When you make or take a loan you must be very careful about the disclosure feature which is required as per debt law. The government is very strict about such disclosures because it wants to protect the consumers from any unfair practices when a creditor makes a loan offer. Even if you offer debt relief services, you must follow the new Rule that lays out many different key aspects and pieces of information regarding the things that you must disclose. The law states that:
- Such disclosures must be made truthfully, very clearly and conspicuously.
- It can be made either orally or in writing and
- It must be certainly made before signing up for the debt or the debt relief services.
Whether it is a commercial bank or an individual money lender, a line of credit or reliable debt relief service providers such as Nationaldebtreliefprograms.com or any other, this requirement is mandatory for all types of service providers.
Features of the law
The debt law is very particular about the “clear and conspicuous” standard of the disclosures made. The law requires that:
- All such statements must be made in such a way that the information to the average consumers are clear and easy to understand.
- It is important to make sure that the customers notice such disclosures made in the service or loan contract.
- The law prohibits burying the necessary disclosures in a complex and lengthy contract with meanings embedded between the lines of the fine print.
- The disclosures must not be in a hard to read section of the text or be included in a rapid fire oral presentation.
All disclosures must meet the set regulations and standard of disclosure though the rule is not very specific about sizes of the type. The law however provides some flexibility to the creditors and the debt relief service providers in which they can convey such information but it makes it very clear that in all situations the message should be communicated as effectively as the sales message is communicated.
If you are unsure about such disclosure requirements then you may have a look at the Complying with the Telemarketing Sales Rule for more information on how to make your disclosures clear as well as conspicuous.
The key facts to disclose
According to the existing as well as the new provision for disclosure requirements of the TSR there are a few key facts that must be disclosed in a loan contract. These facts must include:
- The service costs as well as all other relevant and important terms that may affect the loan size, the repayment terms and even the consequences of defaults.
- For collection process it must involve both outbound as well as inbound call process.
- Before the sign up, all relevant fees and charges must also be disclosed in the disclosure statement and if possible with proper breakup.
- If there are any specific dollar amount charged it must be mentioned as well
- The statement must also include the percentage that you may charge on the specific amount of money a customer may save due to a specific debt relief program along with the estimated amount that the customer will have to pay.
In addition to the above, the disclosure statement must also include all material restrictions, conditions and limitations on your services and debt provided.
- If the sales presentation of your company includes a specific statement about the refund policy of your company, then you must also include it in a clear and conspicuous disclosure statement that must include all terms and conditions of such policy.
- Assuming that you do not give refunds the rule also mentions that you specify that in the disclosure statement as well before any customer signs up for your service.
- You must also make sure that the disclosure statement mentions the time that it may take to provide the desired results.
For example, if you provide debt settlement service then in good faith you must give an estimate of how long the customer will have to wait in months or years specified before you make an offer to each of the creditor that are likely to be a part of the settlement process.
That means, everything that is mentioned in the disclosure statement must have a reasonable basis to exist in the statement in the first place. For this you can consider different factors and elements that will form the base of your disclosure such as:
- Your experience in this field
- Relation with the customers and
- The effects, both positive and negative that such factors will have on the end result.
Make sure that you are very precise in your disclosure knowledge and requirements and include it in the statement. Sometimes, the experience and relation of the debt relief company with specific creditors may also affect the feasibility of a specific disclosure.
When you disclose the estimate make sure that you consider the circumstances of the customer as well as the results that can be achieved by the customer in such similar circumstances.
When you mention the consequences in case the customer fails to make the payments on time or if the customer stops making payment on being asked by the debt relief company or if your program relies on such a practice you must make sure that you also mansion the probable consequences of such practices. This is a very important inclusion in the disclosure statement and must encompass the specific facts such as:
- The probable damage it may cause to the credit report and credit score
- The fact that the creditors may still sue them for non-payment or continue with their collections process and
- The facts that new fees and interest may still accrue which will increase the outstanding loan amount.
Last but not least, it must include the rights of the customers regarding the dedicated accounts created to set aside funds for making the payment to the creditor to settle the debt. It must include all facts regarding opening, control and withdrawal power of the customers.