Last week saw FTC announcements involving allegations of foreclosure rescue fraud, deception aimed at people trying to resell their timeshares, complaints against payday lenders, and lawsuits against outfits claiming to help consumers behind on their car payments. Is there a theme here? You bet. But the message isn't just for companies engaged in practices targeting consumers struggling to stay afloat. There are words to the wise for businesses of any size and every stripe.
As the FTC said in its 2012 Annual Highlights, it’s “on the beat to stop scammers who take advantage of the nation’s most financially fragile consumers through deceptive mortgage servicing practices, abusive debt collection tactics, bogus credit repair services, mortgage, tax, and debt relief offers, and fraudulent job and business opportunity schemes.” To achieve those goals, the agency has used law enforcement, policy initiatives, consumer education — and industry guidance to businesses who want to stay on the right side of the line.
Of course, for some operators, the only thing likely to get their attention is their name on the wrong side of a legal document that begins Federal Trade Commission vs. But what about companies that are legit and have no desire for a dust-up with federal or state law enforcement? What can they glean from what’s going on at the FTC?
Conduct unbecoming. “But we’re not scammers. We have nothing to worry about.” Not so fast. FTC actions target activities the agency believes violate the law. It’s the conduct that counts, not the characteristics of the company. Yes, many FTC cases challenge flim-flamming fly-by-nighters, but other actions focus on missteps by big names in the business. It’s what you do — not who you are — that could land you in legal hot water.
A rose is a rose. And a violation is a violation. Even if you’re not involved in payday lending, foreclosure “rescue,” or other industries in the headlines, FTC complaint allegations still offer useful guidance on where the line is drawn. Many recent cases have focused on marketing chestnuts like fine-print disclosures, buried terms and conditions, pre-checked boxes, and negative options. Those principles apply across the board regardless of whether you’re selling services to people in financial trouble or Ye Olde Compleat Works of Shakespeare Bound in Rich Corinthian Leather.
Card-inal sin. The law offers a wide variety of remedies — both civil and, in appropriate circumstances, criminal — for unauthorized charges on people's credit or debit cards. Sometimes in business it’s worth taking a risk, but not when it comes to questionable billing practices. Even if law enforcers aren’t involved, violating the terms of your merchant account could jeopardize your company’s financial future. So regardless of your line of work, be careful — be very careful — to make sure a transaction is authorized and don't bury your head in the sand if something seems amiss with partners and affiliates.
Ground rule trouble. Debt collection sees an uptick when the economy experiences a downturn. And telemarketing and unsolicited email are popular ways to communicate with consumers in financial distress. But even if markets are volatile, your approach to compliance should be consistent. If your business is covered by the Fair Debt Collection Practices Act, the Telemarketing Sales Rule, CAN-SPAM provisions, or other laws, rules, or guides, don’t let uncertainty in the marketplace lead to a legal slip-up.