for debt collection in your state

Here's a list of guides for other states.

All 50 states.



Guides on how to beat every debt collector

Being sued by a different debt collector? Were making guides on how to beat each one.


We have answers

Join our community of over 40,000 people.


You can ask your questions on the SoloSuit forum and the community will help you out. Whether you need help now are are just look for support, we're here for you.


Get Started

Win against credit card companies

Is your credit card company suing you? Learn how you can beat each one.

Going to Court for Credit Card Debt — Key Tips

How to Negotiate Credit Card Debts

How to Settle a Credit Card Debt Lawsuit — Ultimate Guide

Get answers to these FAQs

Need more info on statutes of limitations? Read our 50-state guide.

Why do debt collectors block their phone numbers?

How long do debt collectors take to respond to debt validation letters?

What are the biggest debt collector companies in the US?

Is Zombie Debt Still a Problem in 2019?

SoloSuit FAQ

If a car is repossessed, do I still owe the debt?

Is Portfolio Recovery Associates Legit?

Is There a Judgment Against Me Without my Knowledge?

Should I File Bankruptcy Before or After a Judgment?

What is a default judgment?— What do I do?

Summoned to Court for Medical Bills — What Do I Do?

What Happens If Someone Sues You and You Have No Money?

What Happens If You Never Answer Debt Collectors?

What Happens When a Debt Is Sold to a Collection Agency

What is a Stipulated Judgment?

What is the Deadline for a Defendants Answer to Avoid a Default Judgment?

Can a Judgement Creditor Take my Car?

Can I Settle a Debt After Being Served?

Can I Stop Wage Garnishment?

Can You Appeal a Default Judgement?

Do I Need a Debt Collection Defense Attorney?

Do I Need a Payday Loans Lawyer?

Do student loans go away after 7 years? — Student Loan Debt Guide

Am I Responsible for My Spouses Medical Debt?

Should I Marry Someone With Debt?

Can a Debt Collector Leave a Voicemail?

How Does Debt Assignment Work?

What Happens If a Defendant Does Not Pay a Judgment?

How Does Debt Assignment Work?

Can You Serve Someone with a Collections Lawsuit at Their Work?

What Is a Warrant in Debt?

How Many Times Can a Judgment be Renewed in Oklahoma?

Can an Eviction Be Reversed?

Does Debt Consolidation Have Risks?

What Happens If You Avoid Getting Served Court Papers?

Does Student Debt Die With You?

Can Debt Collectors Call You at Work in Texas?

How Much Do You Have to Be in Debt to File for Chapter 7?

What Is the Statute of Limitations on Debt in Washington?

How Long Does a Judgment Last?

Can Private Disability Payments Be Garnished?

Can Debt Collectors Call From Local Numbers?

Does the Fair Credit Reporting Act Work in Florida?

The Truth: Should You Never Pay a Debt Collection Agency?

Should You Communicate with a Debt Collector in Writing or by Telephone?

Do I Need a Debt Negotiator?

What Happens After a Motion for Default Is Filed?

Can a Process Server Leave a Summons Taped to My Door?

Learn More With These Additional Resources:

Need help managing your finances? Check out these resources.

How to Make a Debt Validation Letter - The Ultimate Guide

How to Make a Motion to Compel Arbitration Without an Attorney

How to Stop Wage Garnishment — Everything You Need to Know

How to File an FDCPA Complaint Against Your Debt Collector (Ultimate Guide)

Defending Yourself in Court Against a Debt Collector

Tips on you can to file an FDCPA lawsuit against a debt collection agency

Advice on how to answer a summons for debt collection.

Effective strategies for how to get back on track after a debt lawsuit

New Hampshire Statute of Limitations on Debt

Sample Cease and Desist Letter Against Debt Collectors

The Ultimate Guide to Responding to a Debt Collection Lawsuit in Utah

West Virginia Statute of Limitations on Debt

What debt collectors cannot do — FDCPA explained

Defending Yourself in Court Against Debt Collector

How to Liquidate Debt

Arkansas Statute of Limitations on Debt

Youre Drowning in Debt — Heres How to Swim

Help! Im Being Sued by My Debt Collector

How to Make a Motion to Vacate Judgment

How to Answer Summons for Debt Collection in Vermont

North Dakota Statute of Limitations on Debt

ClearPoint Debt Management Review

Indiana Statute of Limitations on Debt

Oregon Eviction Laws - What They Say

CuraDebt Debt Settlement Review

How to Write a Re-Aging Debt Letter

How to Appear in Court by Phone

How to Use the Doctrine of Unclean Hands

Debt Consolidation in Eugene, Oregon

Summoned to Court for Medical Bills? What to Do Next

How to Make a Debt Settlement Agreement

Received a 3-Day Eviction Notice? Heres What to Do

How to Answer a Lawsuit for Debt Collection

Tips for Leaving the Country With Unpaid Credit Card Debt

Kansas Statute of Limitations on Debt Collection

How to File in Small Claims Court in Iowa

How to File a Civil Answer in Kings County Supreme Court

Roseland Associates Debt Consolidation Review

How to Stop a Garnishment

Debt Eraser Review

Do Debt Collectors Ever Give Up?

Can They Garnish Your Wages for Credit Card Debt?

How Often Do Credit Card Companies Sue for Non-Payment?

How Long Does a Judgement Last?

​​How Long Before a Creditor Can Garnish Wages?

How to Beat a Bill Collector in Court

Not sued yet?

Use our Debt Validation Letter.


Out Debt Validation Letter is the best way to respond to a collection letter. Many debt collectors will simply give up after receiving it.


Let's Do It

It only takes 15 minutes.

And 50% of our customers' cases have been dismissed in the past.


"Finding yourself on the wrong side of the law unexpectedly is kinda scary. I started researching on YouTube and found SoloSuit's channel. The videos were so helpful, easy to understand and encouraging. When I reached out to SoloSuit they were on it. Very professional, impeccably prompt. Thanks for the service!" - Heather



Get Started

Contents