16 CFR Part 310 Telemarketing Sales Rule- Debt Relief Amendments #543670-00203

Submission Number:
Dr. Bernard Weinstein
Cox School of Business, SMU
Initiative Name:
16 CFR Part 310 Telemarketing Sales Rule- Debt Relief Amendments
Re: Telemarketing Sales Rule – Debt Relief Rulemaking Forum – Written Comments November 4, 2009, R411001 To Whom It May Concern: Please allow this letter to serve as the introduction to my written comments regarding the above-referenced rule (the “Request”) and Notice of Public Rulemaking regarding the same (“NPRM”). As an academic who has intensely studied and reported on national and local business and economic development for over 30 years, I recognize the FTC's Telemarketing Sales Rule PRM could have serious economic impact on both struggling consumers and tens of thousands of Americans serving these consumers through their companies today. I hope my experience working in a variety of segments, from the Federal Trade Commission, to multiple Universities and economic boards, is of benefit to the Commission on this important matter. Currently serving as the Associate Director of the Maguire Energy Institute and an Adjunct Professor of Business Economics in the Cox School of Business at SMU in Dallas, I recently published a study on the debt settlement industry, along with my colleague Terry Clower of the University of North Texas, entitled Debt Settlement: Fulfilling the Need for an Economic Middle Ground. This study is included as part of my written comments. Our study documents the consumer benefits of debt settlement, a form of debt relief that offers financially struggling consumers an alternative to filing for bankruptcy. If fairly and properly regulated, debt settlement, which can be seen as one of the most immediate form of debt relief available to consumers in today's tenuous economy, may even improve the odds for a sustainable economic recovery. There are notable findings of our study, including: • The great advantage of debt settlement over the alternatives is consumers can satisfy outstanding obligations while paying less than the full amount of their unpaid balances. • Credit counseling agencies receive payments from both consumer and credit card companies. This additional payment, or “kick-back,” from creditors is a percentage of the payments creditors receive from consumers. • Many credit card agencies have been hiking interest rates on outstanding balances, causing debtors to find themselves running faster and faster just to stay in place while the timeframe for paying off creditors is stretched out. For example, Citibank recently raised interest rates to an almost 30% on a large number of cardholders . • Debt settlement can be viewed as part of the healing process to get distressed U.S. households back on a sound financial footing and thereby improve the odds for a sustainable economic recovery in the years ahead. In today's tumultuous economic environment, with many families on the brink of being overwhelmed by debt, fair and balanced debt management options are crucial. These include options for consumers of a variety of situations, including those who cannot satisfy overdue debt burdens while providing for their families in the midst of a hardship. I appreciate the opportunity to speak to the Commission and participate in the upcoming forum on November 4, 2009, and look forward to meeting you all there. I am, with utmost regard, Sincerely Yours, Dr. Bernard WeinsteinAdjunct Professor of Business Economics Cox School of Business, SMU