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UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF ILLINOIS 

EASTERN DIVISION 

FEDERAL TRADE COMMISSION, Case No. 1:22-cv-1919

Plaintiff, STIPULATED ORDER FOR 

PERMANENT INJUNCTION, 

v. MONETARY JUDGMENT, AND 

OTHER RELIEF 

Human Resource Development Services, Inc., a 

corporation, also d/b/a Saint James School of 

Medicine and HRDS, 

Delta Financial Solutions, Inc., a corporation, 

and

KAUSHIK GUHA, individually and as an officer 

of Human Resource Development Services, Inc. 

also d/b/a Saint James School of Medicine, 

Defendants. 

Plaintiff, the Federal Trade Commission (“Commission” or “FTC”), filed its Complaint 

for a permanent injunction, monetary relief, and other relief in this matter (“Complaint”), 

pursuant to Sections 13(b), 19, and 16(a)(1) of the Federal Trade Commission Act (“FTC Act”), 

15 U.S.C. §§ 53(b), 57b, and 56(a)(1). Defendants have waived service of the summons and the 

Complaint. Plaintiff and Defendants stipulate to the entry of this Stipulated Order for Permanent 

Injunction, Monetary Judgment, and Other Relief (“Order”) to resolve all matters in dispute in 

this action between them. 

THEREFORE, IT IS ORDERED as follows: 

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FINDINGS 

1. This Court has jurisdiction over this matter. 

2. The Complaint charges that Defendants participated in deceptive acts or practices in 

violation of Section 5 of the FTC Act, 15 U.S.C. § 45, the FTC’s Telemarketing Sales Rule (the 

“TSR”), as amended, 16 C.F.R. Part 310, the Trade Regulation Rule Concerning Preservation of 

Consumers’ Claims and Defenses (“Holder Rule”), 16 C.F.R. Part 433; and the FTC’s Trade 

Regulation Rule Concerning Credit Practices (“Credit Practices Rule”), 16 C.F.R. § 444, in their 

marketing of educational services. 

3. Defendants neither admit nor deny any of the allegations in the Complaint, except as 

specifically stated in this Order. Only for purposes of this action, Defendants admit the facts 

necessary to establish jurisdiction. 

4. Defendants waive and release any claims they may have against Plaintiff and the 

Commission that relate to this action. Defendants waive any claim that they may have under the 

Equal Access to Justice Act, 28 U.S.C. § 2412, concerning the prosecution of this action through 

the date of this Order, and agree to bear their own costs and attorney fees. 

5. Defendants and Plaintiff waive all rights to appeal or otherwise challenge or contest the 

validity of this Order. 

DEFINITIONS 

For the purpose of this Order, the following definitions apply: 

A. “Competent and Reliable Evidence” means tests, analyses, research, studies, or other 

evidence based on the expertise of professionals in the relevant area, that have been conducted 

and evaluated in an objective manner by qualified persons, using procedures generally accepted 

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in the profession to yield accurate and reliable results. 

B. “Covered Consumer Debt” means debt owed to Corporate Defendants by 

any person who first enrolled in Saint James School of Medicine during the period starting April 

1, 2016 and ending the date this Order is entered, that Defendants could collect, recall, purchase, 

or otherwise obtain, including all unpaid interest and fees related to that debt, whether possessed 

by Defendants or referred, sold, assigned, or otherwise transferred to any collection agency or 

other party. 

C. “Defendants” means all of the Individual Defendants and the Corporate Defendants, 

individually, collectively, or in any combination. 

1. “Corporate Defendants” means Human Resource Development Services, Inc., 

also d/b/a Saint James School of Medicine and HRDS, and Delta Financial Solutions, Inc., and 

their successors and assigns. 

2. “Individual Defendant” means Kaushik Guha. 

D. “Telemarketing” means any plan, program, or campaign which is conducted to induce 

the purchase of goods or services by use of one or more telephones, and which involves a 

telephone call, whether or not covered by the Telemarketing Sales Rule. 

ORDER 

I. PROHIBITED REPRESENTATIONS 

IT IS FURTHER ORDERED that Defendants, Defendants’ officers, agents, employees, 

and all other persons in active concert or participation with any of them, who receive actual 

notice of this Order, whether acting directly or indirectly, in connection with advertising, 

marketing, promoting, offering for sale, or sale of any educational product or service are 

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permanently restrained and enjoined from: 

A. making any misrepresentation, expressly or by implication, including: 

1. Regarding academic prospects, including the likelihood of passing any step of the 

United States Medical Licensing Exam (“USMLE”) or any standardized test for medical 

licensing; 

2. Regarding employment, hiring, or career prospects, including the likelihood of 

obtaining residency matches; or 

3. Regarding any other fact material to consumers concerning any such product or 

service including the total costs; any material restrictions, limitations, or conditions; or 

any material aspect of its performance, efficacy, nature, or central characteristics; and

B. making any representation, or assisting others in making any representation, expressly or 

by implication, about the benefit or outcome of any such product or service, including any 

representation enumerated in Section I.A, unless the representation is non-misleading, and, at the 

time such representation is made, Defendants possess and rely upon Competent and Reliable 

Evidence that is sufficient in quality and quantity to substantiate that the representation is true. 

II. PROHIBITIONS ON TELEMARKETING 

IT IS FURTHER ORDERED that Defendants and Defendants’ officers, agents, 

employees, and all other persons in active concert or participation with any of them, who receive 

actual notice of this Order, whether acting directly or indirectly, in connection with 

Telemarketing, are permanently restrained and enjoined from violating the TSR, 16 C.F.R. Part 

310, a copy of which is attached to this Order as Attachment A, regardless of whether there are 

face-to-face interactions. 

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III. INJUNCTION CONCERNING THE HOLDER RULE 

IT IS FURTHER ORDERED that Defendants, Defendants’ officers, agents, employees, 

and attorneys, and all other persons in active concert or participation with any of them, who 

receive actual notice of this Order, whether acting directly or indirectly, in connection with the 

sale or lease of goods or services to consumers, are hereby permanently restrained and enjoined 

from: 

A. Taking or receiving a consumer credit contract unless the contract contains, in at least ten 

point and bold face type, the Holder Notice attached to this Order as Attachment B. 

B. Accepting the proceeds of any purchase money loan unless any consumer credit contract 

made in connection with such purchase money loan contains, in at least ten point and bold face 

type, the Holder Notice attached to this Order as Attachment C. 

C. Selling, transferring, or assigning any consumer credit contract, unless: 

1. The recipient of such consumer credit contract agrees, in the writing 

memorializing the assignment, that its rights are subject to the borrowers’ claims and defenses 

against Defendants; and 

2. Each borrower whose contract is sold, transferred, or assigned is given notice 

within five (5) days after the sale, transfer, or assignment that the borrowers’ note has been 

assigned and the borrowers’ obligation to pay is subject to the borrowers’ claims and defenses 

against Defendants. 

D. Violating any provision of the Holder Rule, 16 C.F.R. § 433, appended to this Order as 

Attachment D. 

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IV. PROHIBITION AGAINST VIOLATING THE CREDIT PRACTICES RULE 

IT IS FURTHER ORDERED that Defendants, Defendants’ officers, agents, employees, 

and attorneys, and all other persons in active concert or participation with any of them, who 

receive actual notice of this Order, whether acting directly or indirectly, in connection with the 

extension of credit to consumers, are permanently restrained and enjoined from: 

A. Extending credit to a consumer unless the Notice to Cosigner Disclosure, attached to this 

order as Attachment E, has been given to the cosigner prior to becoming obligated. This Notice 

must be provided to the cosigner as a separate document that contains the statements in 

Attachment E and no other. 

B. Violating any other provision of the Credit Practices Rule, 16 C.F.R. § 444, appended to 

this Order as Attachment F. 

V. JUDGMENT FOR MONETARY RELIEF 

IT IS FURTHER ORDERED that: 

A. Judgment in the amount of One Million Two Hundred Seven Thousand Four Hundred 

Fifty-Seven Dollars ($1,207,457) is entered in favor of the Commission against Defendants, 

jointly and severally, as monetary relief. The judgment consists of: 

1. Payment of Eight Hundred Fifty Thousand Dollars ($850,000) to the 

Commission. 

a) Defendants are ordered to pay to the Commission Eight Hundred Fifty 

Thousand Dollars ($850,000), which, as Defendants stipulate, their undersigned counsel holds in 

escrow for no purpose other than payment to the Commission. Such payment must be made 

within 7 days of entry of this Order by electronic fund transfer in accordance with instructions 

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previously provided by a representative of the Commission. 

2. Ceased collection of a minimum of Three Hundred Fifty-Seven Thousand Four 

Hundred Fifty-Seven Dollars ($357,457) in Covered Consumer Debt as follows: 

a) Defendants’ officers, agents, employees, and all other Persons in active 

concert or participation with any of them, who receive actual notice of this Order, whether acting 

directly or indirectly, are permanently enjoined from attempting to collect, collecting, or 

assigning any right to collect any Covered Consumer Debt. Defendants shall not refer, sell, 

assign, or otherwise transfer any Covered Consumer Debt. 

b) Within 10 business days after entry of this Order, Defendants shall cease 

collecting on all Covered Consumer Debt and notify any collection agency or other third party 

collecting Covered Consumer Debt to cease such collection efforts. Within 60 business days 

after entry of this Order, Defendants shall (1) recall, purchase, or otherwise obtain any Covered 

Consumer Debt that Defendants have referred, sold, assigned, or otherwise transferred to any 

collection agency or other third party, and (2) clear all Covered Consumer Debt from 

Defendants’ financial systems. 

c) For any Covered Consumer Debt that has been reported to a Consumer 

Reporting Agency (“CRA”), Defendants shall, within 10 business days of clearing all Covered 

Consumer Debt as required by subsection A.2.b request that each CRA delete the Covered 

Consumer Debt from the consumer’s credit reporting file. 

d) To the extent Defendants receive any payments for Covered Consumer 

Debt after entry of this Order, Defendants shall, within 20 days of receipt or entry of this Order, 

refund any such payments. 

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e) Defendants shall, within 10 business days after entry of this Order, 

provide a signed declaration to the FTC attesting that they have ceased collection of Covered 

Consumer Debt as required by this Section V.A.2. 

VI. ADDITIONAL MONETARY PROVISIONS 

IT IS FURTHER ORDERED that: 

A. Defendants relinquish dominion and all legal and equitable right, title, and interest in all 

assets transferred pursuant to this Order and may not seek the return of any assets. 

B. The facts alleged in the Complaint will be taken as true, without further proof, in any 

subsequent civil litigation by or on behalf of the Commission in a proceeding to enforce its rights 

to any payment or monetary judgment pursuant to the Order, such as a nondischargeability 

complaint in any bankruptcy case. 

C. Defendants agree that any civil penalty judgment represents a civil penalty owed to the 

government of the United States, is not compensation for actual pecuniary loss, and, therefore, as 

to the Individual Defendant, it is not subject to discharge under the Bankruptcy Code pursuant to 

11 U.S.C. § 523(a)(7). 

D. Defendants acknowledge that their Taxpayer Identification Numbers (Social Security 

Numbers or Employer Identification Numbers), which Defendants previously submitted to the 

Commission, may be used for collecting and reporting on any delinquent amount arising out of 

this Order, in accordance with 31 U.S.C. §7701. 

E. All money paid to the Commission pursuant to this Order may be deposited into a fund 

administered by the Commission or its designee to be used for consumer redress and any 

attendant expenses for the administration of any redress fund. If a representative of the 

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Commission decides that direct redress to consumers is wholly or partially impracticable or 

money remains after redress is completed, the Commission may apply any remaining money for 

such other relief (including consumer information remedies) as it determines to be reasonably 

related to Defendants’ practices alleged in the Complaint. Any money not used for such relief is 

to be deposited to the U.S. Treasury. Defendants have no right to challenge any actions the 

Commission or its representatives may take pursuant to this Subsection. 

VII. CONSUMER NOTIFICATION 

IT IS FURTHER ORDERED that Defendants shall: 

A. Within 15 business days of entry of this Order, provide notification to each consumer 

with Covered Consumer Debts, using the notification provided as Attachment G to this Order. 

Notification shall be given: 1. By electronic mail to the most recent electronic mail address 

known to the Defendants; and 2. By written notice sent to the most recent address of the 

consumer known to the Defendants. 

B. Provide the Commission, within 10 business days after providing consumer notice 

pursuant to subsection VIII.A., with a signed declaration identifying the name of each consumer 

required to be notified, including, to the extent known: (i) mailing address; (ii) email address; 

(iii) telephone number; (iv) the method or methods of notification; and (v) whether any 

electronic mail or written notice was returned undelivered. 

VIII. CUSTOMER INFORMATION 

IT IS FURTHER ORDERED that Defendants, Defendants’ officers, agents, employees, 

and all other persons in active concert or participation with any of them, who receive actual 

notice of this Order are permanently restrained and enjoined from directly or indirectly failing to 

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provide sufficient customer information to enable the Commission to efficiently administer 

consumer redress. If a representative of the Commission requests in writing any information 

related to redress, Defendants must provide it, in the form prescribed by the Commission, within 

14 days. 

IX. ORDER ACKNOWLEDGMENTS 

IT IS FURTHER ORDERED that Defendants obtain acknowledgments of receipt of this 

Order: 

A. Each Defendant, within 7 days of entry of this Order, must submit to the Commission an 

acknowledgment of receipt of this Order sworn under penalty of perjury. 

B. For 5 years after entry of this Order, each Individual Defendant for any business that 

such Defendant, individually or collectively with any other Defendants, is the majority owner or 

controls directly or indirectly, and each Corporate Defendant, must deliver a copy of this Order 

to: (1) all principals, officers, directors, and LLC managers and members; (2) all employees 

having managerial responsibilities for conduct related to the subject matter of the Order and all 

agents and representatives who participate in conduct related to the subject matter of the Order; 

and (3) any business entity resulting from any change in structure as set forth in the Section titled 

Compliance Reporting. Delivery must occur within 7 days of entry of this Order for current 

personnel. For all others, delivery must occur before they assume their responsibilities. 

C. From each individual or entity to which a Defendant delivered a copy of this Order, that 

Defendant must obtain, within 30 days, a signed and dated acknowledgment of receipt of this 

Order. 

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X. CONSUMER ACCESS TO TRANSCRIPTS 

IT IS FURTHER ORDERED, that Defendants are prohibited from denying access to any 

transcript on the basis of any Covered Consumer Debt. 

XI. COMPLIANCE REPORTING 

IT IS FURTHER ORDERED that Defendants make timely submissions to the 

Commission: 

A. One year after entry of this Order, each Defendant must submit a compliance report, 

sworn under penalty of perjury: 

1. Each Defendant must: (a) identify the primary physical, postal, and email address 

and telephone number, as designated points of contact, which representatives of the Commission 

and Plaintiff may use to communicate with Defendant; (b) identify all of that Defendant’s 

businesses by all of their names, telephone numbers, and physical, postal, email, and Internet 

addresses; (c) describe the activities of each business, including the goods and services offered, 

the means of advertising, marketing, and sales, and the involvement of any other Defendant 

(which Individual Defendant must describe if they know or should know due to their own 

involvement); (d) describe in detail whether and how that Defendant is in compliance with each 

Section of this Order; and (e) provide a copy of each Order Acknowledgment obtained pursuant 

to this Order, unless previously submitted to the Commission. 

2. Additionally, each Individual Defendant must: (a) identify all telephone numbers 

and all physical, postal, email and Internet addresses, including all residences; (b) identify all 

business activities, including any business for which such Defendant performs services whether 

as an employee or otherwise and any entity in which such Defendant has any ownership interest; 

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and (c) describe in detail such Defendant’s involvement in each such business, including title, 

role, responsibilities, participation, authority, control, and any ownership. 

B. For 10 years after entry of this Order, each Defendant must submit a compliance 

notice, sworn under penalty of perjury, within 14 days of any change in the following: 

1. Each Defendant must report any change in: (a) any designated point of contact; 

or (b) the structure of any Corporate Defendant or any entity that Defendant has any ownership 

interest in or controls directly or indirectly that may affect compliance obligations arising under 

this Order, including: creation, merger, sale, or dissolution of the entity or any subsidiary, parent, 

or affiliate that engages in any acts or practices subject to this Order. 

2. Additionally, each Individual Defendant must report any change in: (a) name, 

including aliases or fictitious name, or residence address; or (b) title or role in any business 

activity, including any business for which such Defendant performs services whether as an 

employee or otherwise and any entity in which such Defendant has any ownership interest, and 

identify the name, physical address, and any Internet address of the business or entity. 

C. Each Defendant must submit to the Commission notice of the filing of any bankruptcy 

petition, insolvency proceeding, or similar proceeding by or against such Defendant within 14 

days of its filing. 

D. Any submission to the Commission required by this Order to be sworn under penalty of 

perjury must be true and accurate and comply with 28 U.S.C. § 1746, such as by concluding: “I 

declare under penalty of perjury under the laws of the United States of America that the 

foregoing is true and correct. Executed on: _____” and supplying the date, signatory’s full 

name, title (if applicable), and signature. 

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E. Unless otherwise directed by a Commission representative in writing, all submissions to 

the Commission pursuant to this Order must be emailed to DEbrief@ftc.gov or sent by overnight 

courier (not the U.S. Postal Service) to: Associate Director for Enforcement, Bureau of 

Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue NW, Washington, 

DC 20580. The subject line must begin: FTC v. HRDS, Inc., et al., [X number to be filled in]. 

XII. RECORDKEEPING 

IT IS FURTHER ORDERED that Defendants must create certain records for 10 years 

after entry of the Order, and retain each such record for 5 years. Specifically, Corporate 

Defendants and each Individual Defendant for any business that such Defendant, individually or 

collectively with any other Defendants, is a majority owner or controls directly or indirectly, in 

connection with advertising, marketing, promotion, offering for sale, or sale of any educational 

products or services, must create and retain the following records: 

A. accounting records showing the revenues from all goods or services sold; 

B. personnel records showing, for each person providing services, whether as an employee 

or otherwise, that person’s: name; addresses; telephone numbers; job title or position; dates of 

service; and (if applicable) the reason for termination; 

C. records of all consumer complaints and refund requests concerning the subject matter of 

the order, whether received directly or indirectly, such as through a third party, and any response; 

D. all records necessary to demonstrate full compliance with each provision of this Order, 

including all submissions to the Commission; and 

E. a copy of each unique advertisement or other marketing material. 

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XIII. COMPLIANCE MONITORING 

IT IS FURTHER ORDERED that, for the purpose of monitoring Defendants’ compliance 

with this Order, including any failure to transfer any assets as required by this Order: 

A. Within 14 days of receipt of a written request from a representative of the Commission or 

Plaintiff, each Defendant must: submit additional compliance reports or other requested 

information, which must be sworn under penalty of perjury; appear for depositions; and produce 

documents for inspection and copying. The Commission and Plaintiff are also authorized to 

obtain discovery, without further leave of court, using any of the procedures prescribed by 

Federal Rules of Civil Procedure 29, 30 (including telephonic depositions), 31, 33, 34, 36, 45, 

and 69. 

B. For matters concerning this Order, the Commission and Plaintiff are authorized to 

communicate directly with each Defendant. Defendant must permit representatives of the 

Commission and Plaintiff to interview any employee or other person affiliated with any 

Defendant who has agreed to such an interview. The person interviewed may have counsel 

present. 

C. The Commission and Plaintiff may use all other lawful means, including posing, through 

its representatives as consumers, suppliers, or other individuals or entities, to Defendants or any 

individual or entity affiliated with Defendants, without the necessity of identification or prior 

notice. Nothing in this Order limits the Commission’s lawful use of compulsory process, 

pursuant to Sections 9 and 20 of the FTC Act, 15 U.S.C. §§ 49, 57b-1. 

D. Upon written request from a representative of the Commission or Plaintiff, any consumer 

reporting agency must furnish consumer reports concerning Individual Defendant pursuant to 

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_______________________________ 

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Section 604(1) of the Fair Credit Reporting Act, 15 U.S.C. §1681b(a)(1). 

XIV. RETENTION OF JURISDICTION 

IT IS FURTHER ORDERED that this Court retains jurisdiction of this matter for 

purposes of construction, modification, and enforcement of this Order. 

SO ORDERED this day of , 2022. 

UNITED STATES DISTRICT JUDGE 

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[Intentionally blank]

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SO STIPULATED AND AGREED:

FEDERAL TRADE COMMISSION 

________________________________ 

QUINN MARTIN, ESQ. 

K. MICHELLE GRAJALES, ESQ. Federal 

Trade Commission 

600 Pennsylvania Ave., NW 

Mail Stop: CC-10232 

Washington, DC 20580 

(202) 326-2080 (Martin) 

(202) 326-3172 (Grajales) 

Email: qmartin@ftc.gov; 

mgrajales@ftc.gov 

17 
FOR DEFENDANTS: 

cu ,.. ,~· 

STEVEN M. WERNIKOFF, 'I!,f,(­

Honigman LLP 

155 North Wacker Drive 

Suite 3100 

Chicago, IL 60606-1734 

(312) 701-9380 

Email: swemikoff@honigman.com 

COUNSEL for all Defendants 

DEFENDANTS: 

A, individually and as an 

officer of an Resource Development 

Services, Inc. and Delta.Financial Solutions, Inc. 

18 

Date: 

Date: 

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3/01/2022
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ATTACHMENT A 
 

 

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Title 16

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PART 310 - TELEMARKETING SALES RULE

Authority: 15 U.S.C. 6101-6108.

Source: 75 FR 48516, Aug. 10, 2010, unless otherwise noted.

§ 310.1 Scope of regulations in this part.

This part implements the Telemarketing and Consumer Fraud and Abuse Prevention Act, 15 U.S.C. 6101-

6108, as amended.

§ 310.2 Definitions.

(a) Acquirer means a business organization, financial institution, or an agent of a business organization

or financial institution that has authority from an organization that operates or licenses a credit card

system to authorize merchants to accept, transmit, or process payment by credit card through the

credit card system for money, goods or services, or anything else of value.

(b) Attorney General means the chief legal officer of a state.

(c) Billing information means any data that enables any person to access a customer's or donor's

account, such as a credit card, checking, savings, share or similar account, utility bill, mortgage

loan account, or debit card.

(d) Caller identification service means a service that allows a telephone subscriber to have the

telephone number, and, where available, name of the calling party transmitted contemporaneously

with the telephone call, and displayed on a device in or connected to the subscriber's telephone.

(e) Cardholder means a person to whom a credit card is issued or who is authorized to use a credit

card on behalf of or in addition to the person to whom the credit card is issued.

(f) Cash-to-cash money transfer means the electronic (as defined in section 106(2) of the Electronic

Signatures in Global and National Commerce Act (15 U.S.C. 7006(2)) transfer of the value of cash

received from one person to another person in a different location that is sent by a money transfer

provider and received in the form of cash. For purposes of this definition, money transfer provider

means any person or financial institution that provides cash-to-cash money transfers for a person in

the normal course of its business, whether or not the person holds an account with such person or

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financial institution. The term cash-to-cash money transfer includes a remittance transfer, as

defined in section 919(g)(2) of the Electronic Fund Transfer Act (“EFTA”), 15 U.S.C. 1693a, that is a

cash-to-cash transaction; however it does not include any transaction that is:

(1) An electronic fund transfer as defined in section 903 of the EFTA;

(2) Covered by Regulation E, 12 CFR 1005.20, pertaining to gift cards; or

(3) Subject to the Truth in Lending Act, 15 U.S.C. 1601 et seq.

(g) Cash reload mechanism is a device, authorization code, personal identification number, or other

security measure that makes it possible for a person to convert cash into an electronic (as defined

in section 106(2) of the Electronic Signatures in Global and National Commerce Act (15 U.S.C.

7006(2)) form that can be used to add funds to a general-use prepaid card, as defined in Regulation

E, 12 CFR 1005.2, or an account with a payment intermediary. For purposes of this definition, a

cash reload mechanism is not itself a general-use prepaid debit card or a swipe reload process or

similar method in which funds are added directly onto a person's own general-use prepaid card or

account with a payment intermediary.

(h) Charitable contribution means any donation or gift of money or any other thing of value.

(i) Commission means the Federal Trade Commission.

(j) Credit means the right granted by a creditor to a debtor to defer payment of debt or to incur debt

and defer its payment.

(k) Credit card means any card, plate, coupon book, or other credit device existing for the purpose of

obtaining money, property, labor, or services on credit.

(l) Credit card sales draft means any record or evidence of a credit card transaction.

(m) Credit card system means any method or procedure used to process credit card transactions

involving credit cards issued or licensed by the operator of that system.

(n) Customer means any person who is or may be required to pay for goods or services offered

through telemarketing.

(o) Debt relief service means any program or service represented, directly or by implication, to

renegotiate, settle, or in any way alter the terms of payment or other terms of the debt between a

person and one or more unsecured creditors or debt collectors, including, but not limited to, a

reduction in the balance, interest rate, or fees owed by a person to an unsecured creditor or debt

collector.

(p) Donor means any person solicited to make a charitable contribution.

(q) Established business relationship means a relationship between a seller and a consumer based on:

(1) the consumer's purchase, rental, or lease of the seller's goods or services or a financial

transaction between the consumer and seller, within the eighteen (18) months immediately

preceding the date of a telemarketing call; or

(2) the consumer's inquiry or application regarding a product or service offered by the seller, within

the three

(3) months immediately preceding the date of a telemarketing call.

(r) Free-to-pay conversion means, in an offer or agreement to sell or provide any goods or services, a

provision under which a customer receives a product or service for free for an initial period and will

incur an obligation to pay for the product or service if he or she does not take affirmative action to

cancel before the end of that period.

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(s) Investment opportunity means anything, tangible or intangible, that is offered, offered for sale, sold,

or traded based wholly or in part on representations, either express or implied, about past, present,

or future income, profit, or appreciation.

(t) Material means likely to affect a person's choice of, or conduct regarding, goods or services or a

charitable contribution.

(u) Merchant means a person who is authorized under a written contract with an acquirer to honor or

accept credit cards, or to transmit or process for payment credit card payments, for the purchase of

goods or services or a charitable contribution.

(v) Merchant agreement means a written contract between a merchant and an acquirer to honor or

accept credit cards, or to transmit or process for payment credit card payments, for the purchase of

goods or services or a charitable contribution.

(w) Negative option feature means, in an offer or agreement to sell or provide any goods or services, a

provision under which the customer's silence or failure to take an affirmative action to reject goods

or services or to cancel the agreement is interpreted by the seller as acceptance of the offer.

(x) Outbound telephone call means a telephone call initiated by a telemarketer to induce the purchase

of goods or services or to solicit a charitable contribution.

(y) Person means any individual, group, unincorporated association, limited or general partnership,

corporation, or other business entity.

(z) Preacquired account information means any information that enables a seller or telemarketer to

cause a charge to be placed against a customer's or donor's account without obtaining the account

number directly from the customer or donor during the telemarketing transaction pursuant to which

the account will be charged.

(aa) Prize means anything offered, or purportedly offered, and given, or purportedly given, to a person

by chance. For purposes of this definition, chance exists if a person is guaranteed to receive an

item and, at the time of the offer or purported offer, the telemarketer does not identify the specific

item that the person will receive.

(bb) Prize promotion means:

(1) A sweepstakes or other game of chance; or

(2) An oral or written express or implied representation that a person has won, has been selected

to receive, or may be eligible to receive a prize or purported prize.

(cc) Remotely created payment order means any payment instruction or order drawn on a person's

account that is created by the payee or the payee's agent and deposited into or cleared through the

check clearing system. The term includes, without limitation, a “remotely created check,” as defined

in Regulation CC, Availability of Funds and Collection of Checks, 12 CFR 229.2(fff), but does not

include a payment order cleared through an Automated Clearinghouse (ACH) Network or subject to

the Truth in Lending Act, 15 U.S.C. 1601 et seq., and Regulation Z, 12 CFR part 1026.

(dd) Seller means any person who, in connection with a telemarketing transaction, provides, offers to

provide, or arranges for others to provide goods or services to the customer in exchange for

consideration.

(ee) State means any state of the United States, the District of Columbia, Puerto Rico, the Northern

Mariana Islands, and any territory or possession of the United States.

(ff) Telemarketer means any person who, in connection with telemarketing, initiates or receives

telephone calls to or from a customer or donor.

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(gg) Telemarketing means a plan, program, or campaign which is conducted to induce the purchase of

goods or services or a charitable contribution, by use of one or more telephones and which involves

more than one interstate telephone call. The term does not include the solicitation of sales through

the mailing of a catalog which: contains a written description or illustration of the goods or services

offered for sale; includes the business address of the seller; includes multiple pages of written

material or illustrations; and has been issued not less frequently than once a year, when the person

making the solicitation does not solicit customers by telephone but only receives calls initiated by

customers in response to the catalog and during those calls takes orders only without further

solicitation. For purposes of the previous sentence, the term “further solicitation” does not include

providing the customer with information about, or attempting to sell, any other item included in the

same catalog which prompted the customer's call or in a substantially similar catalog.

(hh) Upselling means soliciting the purchase of goods or services following an initial transaction during a

single telephone call. The upsell is a separate telemarketing transaction, not a continuation of the

initial transaction. An “external upsell” is a solicitation made by or on behalf of a seller different from

the seller in the initial transaction, regardless of whether the initial transaction and the subsequent

solicitation are made by the same telemarketer. An “internal upsell” is a solicitation made by or on

behalf of the same seller as in the initial transaction, regardless of whether the initial transaction

and subsequent solicitation are made by the same telemarketer.

[75 FR 48516, Aug. 10, 2010, as amended at 80 FR 77557, Dec. 14, 2015]

§ 310.3 Deceptive telemarketing acts or practices.

(a) Prohibited deceptive telemarketing acts or practices. It is a deceptive telemarketing act or practice

and a violation of this Rule for any seller or telemarketer to engage in the following conduct:

[659] (1) Before a customer consents to pay for goods or services offered, failing to disclose

truthfully, in a clear and conspicuous manner, the following material information:

(i) The total costs to purchase, receive, or use, and the quantity of, any goods or services

that are the subject of the sales offer;[660]

(ii) All material restrictions, limitations, or conditions to purchase, receive, or use the goods

or services that are the subject of the sales offer;

(iii) If the seller has a policy of not making refunds, cancellations, exchanges, or repurchases,

a statement informing the customer that this is the seller's policy; or, if the seller or

telemarketer makes a representation about a refund, cancellation, exchange, or

repurchase policy, a statement of all material terms and conditions of such policy;

(iv) In any prize promotion, the odds of being able to receive the prize, and, if the odds are

not calculable in advance, the factors used in calculating the odds; that no purchase or

payment is required to win a prize or to participate in a prize promotion and that any

purchase or payment will not increase the person's chances of winning; and the nopurchase/no-payment method of participating in the prize promotion with either

instructions on how to participate or an address or local or toll-free telephone number to

which customers may write or call for information on how to participate;

(v) All material costs or conditions to receive or redeem a prize that is the subject of the prize

promotion;

(vi) In the sale of any goods or services represented to protect, insure, or otherwise limit a

customer's liability in the event of unauthorized use of the customer's credit card, the

limits on a cardholder's liability for unauthorized use of a credit card pursuant to 15

U.S.C. 1643;

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(vii) If the offer includes a negative option feature, all material terms and conditions of the

negative option feature, including, but not limited to, the fact that the customer's account

will be charged unless the customer takes an affirmative action to avoid the charge(s),

the date(s) the charge(s) will be submitted for payment, and the specific steps the

customer must take to avoid the charge(s); and

(viii) In the sale of any debt relief service:

(A) the amount of time necessary to achieve the represented results, and to the extent

that the service may include a settlement offer to any of the customer's creditors or

debt collectors, the time by which the debt relief service provider will make a bona

fide settlement offer to each of them;

(B) to the extent that the service may include a settlement offer to any of the customer's

creditors or debt collectors, the amount of money or the percentage of each

outstanding debt that the customer must accumulate before the debt relief service

provider will make a bona fide settlement offer to each of them;

(C) to the extent that any aspect of the debt relief service relies upon or results in the

customer's failure to make timely payments to creditors or debt collectors, that the

use of the debt relief service will likely adversely affect the customer's

creditworthiness, may result in the customer being subject to collections or sued by

creditors or debt collectors, and may increase the amount of money the customer

owes due to the accrual of fees and interest; and

(D) to the extent that the debt relief service requests or requires the customer to place

funds in an account at an insured financial institution, that the customer owns the

funds held in the account, the customer may withdraw from the debt relief service at

any time without penalty, and, if the customer withdraws, the customer must receive

all funds in the account, other than funds earned by the debt relief service in

compliance with § 310.4(a)(5)(i)(A) through (C).

(2) Misrepresenting, directly or by implication, in the sale of goods or services any of the following

material information:

(i) The total costs to purchase, receive, or use, and the quantity of, any goods or services

that are the subject of a sales offer;

(ii) Any material restriction, limitation, or condition to purchase, receive, or use goods or

services that are the subject of a sales offer;

(iii) Any material aspect of the performance, efficacy, nature, or central characteristics of

goods or services that are the subject of a sales offer;

(iv) Any material aspect of the nature or terms of the seller's refund, cancellation, exchange,

or repurchase policies;

(v) Any material aspect of a prize promotion including, but not limited to, the odds of being

able to receive a prize, the nature or value of a prize, or that a purchase or payment is

required to win a prize or to participate in a prize promotion;

(vi) Any material aspect of an investment opportunity including, but not limited to, risk,

liquidity, earnings potential, or profitability;

(vii) A seller's or telemarketer's affiliation with, or endorsement or sponsorship by, any person

or government entity;

(viii) That any customer needs offered goods or services to provide protections a customer

already has pursuant to 15 U.S.C. 1643;

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(ix) Any material aspect of a negative option feature including, but not limited to, the fact that

the customer's account will be charged unless the customer takes an affirmative action to

avoid the charge(s), the date(s) the charge(s) will be submitted for payment, and the

specific steps the customer must take to avoid the charge(s); or

(x) Any material aspect of any debt relief service, including, but not limited to, the amount of

money or the percentage of the debt amount that a customer may save by using such

service; the amount of time necessary to achieve the represented results; the amount of

money or the percentage of each outstanding debt that the customer must accumulate

before the provider of the debt relief service will initiate attempts with the customer's

creditors or debt collectors or make a bona fide offer to negotiate, settle, or modify the

terms of the customer's debt; the effect of the service on a customer's creditworthiness;

the effect of the service on collection efforts of the customer's creditors or debt collectors;

the percentage or number of customers who attain the represented results; and whether

a debt relief service is offered or provided by a non-profit entity.

(3) Causing billing information to be submitted for payment, or collecting or attempting to collect

payment for goods or services or a charitable contribution, directly or indirectly, without the

customer's or donor's express verifiable authorization, except when the method of payment

[661] used is a credit card subject to protections of the Truth in Lending Act and Regulation Z, or

a debit card subject to the protections of the Electronic Fund Transfer Act and Regulation E.

[662] Such authorization shall be deemed verifiable if any of the following means is employed:

(i) Express written authorization by the customer or donor, which includes the customer's or

donor's signature;[663]

(ii) Express oral authorization which is audio-recorded and made available upon request to

the customer or donor, and the customer's or donor's bank or other billing entity, and

which evidences clearly both the customer's or donor's authorization of payment for the

goods or services or charitable contribution that are the subject of the telemarketing

transaction and the customer's or donor's receipt of all of the following information:

(A) An accurate description, clearly and conspicuously stated, of the goods or services

or charitable contribution for which payment authorization is sought;

(B) The number of debits, charges, or payments (if more than one);

(C) The date(s) the debit(s), charge(s), or payment(s) will be submitted for payment;

(D) The amount(s) of the debit(s), charge(s), or payment(s);

(E) The customer's or donor's name;

(F) The customer's or donor's billing information, identified with sufficient specificity

such that the customer or donor understands what account will be used to collect

payment for the goods or services or charitable contribution that are the subject of

the telemarketing transaction;

(G) A telephone number for customer or donor inquiry that is answered during normal

business hours; and

(H) The date of the customer's or donor's oral authorization; or

(iii) Written confirmation of the transaction, identified in a clear and conspicuous manner as

such on the outside of the envelope, sent to the customer or donor via first class mail

prior to the submission for payment of the customer's or donor's billing information, and

that includes all of the information contained in §§ 310.3(a)(3)(ii)(A)-(G) and a clear and

conspicuous statement of the procedures by which the customer or donor can obtain a

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refund from the seller or telemarketer or charitable organization in the event the

confirmation is inaccurate; provided, however, that this means of authorization shall not

be deemed verifiable in instances in which goods or services are offered in a transaction

involving a free-to-pay conversion and preacquired account information.

(4) Making a false or misleading statement to induce any person to pay for goods or services or to

induce a charitable contribution.

(b) Assisting and facilitating. It is a deceptive telemarketing act or practice and a violation of this Rule

for a person to provide substantial assistance or support to any seller or telemarketer when that

person knows or consciously avoids knowing that the seller or telemarketer is engaged in any act or

practice that violates §§ 310.3(a), (c) or (d), or § 310.4 of this Rule.

(c) Credit card laundering. Except as expressly permitted by the applicable credit card system, it is a

deceptive telemarketing act or practice and a violation of this Rule for:

(1) A merchant to present to or deposit into, or cause another to present to or deposit into, the

credit card system for payment, a credit card sales draft generated by a telemarketing

transaction that is not the result of a telemarketing credit card transaction between the

cardholder and the merchant;

(2) Any person to employ, solicit, or otherwise cause a merchant, or an employee, representative,

or agent of the merchant, to present to or deposit into the credit card system for payment, a

credit card sales draft generated by a telemarketing transaction that is not the result of a

telemarketing credit card transaction between the cardholder and the merchant; or

(3) Any person to obtain access to the credit card system through the use of a business

relationship or an affiliation with a merchant, when such access is not authorized by the

merchant agreement or the applicable credit card system.

(d) Prohibited deceptive acts or practices in the solicitation of charitable contributions. It is a fraudulent

charitable solicitation, a deceptive telemarketing act or practice, and a violation of this Rule for any

telemarketer soliciting charitable contributions to misrepresent, directly or by implication, any of the

following material information:

(1) The nature, purpose, or mission of any entity on behalf of which a charitable contribution is

being requested;

(2) That any charitable contribution is tax deductible in whole or in part;

(3) The purpose for which any charitable contribution will be used;

(4) The percentage or amount of any charitable contribution that will go to a charitable

organization or to any particular charitable program;

(5) Any material aspect of a prize promotion including, but not limited to: the odds of being able to

receive a prize; the nature or value of a prize; or that a charitable contribution is required to

win a prize or to participate in a prize promotion; or

(6) A charitable organization's or telemarketer's affiliation with, or endorsement or sponsorship by,

any person or government entity.

[75 FR 48516, Aug. 10, 2010, as amended at 80 FR 77558, Dec. 14, 2015]

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FOOTNOTES - 310.3

[659]

 When a seller or telemarketer uses, or directs a customer to use, a courier to transport payment,

the seller or telemarketer must make the disclosures required by § 310.3(a)(1) before sending a

courier to pick up payment or authorization for payment, or directing a customer to have a courier pick

up payment or authorization for payment. In the case of debt relief services, the seller or telemarketer

must make the disclosures required by § 310.3(a)(1) before the consumer enrolls in an offered

program.

[660]

 For offers of consumer credit products subject to the Truth in Lending Act, 15 U.S.C. 1601 et

seq., and Regulation Z, 12 CFR 226, compliance with the disclosure requirements under the Truth in

Lending Act and Regulation Z shall constitute compliance with § 310.3(a)(1)(i) of this Rule.

[661]

 Truth in Lending Act, 15 U.S.C. 1601 et seq., and Regulation Z, 12 CFR part 226.

[662]

 Electronic Fund Transfer Act, 15 U.S.C. 1693 et seq., and Regulation E, 12 CFR part 205.

[663]

 For purposes of this Rule, the term “signature” shall include an electronic or digital form of

signature, to the extent that such form of signature is recognized as a valid signature under applicable

federal law or state contract law.

§ 310.4 Abusive telemarketing acts or practices.

(a) Abusive conduct generally. It is an abusive telemarketing act or practice and a violation of this Rule for any

seller or telemarketer to engage in the following conduct:

(1) Threats, intimidation, or the use of profane or obscene language;

(2) Requesting or receiving payment of any fee or consideration for goods or services represented to

remove derogatory information from, or improve, a person's credit history, credit record, or credit

rating until:

(i) The time frame in which the seller has represented all of the goods or services will be provided

to that person has expired; and

(ii) The seller has provided the person with documentation in the form of a consumer report from a

consumer reporting agency demonstrating that the promised results have been achieved, such

report having been issued more than six months after the results were achieved. Nothing in

this Rule should be construed to affect the requirement in the Fair Credit Reporting Act, 15

U.S.C. 1681, that a consumer report may only be obtained for a specified permissible purpose;

(3) Requesting or receiving payment of any fee or consideration from a person for goods or services

represented to recover or otherwise assist in the return of money or any other item of value paid for

by, or promised to, that person in a previous transaction, until seven (7) business days after such

money or other item is delivered to that person. This provision shall not apply to goods or services

provided to a person by a licensed attorney;

(4) Requesting or receiving payment of any fee or consideration in advance of obtaining a loan or other

extension of credit when the seller or telemarketer has guaranteed or represented a high likelihood

of success in obtaining or arranging a loan or other extension of credit for a person;

(5)

(i) Requesting or receiving payment of any fee or consideration for any debt relief service until

and unless:

(A) The seller or telemarketer has renegotiated, settled, reduced, or otherwise altered the

terms of at least one debt pursuant to a settlement agreement, debt management plan,

or other such valid contractual agreement executed by the customer;

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(B) The customer has made at least one payment pursuant to that settlement agreement,

debt management plan, or other valid contractual agreement between the customer and

the creditor or debt collector; and

(C) To the extent that debts enrolled in a service are renegotiated, settled, reduced, or

otherwise altered individually, the fee or consideration either:

(1) Bears the same proportional relationship to the total fee for renegotiating, settling,

reducing, or altering the terms of the entire debt balance as the individual debt

amount bears to the entire debt amount. The individual debt amount and the entire

debt amount are those owed at the time the debt was enrolled in the service; or

(2) Is a percentage of the amount saved as a result of the renegotiation, settlement,

reduction, or alteration. The percentage charged cannot change from one individual

debt to another. The amount saved is the difference between the amount owed at

the time the debt was enrolled in the service and the amount actually paid to satisfy

the debt.

(ii) Nothing in § 310.4(a)(5)(i) prohibits requesting or requiring the customer to place funds in an

account to be used for the debt relief provider's fees and for payments to creditors or debt

collectors in connection with the renegotiation, settlement, reduction, or other alteration of the

terms of payment or other terms of a debt, provided that:

(A) The funds are held in an account at an insured financial institution;

(B) The customer owns the funds held in the account and is paid accrued interest on the

account, if any;

(C) The entity administering the account is not owned or controlled by, or in any way affiliated

with, the debt relief service;

(D) The entity administering the account does not give or accept any money or other

compensation in exchange for referrals of business involving the debt relief service; and

(E) The customer may withdraw from the debt relief service at any time without penalty, and

must receive all funds in the account, other than funds earned by the debt relief service in

compliance with § 310.4(a)(5)(i)(A) through (C), within seven (7) business days of the

customer's request.

(6) Disclosing or receiving, for consideration, unencrypted consumer account numbers for use in

telemarketing; provided, however, that this paragraph shall not apply to the disclosure or receipt of

a customer's or donor's billing information to process a payment for goods or services or a

charitable contribution pursuant to a transaction;

(7) Causing billing information to be submitted for payment, directly or indirectly, without the express

informed consent of the customer or donor. In any telemarketing transaction, the seller or

telemarketer must obtain the express informed consent of the customer or donor to be charged for

the goods or services or charitable contribution and to be charged using the identified account. In

any telemarketing transaction involving preacquired account information, the requirements in

paragraphs (a)(7)(i) through (ii) of this section must be met to evidence express informed consent.

(i) In any telemarketing transaction involving preacquired account information and a free-to-pay

conversion feature, the seller or telemarketer must:

(A) Obtain from the customer, at a minimum, the last four (4) digits of the account number to

be charged;

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(B) Obtain from the customer his or her express agreement to be charged for the goods or

services and to be charged using the account number pursuant to paragraph (a)(7)(i)(A)

of this section; and,

(C) Make and maintain an audio recording of the entire telemarketing transaction.

(ii) In any other telemarketing transaction involving preacquired account information not described

in paragraph (a)(7)(i) of this section, the seller or telemarketer must:

(A) At a minimum, identify the account to be charged with sufficient specificity for the

customer or donor to understand what account will be charged; and

(B) Obtain from the customer or donor his or her express agreement to be charged for the

goods or services and to be charged using the account number identified pursuant to

paragraph (a)(7)(ii)(A) of this section;

(8) Failing to transmit or cause to be transmitted the telephone number, and, when made available by

the telemarketer's carrier, the name of the telemarketer, to any caller identification service in use by

a recipient of a telemarketing call; provided that it shall not be a violation to substitute (for the name

and phone number used in, or billed for, making the call) the name of the seller or charitable

organization on behalf of which a telemarketing call is placed, and the seller's or charitable

organization's customer or donor service telephone number, which is answered during regular

business hours;

(9) Creating or causing to be created, directly or indirectly, a remotely created payment order as

payment for goods or services offered or sold through telemarketing or as a charitable contribution

solicited or sought through telemarketing; or

(10) Accepting from a customer or donor, directly or indirectly, a cash-to-cash money transfer or cash

reload mechanism as payment for goods or services offered or sold through telemarketing or as a

charitable contribution solicited or sought through telemarketing.

(b) Pattern of calls. (1) It is an abusive telemarketing act or practice and a violation of this Rule for a

telemarketer to engage in, or for a seller to cause a telemarketer to engage in, the following conduct:

(i) Causing any telephone to ring, or engaging any person in telephone conversation, repeatedly

or continuously with intent to annoy, abuse, or harass any person at the called number;

(ii) Denying or interfering in any way, directly or indirectly, with a person's right to be placed on

any registry of names and/or telephone numbers of persons who do not wish to receive

outbound telephone calls established to comply with paragraph (b)(1)(iii)(A) of this section,

including, but not limited to, harassing any person who makes such a request; hanging up on

that person; failing to honor the request; requiring the person to listen to a sales pitch before

accepting the request; assessing a charge or fee for honoring the request; requiring a person

to call a different number to submit the request; and requiring the person to identify the seller

making the call or on whose behalf the call is made;

(iii) Initiating any outbound telephone call to a person when:

(A) That person previously has stated that he or she does not wish to receive an outbound

telephone call made by or on behalf of the seller whose goods or services are being

offered or made on behalf of the charitable organization for which a charitable

contribution is being solicited; or

(B) That person's telephone number is on the “do-not-call” registry, maintained by the

Commission, of persons who do not wish to receive outbound telephone calls to induce

the purchase of goods or services unless the seller or telemarketer:

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(1) Can demonstrate that the seller has obtained the express agreement, in writing, of

such person to place calls to that person. Such written agreement shall clearly

evidence such person's authorization that calls made by or on behalf of a specific

party may be placed to that person, and shall include the telephone number to

which the calls may be placed and the signature[664] of that person; or

(2) Can demonstrate that the seller has an established business relationship with such

person, and that person has not stated that he or she does not wish to receive

outbound telephone calls under paragraph (b)(1)(iii)(A) of this section; or

(iv) Abandoning any outbound telephone call. An outbound telephone call is “abandoned” under

this section if a person answers it and the telemarketer does not connect the call to a sales

representative within two (2) seconds of the person's completed greeting.

(v) Initiating any outbound telephone call that delivers a prerecorded message, other than a

prerecorded message permitted for compliance with the call abandonment safe harbor in §

310.4(b)(4)(iii), unless:

(A) In any such call to induce the purchase of any good or service, the seller has obtained

from the recipient of the call an express agreement, in writing, that:

(i) The seller obtained only after a clear and conspicuous disclosure that the purpose of the

agreement is to authorize the seller to place prerecorded calls to such person;

(ii) The seller obtained without requiring, directly or indirectly, that the agreement be executed as

a condition of purchasing any good or service;

(iii) Evidences the willingness of the recipient of the call to receive calls that deliver prerecorded

messages by or on behalf of a specific seller; and

[665] (iv) Includes such person's telephone number and signature; and

(B) In any such call to induce the purchase of any good or service, or to induce a charitable

contribution from a member of, or previous donor to, a non-profit charitable organization

on whose behalf the call is made, the seller or telemarketer:

(i) Allows the telephone to ring for at least fifteen (15) seconds or four (4) rings before

disconnecting an unanswered call; and

(ii) Within two (2) seconds after the completed greeting of the person called, plays a prerecorded

message that promptly provides the disclosures required by § 310.4(d) or (e), followed

immediately by a disclosure of one or both of the following:

(A) In the case of a call that could be answered in person by a consumer, that the person

called can use an automated interactive voice and/or keypress-activated opt-out

mechanism to assert a Do Not Call request pursuant to § 310.4(b)(1)(iii)(A) at any time

during the message. The mechanism must:

(1) Automatically add the number called to the seller's entity-specific Do Not Call list;

(2) Once invoked, immediately disconnect the call; and

(3) Be available for use at any time during the message; and

(B) In the case of a call that could be answered by an answering machine or voicemail service, that the

person called can use a toll-free telephone number to assert a Do Not Call request pursuant to § 310.4(b)(1)

(iii)(A). The number provided must connect directly to an automated interactive voice or keypress-activated

opt-out mechanism that:

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(1) Automatically adds the number called to the seller's entity-specific Do Not Call list;

(2) Immediately thereafter disconnects the call; and

(3) Is accessible at any time throughout the duration of the telemarketing campaign; and

(iii) Complies with all other requirements of this part and other applicable federal and state laws.

(C) Any call that complies with all applicable requirements of this paragraph (v) shall not be deemed to violate

§ 310.4(b)(1)(iv) of this part.

(D) This paragraph (v) shall not apply to any outbound telephone call that delivers a prerecorded healthcare

message made by, or on behalf of, a covered entity or its business associate, as those terms are defined in

the HIPAA Privacy Rule, 45 CFR 160.103.

(2) It is an abusive telemarketing act or practice and a violation of this Rule for any person to sell, rent, lease,

purchase, or use any list established to comply with § 310.4(b)(1)(iii)(A), or maintained by the Commission

pursuant to § 310.4(b)(1)(iii)(B), for any purpose except compliance with the provisions of this Rule or

otherwise to prevent telephone calls to telephone numbers on such lists.

(3) A seller or telemarketer will not be liable for violating § 310.4(b)(1)(ii) and (iii) if it can demonstrate

that, as part of the seller's or telemarketer's routine business practice:

(i) It has established and implemented written procedures to comply with § 310.4(b)(1)(ii) and (iii);

(ii) It has trained its personnel, and any entity assisting in its compliance, in the procedures

established pursuant to § 310.4(b)(3)(i);

(iii) The seller, or a telemarketer or another person acting on behalf of the seller or charitable

organization, has maintained and recorded a list of telephone numbers the seller or charitable

organization may not contact, in compliance with § 310.4(b)(1)(iii)(A);

(iv) The seller or a telemarketer uses a process to prevent telemarketing to any telephone number

on any list established pursuant to § 310.4(b)(3)(iii) or 310.4(b)(1)(iii)(B), employing a version

of the “do-not-call” registry obtained from the Commission no more than thirty-one (31) days

prior to the date any call is made, and maintains records documenting this process;

(v) The seller or a telemarketer or another person acting on behalf of the seller or charitable

organization, monitors and enforces compliance with the procedures established pursuant to §

310.4(b)(3)(i); and

(vi) Any subsequent call otherwise violating paragraph (b)(1)(ii) or (iii) of this section is the result of

error and not of failure to obtain any information necessary to comply with a request pursuant

to paragraph (b)(1)(iii)(A) of this section not to receive further calls by or on behalf of a seller or

charitable organization.

(4) A seller or telemarketer will not be liable for violating § 310.4(b)(1)(iv) if:

(i) The seller or telemarketer employs technology that ensures abandonment of no more than

three (3) percent of all calls answered by a person, measured over the duration of a single

calling campaign, if less than 30 days, or separately over each successive 30-day period or

portion thereof that the campaign continues.

(ii) The seller or telemarketer, for each telemarketing call placed, allows the telephone to ring for

at least fifteen (15) seconds or four (4) rings before disconnecting an unanswered call;

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(iii) Whenever a sales representative is not available to speak with the person answering the call

within two (2) seconds after the person's completed greeting, the seller or telemarketer

promptly plays a recorded message that states the name and telephone number of the seller

[666] on whose behalf the call was placed ; and

(iv) The seller or telemarketer, in accordance with § 310.5(b)-(d), retains records establishing

compliance with § 310.4(b)(4)(i)-(iii).

(c) Calling time restrictions. Without the prior consent of a person, it is an abusive telemarketing act or

practice and a violation of this Rule for a telemarketer to engage in outbound telephone calls to a person's

residence at any time other than between 8:00 a.m. and 9:00 p.m. local time at the called person's location.

(d) Required oral disclosures in the sale of goods or services. It is an abusive telemarketing act or practice

and a violation of this Rule for a telemarketer in an outbound telephone call or internal or external upsell to

induce the purchase of goods or services to fail to disclose truthfully, promptly, and in a clear and conspicuous

manner to the person receiving the call, the following information:

(1) The identity of the seller;

(2) That the purpose of the call is to sell goods or services;

(3) The nature of the goods or services; and

(4) That no purchase or payment is necessary to be able to win a prize or participate in a prize

promotion if a prize promotion is offered and that any purchase or payment will not increase the

person's chances of winning. This disclosure must be made before or in conjunction with the

description of the prize to the person called. If requested by that person, the telemarketer must

disclose the no-purchase/no-payment entry method for the prize promotion; provided, however,

that, in any internal upsell for the sale of goods or services, the seller or telemarketer must provide

the disclosures listed in this section only to the extent that the information in the upsell differs from

the disclosures provided in the initial telemarketing transaction.

(e) Required oral disclosures in charitable solicitations. It is an abusive telemarketing act or practice and a

violation of this Rule for a telemarketer, in an outbound telephone call to induce a charitable contribution, to

fail to disclose truthfully, promptly, and in a clear and conspicuous manner to the person receiving the call, the

following information:

(1) The identity of the charitable organization on behalf of which the request is being made; and

(2) That the purpose of the call is to solicit a charitable contribution.

[75 FR 48516, Aug. 10, 2010, as amended at 76 FR 58716, Sept. 22, 2011; 80 FR 77559, Dec. 14, 2015]

FOOTNOTES - 310.4

[664]

 For purposes of this Rule, the term “signature” shall include an electronic or digital form of

signature, to the extent that such form of signature is recognized as a valid signature under applicable

federal law or state contract law.

[665]

 For purposes of this Rule, the term “signature” shall include an electronic or digital form of

signature, to the extent that such form of signature is recognized as a valid signature under applicable

federal law or state contract law.

[666]

 This provision does not affect any seller's or telemarketer's obligation to comply with relevant

state and federal laws, including but not limited to the TCPA, 47 U.S.C. 227, and 47 CFR part

64.1200.

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§ 310.5 Recordkeeping requirements.

(a) Any seller or telemarketer shall keep, for a period of 24 months from the date the record is

produced, the following records relating to its telemarketing activities:

(1) All substantially different advertising, brochures, telemarketing scripts, and promotional

materials;

(2) The name and last known address of each prize recipient and the prize awarded for prizes that

are represented, directly or by implication, to have a value of $25.00 or more;

(3) The name and last known address of each customer, the goods or services purchased, the

date such goods or services were shipped or provided, and the amount paid by the customer

for the goods or services;[667]

(4) The name, any fictitious name used, the last known home address and telephone number, and

the job title(s) for all current and former employees directly involved in telephone sales or

solicitations; provided, however, that if the seller or telemarketer permits fictitious names to be

used by employees, each fictitious name must be traceable to only one specific employee; and

(5) All verifiable authorizations or records of express informed consent or express agreement

required to be provided or received under this Rule.

(b) A seller or telemarketer may keep the records required by § 310.5(a) in any form, and in the same

manner, format, or place as they keep such records in the ordinary course of business. Failure to

keep all records required by § 310.5(a) shall be a violation of this Rule.

(c) The seller and the telemarketer calling on behalf of the seller may, by written agreement, allocate

responsibility between themselves for the recordkeeping required by this Section. When a seller

and telemarketer have entered into such an agreement, the terms of that agreement shall govern,

and the seller or telemarketer, as the case may be, need not keep records that duplicate those of

the other. If the agreement is unclear as to who must maintain any required record(s), or if no such

agreement exists, the seller shall be responsible for complying with §§ 310.5(a)(1)-(3) and (5); the

telemarketer shall be responsible for complying with § 310.5(a)(4).

(d) In the event of any dissolution or termination of the seller's or telemarketer's business, the principal

of that seller or telemarketer shall maintain all records as required under this section. In the event of

any sale, assignment, or other change in ownership of the seller's or telemarketer's business, the

successor business shall maintain all records required under this section.

FOOTNOTES - 310.5

[667]

 For offers of consumer credit products subject to the Truth in Lending Act, 15 U.S.C. 1601 et

seq., and Regulation Z, 12 CFR 226, compliance with the recordkeeping requirements under the

Truth in Lending Act, and Regulation Z, shall constitute compliance with § 310.5(a)(3) of this Rule.

§ 310.6 Exemptions.

(a) Solicitations to induce charitable contributions via outbound telephone calls are not covered by §

310.4(b)(1)(iii)(B) of this Rule.

(b) The following acts or practices are exempt from this Rule:

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(1) The sale of pay-per-call services subject to the Commission's Rule entitled “Trade Regulation

Rule Pursuant to the Telephone Disclosure and Dispute Resolution Act of 1992,” 16 CFR part

308, provided, however, that this exemption does not apply to the requirements of §§ 310.4(a)

(1), (a)(7), (b), and (c);

(2) The sale of franchises subject to the Commission's Rule entitled “Disclosure Requirements

and Prohibitions Concerning Franchising,” (“Franchise Rule”) 16 CFR part 436, and the sale of

business opportunities subject to the Commission's Rule entitled “Disclosure Requirements

and Prohibitions Concerning Business Opportunities,” (“Business Opportunity Rule”) 16 CFR

part 437, provided, however, that this exemption does not apply to the requirements of §§

310.4(a)(1), (a)(7), (b), and (c);

(3) Telephone calls in which the sale of goods or services or charitable solicitation is not

completed, and payment or authorization of payment is not required, until after a face-to-face

sales or donation presentation by the seller or charitable organization, provided, however, that

this exemption does not apply to the requirements of §§ 310.4(a)(1), (a)(7), (b), and (c);

(4) Telephone calls initiated by a customer or donor that are not the result of any solicitation by a

seller, charitable organization, or telemarketer, provided, however, that this exemption does

not apply to any instances of upselling included in such telephone calls;

(5) Telephone calls initiated by a customer or donor in response to an advertisement through any

medium, other than direct mail solicitation, provided, however, that this exemption does not

apply to:

(i) Calls initiated by a customer or donor in response to an advertisement relating to

investment opportunities, debt relief services, business opportunities other than business

arrangements covered by the Franchise Rule or Business Opportunity Rule, or

advertisements involving offers for goods or services described in § 310.3(a)(1)(vi) or §

310.4(a)(2) through (4);

(ii) The requirements of § 310.4(a)(9) or (10); or

(iii) Any instances of upselling included in such telephone calls;

(6) Telephone calls initiated by a customer or donor in response to a direct mail solicitation,

including solicitations via the U.S. Postal Service, facsimile transmission, electronic mail, and

other similar methods of delivery in which a solicitation is directed to specific address(es) or

person(s), that clearly, conspicuously, and truthfully discloses all material information listed in §

310.3(a)(1), for any goods or services offered in the direct mail solicitation, and that contains

no material misrepresentation regarding any item contained in § 310.3(d) for any requested

charitable contribution; provided, however, that this exemption does not apply to:

(i) Calls initiated by a customer in response to a direct mail solicitation relating to prize

promotions, investment opportunities, debt relief services, business opportunities other

than business arrangements covered by the Franchise Rule or Business Opportunity

Rule, or goods or services described in § 310.3(a)(1)(vi) or § 310.4(a)(2) through (4);

(ii) The requirements of § 310.4(a)(9) or (10); or

(iii) Any instances of upselling included in such telephone calls; and

(7) Telephone calls between a telemarketer and any business to induce the purchase of goods or

services or a charitable contribution by the business, except calls to induce the retail sale of

nondurable office or cleaning supplies; provided, however, that §§ 310.4(b)(1)(iii)(B) and 310.5

shall not apply to sellers or telemarketers of nondurable office or cleaning supplies.

[75 FR 48516, Aug. 10, 2010, as amended at 80 FR 77559, Dec. 14, 2015]

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§ 310.7 Actions by states and private persons.

(a) Any attorney general or other officer of a state authorized by the state to bring an action under the

Telemarketing and Consumer Fraud and Abuse Prevention Act, and any private person who brings

an action under that Act, shall serve written notice of its action on the Commission, if feasible, prior

to its initiating an action under this Rule. The notice shall be sent to the Office of the Director,

Bureau of Consumer Protection, Federal Trade Commission, Washington, DC 20580, and shall

include a copy of the state's or private person's complaint and any other pleadings to be filed with

the court. If prior notice is not feasible, the state or private person shall serve the Commission with

the required notice immediately upon instituting its action.

(b) Nothing contained in this Section shall prohibit any attorney general or other authorized state official

from proceeding in state court on the basis of an alleged violation of any civil or criminal statute of

such state.

§ 310.8 Fee for access to the National Do Not Call Registry.

(a) It is a violation of this Rule for any seller to initiate, or cause any telemarketer to initiate, an

outbound telephone call to any person whose telephone number is within a given area code unless

such seller, either directly or through another person, first has paid the annual fee, required by §

310.8(c), for access to telephone numbers within that area code that are included in the National Do

Not Call Registry maintained by the Commission under § 310.4(b)(1)(iii)(B); provided, however, that

such payment is not necessary if the seller initiates, or causes a telemarketer to initiate, calls solely

to persons pursuant to §§ 310.4(b)(1)(iii)(B)(i) or (ii), and the seller does not access the National Do

Not Call Registry for any other purpose.

(b) It is a violation of this Rule for any telemarketer, on behalf of any seller, to initiate an outbound

telephone call to any person whose telephone number is within a given area code unless that seller,

either directly or through another person, first has paid the annual fee, required by § 310.8(c), for

access to the telephone numbers within that area code that are included in the National Do Not Call

Registry; provided, however, that such payment is not necessary if the seller initiates, or causes a

telemarketer to initiate, calls solely to persons pursuant to §§ 310.4(b)(1)(iii)(B)(i) or (ii), and the

seller does not access the National Do Not Call Registry for any other purpose.

(c) The annual fee, which must be paid by any person prior to obtaining access to the National Do Not

Call Registry, is $66 for each area code of data accessed, up to a maximum of $18,044; provided,

however, that there shall be no charge to any person for accessing the first five area codes of data,

and provided further, that there shall be no charge to any person engaging in or causing others to

engage in outbound telephone calls to consumers and who is accessing area codes of data in the

National Do Not Call Registry if the person is permitted to access, but is not required to access, the

National Do Not Call Registry under this Rule, 47 CFR 64.1200, or any other Federal regulation or

law. No person may participate in any arrangement to share the cost of accessing the National Do

Not Call Registry, including any arrangement with any telemarketer or service provider to divide the

costs to access the registry among various clients of that telemarketer or service provider.

(d) Each person who pays, either directly or through another person, the annual fee set forth in

paragraph (c) of this section, each person excepted under paragraph (c) from paying the annual

fee, and each person excepted from paying an annual fee under § 310.4(b)(1)(iii)(B), will be

provided a unique account number that will allow that person to access the registry data for the

selected area codes at any time for the twelve month period beginning on the first day of the month

in which the person paid the fee (“the annual period”). To obtain access to additional area codes of

data during the first six months of the annual period, each person required to pay the fee under

paragraph (c) of this section must first pay $66 for each additional area code of data not initially

selected. To obtain access to additional area codes of data during the second six months of the

annual period, each person required to pay the fee under paragraph (c) of this section must first pay

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$33 for each additional area code of data not initially selected. The payment of the additional fee

will permit the person to access the additional area codes of data for the remainder of the annual

period.

(e) Access to the National Do Not Call Registry is limited to telemarketers, sellers, others engaged in or

causing others to engage in telephone calls to consumers, service providers acting on behalf of

such persons, and any government agency that has law enforcement authority. Prior to accessing

the National Do Not Call Registry, a person must provide the identifying information required by the

operator of the registry to collect the fee, and must certify, under penalty of law, that the person is

accessing the registry solely to comply with the provisions of this Rule or to otherwise prevent

telephone calls to telephone numbers on the registry. If the person is accessing the registry on

behalf of sellers, that person also must identify each of the sellers on whose behalf it is accessing

the registry, must provide each seller's unique account number for access to the national registry,

and must certify, under penalty of law, that the sellers will be using the information gathered from

the registry solely to comply with the provisions of this Rule or otherwise to prevent telephone calls

to telephone numbers on the registry.

[75 FR 48516, Aug. 10, 2010; 75 FR 51934, Aug. 24, 2010, as amended at 77 FR 51697, Aug. 27, 2012; 78

FR 53643, Aug. 30, 2013; 79 FR 51478, Aug. 29, 2014; 80 FR 77560, Dec. 14, 2016; 81 FR 59845, Aug. 31,

2016; 82 FR 39534, Aug. 21, 2017; 83 FR 46640, Sept. 14, 2018; 84 FR 44687, Aug. 27, 2019; 85 FR 62597,

Oct. 5, 2020]

§ 310.9 Severability.

The provisions of this Rule are separate and severable from one another. If any provision is stayed or

determined to be invalid, it is the Commission's intention that the remaining provisions shall continue in effect.

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ATTACHMENT B 
 

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NOTICE 

ANY HOLDER OF THIS CONSUMER CREDIT CONTRACT IS SUBJECT TO ALL 

CLAIMS AND DEFENSES WHICH THE DEBTOR COULD ASSERT AGAINST THE 

SELLER OF GOODS OR SERVICES OBTAINED PURSUANT HERETO OR WITH 

THE PROCEEDS HEREOF. RECOVERY HEREUNDER BY THE DEBTOR SHALL 

NOT EXCEED AMOUNTS PAID BY THE DEBTOR HEREUNDER. 
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ATTACHMENT C 
 

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NOTICE 

ANY HOLDER OF THIS CONSUMER CREDIT CONTRACT IS SUBJECT TO ALL 

CLAIMS AND DEFENSES WHICH THE DEBTOR COULD ASSERT AGAINST THE 

SELLER OF GOODS OR SERVICES OBTAINED WITH THE PROCEEDS HEREOF. 

RECOVERY HEREUNDER BY THE DEBTOR SHALL NOT EXCEED AMOUNTS PAID 

BY THE DEBTOR HEREUNDER. 
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PART 433 - PRESERVATION OF CONSUMERS' CLAIMS AND

DEFENSES

Authority: 38 Stat. 717, as amended; (15 U.S.C. 41, et seq.)

§ 433.1 Definitions.

(a) Person. An individual, corporation, or any other business organization.

(b) Consumer. A natural person who seeks or acquires goods or services for personal, family, or

household use.

(c) Creditor. A person who, in the ordinary course of business, lends purchase money or finances the

sale of goods or services to consumers on a deferred payment basis; Provided, such person is not

acting, for the purposes of a particular transaction, in the capacity of a credit card issuer.

(d) Purchase money loan. A cash advance which is received by a consumer in return for a “Finance

Charge” within the meaning of the Truth in Lending Act and Regulation Z, which is applied, in whole

or substantial part, to a purchase of goods or services from a seller who

(1) refers consumers to the creditor or

(2) is affiliated with the creditor by common control, contract, or business arrangement.

(e) Financing a sale. Extending credit to a consumer in connection with a “Credit Sale” within the

meaning of the Truth in Lending Act and Regulation Z.

(f) Contract. Any oral or written agreement, formal or informal, between a creditor and a seller, which

contemplates or provides for cooperative or concerted activity in connection with the sale of goods

or services to consumers or the financing thereof.

(g) Business arrangement. Any understanding, procedure, course of dealing, or arrangement, formal or

informal, between a creditor and a seller, in connection with the sale of goods or services to

consumers or the financing thereof.

(h) Credit card issuer. A person who extends to cardholders the right to use a credit card in connection

with purchases of goods or services.

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(i) Consumer credit contract. Any instrument which evidences or embodies a debt arising from a

“Purchase Money Loan” transaction or a “financed sale” as defined in paragraphs (d) and (e) of this

section.

(j) Seller. A person who, in the ordinary course of business, sells or leases goods or services to

consumers.

[40 FR 53506, Nov. 18, 1975]

§ 433.2 Preservation of consumers' claims and defenses, unfair or deceptive acts or

practices.

In connection with any sale or lease of goods or services to consumers, in or affecting commerce as

“commerce” is defined in the Federal Trade Commission Act, it is an unfair or deceptive act or practice within

the meaning of section 5 of that Act for a seller, directly or indirectly, to:

(a) Take or receive a consumer credit contract which fails to contain the following provision in at least

ten point, bold face, type:

NOTICE

ANY HOLDER OF THIS CONSUMER CREDIT CONTRACT IS SUBJECT TO ALL CLAIMS AND

DEFENSES WHICH THE DEBTOR COULD ASSERT AGAINST THE SELLER OF GOODS OR

SERVICES OBTAINED PURSUANT HERETO OR WITH THE PROCEEDS HEREOF.

RECOVERY HEREUNDER BY THE DEBTOR SHALL NOT EXCEED AMOUNTS PAID BY THE

DEBTOR HEREUNDER.

or,

(b) Accept, as full or partial payment for such sale or lease, the proceeds of any purchase money loan

(as purchase money loan is defined herein), unless any consumer credit contract made in

connection with such purchase money loan contains the following provision in at least ten point,

bold face, type:

NOTICE

ANY HOLDER OF THIS CONSUMER CREDIT CONTRACT IS SUBJECT TO ALL CLAIMS AND

DEFENSES WHICH THE DEBTOR COULD ASSERT AGAINST THE SELLER OF GOODS OR SERVICES

OBTAINED WITH THE PROCEEDS HEREOF. RECOVERY HEREUNDER BY THE DEBTOR SHALL NOT

EXCEED AMOUNTS PAID BY THE DEBTOR HEREUNDER.

[40 FR 53506, Nov. 18, 1975; 40 FR 58131, Dec. 15, 1975]

§ 433.3 Exemption of sellers taking or receiving open end consumer credit contracts

before November 1, 1977 from requirements of § 433.2(a).

(a) Any seller who has taken or received an open end consumer credit contract before November 1,

1977, shall be exempt from the requirements of 16 CFR part 433 with respect to such contract

provided the contract does not cut off consumers' claims and defenses.

(b) Definitions. The following definitions apply to this exemption:

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(1) All pertinent definitions contained in 16 CFR 433.1.

(2) Open end consumer credit contract: a consumer credit contract pursuant to which “open end

credit” is extended.

(3) “Open end credit”: consumer credit extended on an account pursuant to a plan under which a

creditor may permit an applicant to make purchases or make loans, from time to time, directly

from the creditor or indirectly by use of a credit card, check, or other device, as the plan may

provide. The term does not include negotiated advances under an open-end real estate

mortgage or a letter of credit.

(4) Contract which does not cut off consumers' claims and defenses: A consumer credit contract

which does not constitute or contain a negotiable instrument, or contain any waiver, limitation,

term, or condition which has the effect of limiting a consumer's right to assert against any

holder of the contract all legally sufficient claims and defenses which the consumer could

assert against the seller of goods or services purchased pursuant to the contract.

[42 FR 19490, Apr. 14, 1977, as amended at 42 FR 46510, Sept. 16, 1977]

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ATTACHMENT E 
 

 

 

 

 

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Notice to Cosigner 

You are being asked to guarantee this debt. Think carefully before you do. If the 

borrower doesn't pay the debt, you will have to. Be sure you can afford to pay if you 

have to, and that you want to accept this responsibility. 

You may have to pay up to the full amount of the debt if the borrower does not pay. You 

may also have to pay late fees or collection costs, which increase this amount. 

The creditor can collect this debt from you without first trying to collect from the 

borrower. The creditor can use the same collection methods against you that can be 

used against the borrower, such as suing you, garnishing your wages, etc. If this debt is 

ever in default, that fact may become a part of your credit record. 

This notice is not the contract that makes you liable for the debt. 
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PART 444 - CREDIT PRACTICES

Authority: Sec. 18(a), 88 Stat. 2193, as amended 93 Stat. 95 (15 U.S.C. 57a); 80 Stat. 383, as amended,

81 Stat. 54 (5 U.S.C. 552).

Source: 49 FR 7789, Mar. 1, 1984, unless otherwise noted.

§ 444.1 Definitions.

(a) Lender. A person who engages in the business of lending money to consumers within the

jurisdiction of the Federal Trade Commission.

(b) Retail installment seller. A person who sells goods or services to consumers on a deferred payment

basis or pursuant to a lease-purchase arrangement within the jurisdiction of the Federal Trade

Commission.

(c) Person. An individual, corporation, or other business organization.

(d) Consumer. A natural person who seeks or acquires goods, services, or money for personal, family,

or household use.

(e) Obligation. An agreement between a consumer and a lender or retail installment seller.

(f) Creditor. A lender or a retail installment seller.

(g) Debt. Money that is due or alleged to be due from one to another.

(h) Earnings. Compensation paid or payable to an individual or for his or her account for personal

services rendered or to be rendered by him or her, whether denominated as wages, salary,

commission, bonus, or otherwise, including periodic payments pursuant to a pension, retirement, or

disability program.

(i) Household goods. Clothing, furniture, appliances, one radio and one television, linens, china,

crockery, kitchenware, and personal effects (including wedding rings) of the consumer and his or

her dependents, provided that the following are not included within the scope of the term household

goods:

(1) Works of art;

(2) Electronic entertainment equipment (except one television and one radio);

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(3) Items acquired as antiques; and

(4) Jewelry (except wedding rings).

(j) Antique. Any item over one hundred years of age, including such items that have been repaired or

renovated without changing their original form or character.

(k) Cosigner. A natural person who renders himself or herself liable for the obligation of another person

without compensation. The term shall include any person whose signature is requested as a

condition to granting credit to another person, or as a condition for forbearance on collection of

another person's obligation that is in default. The term shall not include a spouse whose signature

is required on a credit obligation to perfect a security interest pursuant to State law. A person who

does not receive goods, services, or money in return for a credit obligation does not receive

compensation within the meaning of this definition. A person is a cosigner within the meaning of this

definition whether or not he or she is designated as such on a credit obligation.

§ 444.2 Unfair credit practices.

(a) In connection with the extension of credit to consumers in or affecting commerce, as commerce is

defined in the Federal Trade Commission Act, it is an unfair act or practice within the meaning of

Section 5 of that Act for a lender or retail installment seller directly or indirectly to take or receive

from a consumer an obligation that:

(1) Constitutes or contains a cognovit or confession of judgment (for purposes other than

executory process in the State of Louisiana), warrant of attorney, or other waiver of the right to

notice and the opportunity to be heard in the event of suit or process thereon.

(2) Constitutes or contains an executory waiver or a limitation of exemption from attachment,

execution, or other process on real or personal property held, owned by, or due to the

consumer, unless the waiver applies solely to property subject to a security interest executed

in connection with the obligation.

(3) Constitutes or contains an assignment of wages or other earnings unless:

(i) The assignment by its terms is revocable at the will of the debtor, or

(ii) The assignment is a payroll deduction plan or preauthorized payment plan, commencing

at the time of the transaction, in which the consumer authorizes a series of wage

deductions as a method of making each payment, or

(iii) The assignment applies only to wages or other earnings already earned at the time of the

assignment.

(4) Constitutes or contains a nonpossessory security interest in household goods other than a

purchase money security interest.

(b) [Reserved]

§ 444.3 Unfair or deceptive cosigner practices.

(a) In connection with the extension of credit to consumers in or affecting commerce, as commerce is

defined in the Federal Trade Commission Act, it is:

(1) A deceptive act or practice within the meaning of section 5 of that Act for a lender or retail

installment seller, directly or indirectly, to misrepresent the nature or extent of cosigner liability

to any person.

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(2) An unfair act or practice within the meaning of section 5 of that Act for a lender or retail

installment seller, directly or indirectly, to obligate a cosigner unless the cosigner is informed

prior to becoming obligated, which in the case of open end credit shall mean prior to the time

that the agreement creating the cosigner's liability for future charges is executed, of the nature

of his or her liability as cosigner.

(b) Any lender or retail installment seller who complies with the preventive requirements in paragraph

(c) of this section does not violate paragraph (a) of this section.

(c) To prevent these unfair or deceptive acts or practices, a disclosure, consisting of a separate

document that shall contain the following statement and no other, shall be given to the cosigner

prior to becoming obligated, which in the case of open end credit shall mean prior to the time that

the agreement creating the cosigner's liability for future charges is executed:

Notice to Cosigner

You are being asked to guarantee this debt. Think carefully before you do. If the borrower doesn't pay the

debt, you will have to. Be sure you can afford to pay if you have to, and that you want to accept this

responsibility.

You may have to pay up to the full amount of the debt if the borrower does not pay. You may also have to

pay late fees or collection costs, which increase this amount.

The creditor can collect this debt from you without first trying to collect from the borrower. The creditor can

use the same collection methods against you that can be used against the borrower, such as suing you,

garnishing your wages, etc. If this debt is ever in default, that fact may become a part of your credit record.

This notice is not the contract that makes you liable for the debt.

§ 444.4 Late charges.

(a) In connection with collecting a debt arising out of an extension of credit to a consumer in or affecting

commerce, as commerce is defined in the Federal Trade Commission Act, it is an unfair act or

practice within the meaning of section 5 of that Act for a creditor, directly or indirectly, to levy or

collect any deliquency charge on a payment, which payment is otherwise a full payment for the

applicable period and is paid on its due date or within an applicable grace period, when the only

delinquency is attributable to late fee(s) or delinquency charge(s) assessed on earlier installment(s).

(b) For purposes of this section, collecting a debt means any activity other than the use of judicial

process that is intended to bring about or does bring about repayment of all or part of a consumer

debt.

§ 444.5 State exemptions.

(a) If, upon application to the Federal Trade Commission by an appropriate State agency, the Federal

Trade Commission determines that:

(1) There is a State requirement or prohibition in effect that applies to any transaction to which a

provision of this rule applies; and

(2) The State requirement or prohibition affords a level of protection to consumers that is

substantially equivalent to, or greater than, the protection afforded by this rule;

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Then that provision of the rule will not be in effect in that State to the extent specified by the

Federal Trade Commission in its determination, for as long as the State administers and

enforces the State requirement or prohibition effectively.

(b) [Reserved]

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ATTACHMENT G 
 

 

 

 

 

 

 

 

 

 

 

Case: 1:22-cv-01919 Document #: 5-1 Filed: 04/14/22 Page 53 of 53 PageID #:76 

[SAINT JAMES SCHOOL OF MEDICINE LETTERHEAD 

AND DELTA FINANCIAL LETTERHEAD - equal size/font/prominence] 

Subject Line of Notice: Your account balance relating to Saint James School of 

Medicine 

Dear [consumer’s name]: 

We are writing to you because you have a loan balance for Saint James School of Medicine with 

Delta Financial (“Delta”). The Federal Trade Commission (FTC), the nation’s consumer 

protection agency, sued us alleging that we engaged in deceptive advertising. As part of settling 

this lawsuit with the FTC, Delta has agreed to stop collecting the outstanding account balance you 

owe directly to Delta. 

You no longer owe any money to Delta. You don’t have to do anything. 

• We will clear your account balance 45 business days from the date of this letter. 

• We will automatically release any holds on your account caused by this outstanding 

balance. 

Your Delta debt will be deleted from your credit report. Within 55 business days of this letter, 

Delta will ask credit bureaus Experian and Equifax to delete this debt from your credit report. To 

get your credit report for free, visit AnnualCreditReport.com. 

Federal or private student loans are not covered. This settlement covers only the outstanding 

balance you owe directly to Delta. Contact your federal or private loan servicer for more 

information. 

If you have questions, please contact us at [email address to be regularly monitored] or [phone 

number to be answered by a live person]. For more information about the FTC settlement, visit 

[FTC alias URL]. 

[Include a complimentary close] 

[Include a person’s name]