The Telemarketing Sales Rule and Credit Repair
Most credit repair operators know about CROA. Far fewer know that if any part of their sales process happens by telephone, a second federal rule applies — and its restriction on collecting fees is dramatically stricter than CROA's.
This catches people because the trigger is not what you sell but how you sell it. A business that would be fully compliant selling in person can be in serious violation running the same offer over the phone.
What the TSR Is
The Telemarketing Sales Rule is a Federal Trade Commission regulation governing telephone sales. It covers disclosures, prohibited practices, calling times, Do Not Call obligations, payment methods, and recordkeeping.
Credit repair receives specific, heightened treatment under the rule — it is named alongside a small group of offerings the FTC identified as carrying elevated risk of consumer harm.
Whether It Applies to You
The rule generally reaches telemarketing: a plan or program to induce the purchase of goods or services using one or more telephone calls. That includes calls you place and, importantly, many calls consumers place to you.
Situations where credit repair businesses commonly fall under it:
- You call leads who submitted a form.
- You run a consultation call before closing the sale.
- Consumers call you in response to advertising, and the sale is completed on that call.
- You take payment information over the phone.
The Advance-Fee Rule That Surprises People
CROA says you may not collect payment before services are fully performed. The TSR goes considerably further for credit repair sold by phone.
Under the TSR, you may not request or receive payment for credit repair services until both of the following are true:
- The time frame in which you represented the results would be achieved has expired, and
- You have provided the consumer with documentation demonstrating that the promised results were achieved — in the form of a consumer report from a credit reporting agency, issued more than six months after those results were achieved.
Read that second condition carefully. It means a consumer report obtained at least six months after the outcome, showing the outcome held. In practical terms, a business selling credit repair by telephone cannot lawfully be paid for many months after the work is done, and cannot be paid at all unless the promised result actually occurred and persisted.
What You Must Disclose on a Call
Before a consumer pays for anything, certain information must be disclosed truthfully, clearly, and conspicuously:
- The total cost to purchase, receive, or use the goods or services.
- All material restrictions, limitations, or conditions.
- Whether a refund, cancellation, exchange, or repurchase policy exists, and if so, its material terms — including any conditions the consumer must meet.
- For outbound calls, promptly identifying yourself, your company, and that the purpose of the call is to sell something, before making a pitch.
"Clearly and conspicuously" is a substantive standard. Terms recited quickly at the end of a call, or buried in a follow-up email, do not satisfy it.
Practices the Rule Prohibits
- Misrepresentations about the cost, the nature of the service, refund policies, or material aspects of performance.
- Calls outside permitted hours — generally before 8 a.m. or after 9 p.m. in the consumer's local time.
- Continuing to call a consumer who has asked you to stop.
- Threats, intimidation, or profane language; repeated calls intended to annoy or harass.
- Failing to transmit accurate caller ID information.
- Taking payment without the consumer's express informed consent, with heightened requirements for certain payment methods.
Do Not Call Obligations
If you make outbound calls, you have obligations under both the National Do Not Call Registry and your own internal do-not-call list.
- Access the registry and scrub your calling lists against it at the required interval.
- Maintain an internal list of consumers who have asked you not to call, and honor those requests.
- Keep the records that show you did both.
Purchased lead lists do not transfer compliance to you. If a lead vendor claims consent, you are the one who has to be able to prove it — which means retaining the consent record, not the vendor's assurance.
Records You Must Keep
The TSR requires retention of specified records for a defined period, including advertising and promotional materials, information about prize recipients where applicable, sales records, employee records, and records of express verifiable authorization for payment.
Practically: keep your scripts, your ads, your call recordings where you make them, your consent records, and your transaction history. In an FTC inquiry, the absence of records is itself a finding.
What This Means in Practice
Three decisions follow from all of this, and they are worth making consciously rather than by default.
Decide whether the phone is part of your sales process at all. Many credit consultants move consultation and closing to written channels specifically to stay outside the TSR's fee provisions. That is a legitimate structural choice.
If the phone stays in, build the fee structure around the rule, not around cash flow. The temptation to collect something up front is exactly what the provision exists to prevent, and it is what enforcement actions are built on.
Get this reviewed before you launch, not after. Whether a particular arrangement falls inside or outside the rule turns on specifics — how leads arrive, where the sale closes, what is represented, when money moves. That is a question for a lawyer who does consumer finance work.
Common Questions
Does the TSR apply if customers call me?
Often yes. The exemption for inbound calls responding to general media advertising does not extend to the rule's credit repair advance-fee provisions.
How is the TSR fee rule different from CROA's?
CROA prohibits payment before services are fully performed. The TSR additionally requires that the represented time frame has expired and that you have given the consumer a credit report, issued more than six months after the results were achieved, demonstrating those results.
Can I avoid the TSR by using text or email?
Moving the sale off the phone may take it outside the TSR, but other rules govern electronic messaging, and CROA still applies in full. This is a structural decision to make with counsel, not a loophole.
Do purchased leads satisfy consent requirements?
No. A vendor's assurance is not a defense. You must be able to produce the consent record yourself.
What are the penalties?
TSR violations can carry substantial civil penalties per violation, and each call can count separately. State attorneys general may also enforce the rule.