Telemarketing Sales Rule and credit repair: what every caller must know

Last updated 2026-07-09

What is the Telemarketing Sales Rule and why does it cover credit repair?

The Telemarketing Sales Rule (TSR) is a Federal Trade Commission regulation, codified at 16 CFR Part 310, that governs outbound telephone sales across most industries. Congress gave the FTC that authority through the Telemarketing and Consumer Fraud and Abuse Prevention Act of 1994 ^[1]. Credit repair is not a footnote in the rule. It is one of a short list of industries that gets its own subsection with rules tighter than the general TSR baseline.

Credit repair gets special treatment because of its enforcement history. The FTC documented widespread advance-fee fraud through the 1990s and 2000s. Companies collected fees upfront, promised to fix credit reports, delivered nothing, and vanished. Congress also passed the Credit Repair Organizations Act (CROA), 15 U.S.C. §§ 1679-1679j, which independently bans advance fees and deceptive claims in credit repair ^[2]. The TSR takes that same policy and aims it at the telemarketing channel.

If your company sells, offers, or arranges credit repair by phone, both the TSR and CROA apply at the same time. Complying with one does not cover the other. And if your calls use an autodialer or a prerecorded voice, the TCPA joins as a third federal layer. Knowing where each regime starts and stops is the first practical step.

What counts as 'credit repair' under the TSR?

The TSR defines credit repair as any service sold to improve a consumer's credit record, credit history, or credit rating, or to remove accurate or inaccurate information from a credit report ^[3]. That language is wide on purpose. It covers nonprofit credit counseling that charges a fee, debt settlement marketed as a path to better credit, software sold to help consumers dispute items themselves, and traditional credit repair firms that deal with the bureaus directly.

A few things sit outside the rule. Services provided free of charge are not covered. Lawyers providing credit-related legal work as part of general representation have a limited exemption in some circumstances, though it is narrow, and the FTC has gone after firms that used it as cover for a volume credit repair operation. Banks and credit unions regulated by other federal agencies also have limited exemptions, though not from every TSR provision.

The practical test is simple. Does money change hands in connection with a promise to improve credit? If yes, and the transaction is started or finished by an outbound or inbound telemarketing call, the TSR's credit repair provisions apply.

This matters because many companies believe they are only running a lead generation or educational call and are not the actual credit repair provider. The TSR reaches sellers and telemarketers alike. If your call starts the sales process for a credit repair service, even when a separate company does the work, you are a "telemarketer" under the rule and you carry compliance obligations ^[1].

What does the TSR's advance fee ban actually prohibit?

Section 310.4(a)(2) of the TSR makes it a deceptive act for any seller or telemarketer to request or receive payment of any fee for credit repair before the promised results have been achieved ^[3]. This is a flat ban, not a disclosure you can cure with fine print. No deposit. No setup fee. No monthly subscription that starts before results land. Any payment before results is a violation.

"Results" means the specific outcome promised in the sales call or the contract. Promise to remove a collection account, and if it is still on the report, results have not been achieved and you cannot collect. The FTC reads this strictly in enforcement actions. The only payment timing that survives is collecting after the promised change shows up on the consumer's credit report.

That creates a real business-model challenge. Plenty of legitimate credit repair companies run a monthly service model where fees are billed after each month's work is done and that month's results are delivered. That can comply if it is structured right. Bill month by month, after disputed items are resolved in that cycle, with documented results tied to each billing period. What does not survive is front-loading any payment before any result exists, no matter what you call it internally.

Here is a common mistake. Billing for a "credit analysis" or "audit" call before any repair work begins. The FTC's position is that preliminary analysis sold as part of a credit repair engagement falls under the advance fee ban. If the point of the consumer's payment is to get their credit fixed, every fee in that chain is a credit repair fee.

What disclosures does the TSR require on credit repair calls?

The TSR requires specific spoken disclosures on every outbound credit repair call, given clearly and conspicuously before the consumer pays anything ^[1]. The required disclosures are:

1. The seller's name and, if different, the name it does business under. 2. That the purpose of the call is to sell goods or services. 3. The nature of the goods or services being sold. 4. If the call involves a prize promotion, that no purchase is necessary to win.

Credit repair adds a CROA disclosure that belongs on these calls as a matter of practice. Tell the consumer they have the right to dispute inaccurate information directly with the credit bureaus at no charge, and that they may contact a nonprofit credit counseling organization ^[2]. CROA applies to contracts, but the FTC has cited a missing disclosure on sales calls as evidence of a deceptive practice.

The TSR also bans a cluster of misrepresentations that show up constantly in credit repair sales. You cannot claim you can remove accurate negative information. You cannot guarantee a specific score increase. You cannot imply that a new credit identity (file segregation or credit privacy numbers) is legal. Under 16 CFR 310.3(a), any material misrepresentation about the efficacy of credit repair is a separate TSR violation on top of the advance fee rules ^[3]. Courts and the FTC treat each misleading call as its own violation.

How do TSR credit repair rules interact with the TCPA?

The TSR and the TCPA are separate statutes enforced by different agencies. The TSR is an FTC rule. The TCPA is a Federal Communications Commission rule, codified at 47 U.S.C. § 227 ^[4]. A credit repair call that breaks the TSR's advance fee rules is not automatically a TCPA violation, and the reverse is true too. In practice, credit repair calling almost always triggers both.

The TCPA's requirements for outbound telemarketing calls include written prior express consent before using an autodialer or prerecorded voice to call a cell phone, compliance with the National Do Not Call Registry, company-specific DNC list maintenance, calling windows of 8 a.m. to 9 p.m. local time at the called party's location, and identification disclosures on prerecorded messages ^[4]. None of those overlap with the TSR's credit repair provisions. You can follow TCPA calling windows and consent rules perfectly and still break the advance fee ban, and the other way around.

So a credit repair sales team needs three things at once: a written consent workflow for autodialed or prerecorded calls, a DNC scrub process, and a TSR-compliant payment and disclosure structure. Treating all of it as one undifferentiated "compliance" box is the most common mistake small teams make. For building a call compliance process from scratch, see our guide on cold calling.

Private TCPA plaintiffs can sue for $500 to $1,500 per call. The FTC enforces the TSR civilly, and credit repair companies have taken multi-million dollar judgments. One outbound campaign that breaks both statutes generates liability from two directions at once.

What are the penalties for TSR violations in credit repair?

Civil penalties under the TSR come from the FTC Act, adjusted for inflation under the Federal Civil Penalties Inflation Adjustment Act. As of 2024, the maximum is $51,744 per violation ^[5]. Each call that requests an advance fee is a separate violation. Each material misrepresentation on a separate call is another. Across a campaign of thousands of calls, the math turns brutal fast.

The FTC does more than fine. In credit repair actions, the agency has sought and won:

• Full consumer redress (returning every fee collected from every consumer who paid).
• Permanent industry bans for individual officers and owners.
• Lifetime monitoring requirements.
• Disgorgement of profits.

Between 2010 and 2023, the FTC brought more than 30 enforcement actions aimed specifically at credit repair companies ^[12]. Many settled for more than $10 million. In FTC v. Credit Bureau Center LLC (N.D. Ill.), the district court entered a judgment of roughly $5.2 million, though the Seventh Circuit's 2019 ruling raised separate questions about the FTC's disgorgement authority that fed into the later AMG decision ^[6].

The Supreme Court's 2021 ruling in AMG Capital Management LLC v. FTC limited the FTC's ability to get equitable monetary relief like restitution or disgorgement under Section 13(b) of the FTC Act in district court ^[7]. Congress responded with the COVID-19 Consumer Protection Act and further amendments that partly restored monetary relief authority. The picture is still shifting. But the per-violation civil penalty authority under Section 5(m) was never touched by AMG. Penalty exposure for TSR violations is intact.

State attorneys general can also enforce the TSR, and many states run their own credit repair statutes with separate penalties. Operating in California, New York, or Texas without a state credit repair registration is its own violation, layered on top of the federal exposure.

What key TSR penalty benchmarks should credit repair teams know?

The table below shows the main financial exposure points under the TSR for credit repair telemarketing.

Violation Type	Maximum Per-Violation Penalty	Enforcing Agency	Private Right of Action?
TSR advance fee request	$51,744	FTC	No (FTC only)
TSR material misrepresentation	$51,744	FTC	No (FTC only)
TSR disclosure failure	$51,744	FTC	No (FTC only)
TCPA autodialed call without consent	$500-$1,500	FCC / private plaintiff	Yes
TCPA DNC violation	$500-$1,500	FCC / private plaintiff	Yes
CROA advance fee violation	Actual damages + punitive + attorney fees	Courts	Yes

The CROA row matters most. Unlike the TSR, CROA at 15 U.S.C. § 1679g creates a private right of action ^[2]. Any consumer you called, took a fee from before delivering results, and who knows about CROA can sue you directly in federal court for actual damages, punitive damages, and attorney fees. Class actions under CROA are common. Plaintiffs' lawyers watch this statute closely.

Does the TSR's Do Not Call registry requirement apply to credit repair callers?

Yes. Credit repair telemarketers get no exemption from the National Do Not Call Registry. The TSR's DNC provisions at 16 CFR 310.4(b) cover credit repair like any other telemarketer ^[3]. You have to scrub call lists against the registry, which for most commercial use means a paid data subscription through the FTC's telemarketer registration system. Current fee details live on the FTC's DNC registry portal ^[8].

There is no established business relationship exemption from the DNC registry under the TSR. The TSR's version of this idea is narrower than the TCPA's. Under the TSR, you can call someone who bought from you within 18 months, or who made an inquiry within 3 months, even if they sit on the registry, but only if they have not put themselves on your company's internal DNC list ^[1]. That internal list has to be kept indefinitely and honored within 30 days of a consumer's request.

For credit repair, the 18-month window is often shorter than a client engagement. A client who paid for a year of service, finished the engagement, then landed on the national registry cannot be called again to upsell a new service unless they proactively gave express written consent. Plenty of teams get this wrong by treating former clients as callable forever.

For how cold calling rules mesh with DNC obligations, including scrub frequency and list management, that article walks through the full operational workflow.

What TSR disclosures are required before a credit repair contract is signed?

Before a consumer pays for credit repair (and, in practice, before they sign a contract), the TSR requires a set of disclosures. Some overlap with the CROA written disclosure requirement, which mandates a separate consumer rights statement before any credit repair contract is signed ^[2].

Under CROA, the written disclosure has to include:

• That the consumer has the right to dispute inaccurate information directly with the credit bureau at no charge.
• That the consumer may seek help from a nonprofit credit counseling agency.
• That the consumer has the right to cancel the contract within 3 business days without penalty.

On a call, you cannot hand the consumer a written document through the phone. The FTC's position is that material terms must be disclosed orally before any payment is requested, and written contracts must still reach the consumer before they are bound. In practice, a credit repair telemarketer should deliver the CROA disclosure by voice on the call, then send written CROA-compliant materials before any funds change hands or the 3-day cancellation clock starts.

The 3-day right to cancel is not optional and cannot be waived. Structure an outbound call to pressure a same-day credit card charge and you are almost certainly breaking both the TSR's misrepresentation provisions and CROA's cancellation right.

What specific claims are illegal to make on a credit repair telemarketing call?

The TSR at 16 CFR 310.3(a) bans misrepresentations about material aspects of any goods or services sold by telemarketing ^[3]. For credit repair, the FTC has flagged specific claim categories it treats as deceptive on their face:

Guaranteed score increases. Any guarantee of a specific point gain is a misrepresentation. Scores depend on ongoing consumer behavior, lender reporting timing, and bureau algorithm changes. No one can guarantee the outcome.

Removal of accurate negative information. Accurate, timely negative information cannot legally be removed from a report. Telling a consumer you can wipe their legitimate late payment or default is false.

New credit identities (CPN/file segregation schemes). Offering to create a second credit file using a Credit Privacy Number or Employer Identification Number in place of a Social Security Number is more than a TSR violation. It is federal wire fraud and identity fraud. People who run these schemes go to prison.

Timeframe misrepresentations. Claiming results in "30 days" or "60 days" when the dispute process runs longer, or when the specific items on the report cannot be resolved that fast, is a material misrepresentation.

Hiding the consumer's free rights. The FTC treats failure to tell consumers they can dispute inaccurate information free of charge with the bureaus as a deceptive omission.

Every script your credit repair team uses should be checked against these categories. If your cold calling scripts contain any of these claims, you have a problem to fix before the next call goes out.

How should a credit repair company structure its sales call process to stay compliant?

Compliance on credit repair calls is doable with the right process. Here is what a defensible workflow looks like.

Before the call, scrub the number against the National DNC Registry and your internal DNC list. If you are calling cell phones with an autodialer or prerecorded message, confirm you have documented prior express written consent tied to that specific number. Keep the consent record with a timestamp and a source.

At the start of the call, give the required TSR disclosures: your name, the company name, and that you are calling to sell credit repair. Do not hide the purpose.

During the pitch, promise no specific score outcomes. Claim no removal of accurate information. Imply no unrealistically short timeline. Stick to what you can document. For cold call script structure that keeps disclosures in the right spots, the general framework carries over here, with credit-repair language layered in.

Before any payment talk, give the CROA disclosures by voice: the consumer can dispute inaccurate items free with the bureaus, nonprofit credit counseling is available, and they have a 3-day right to cancel any contract.

Do not collect payment on the call. Send written CROA-compliant contracts. Let the 3-day cancellation period pass. Start work. Bill after documented results for each period land.

Record the call if your state allows single-party recording, or get explicit consent to record in two-party states. Recordings are your best defense in a dispute.

LeadCompliant's free compliance kit includes a credit repair call checklist you can run before launching any campaign. It covers TSR disclosures, CROA timing, and TCPA consent verification in one document.

Document everything. Regulators want to see that you had a process, trained your team, and caught problems. Occasional slips inside a documented program draw far less FTC attention than systematic advance-fee collection with no compliance infrastructure at all.

Are there state laws that add to the TSR's credit repair requirements?

Yes, and they matter. At least 36 states have their own credit repair organization statutes, and many require registration or bonding before you can operate ^[9]. California's Credit Services Act, for one, requires registration with the state and posting a $100,000 surety bond ^[10]. Texas requires registration with the Secretary of State. Florida runs its own advance fee ban with separate civil remedies.

The TSR is a floor, not a ceiling. State laws can go further, and they often do. Operating in multiple states without checking each one's credit repair statute is a frequent and expensive mistake.

Beyond credit repair statutes, state consumer protection laws, mini-TCPA laws, and state DNC lists add more layers. Oklahoma and Indiana, among others, keep state DNC registries separate from the federal list. Scrub only the federal registry in those states and you miss a batch of numbers you are barred from calling.

For what is cold calling in sales from a definitional angle, state law sometimes draws the line differently than the federal TSR, especially around what counts as an "established business relationship" exemption. Check your operating states one by one, or have counsel run a multi-state survey before you launch.

What should a credit repair telemarketer do after receiving a cease-and-desist or FTC civil investigative demand?

If an FTC Civil Investigative Demand (CID) lands, treat it like the serious legal process it is. A CID is not a lawsuit, but it is a formal tool that compels documents and testimony. Ignore it or produce incomplete records and you create more liability.

Get FTC-experienced counsel right away. Do not call the FTC investigator without counsel on the line. Do not negotiate informally or make claims about your compliance program without legal guidance. Anything you say to FTC investigators goes on the record.

Preserve every record tied to the investigation: call recordings, consent documentation, payment records, consumer contracts, scripts, training materials, and emails with third-party lead providers. Destroying records after a CID arrives is obstruction.

If a consumer or a plaintiffs' firm sends a cease-and-desist or a pre-litigation demand citing CROA, take it seriously even though it is not a federal proceeding. CROA's private right of action is real, attorney fees shift to defendants who lose, and class certification under CROA is possible.

The best time to size up your exposure is before any of this happens. If you run or plan credit repair telemarketing and have not done a TSR and CROA compliance audit, do it now. LeadCompliant's compliance kit covers the documentation framework you need to show regulators a good-faith compliance program.

Frequently asked questions

Does the TSR apply to inbound credit repair calls, more than outbound ones?

The TSR's advance fee ban and misrepresentation rules apply to inbound calls too, as long as they come in response to your outbound advertising. Run ads that generate inbound calls, then collect fees or make representations on those calls, and the credit repair provisions cover you. Purely unsolicited inbound calls (where you did no advertising) fall into a narrow exclusion, but most real credit repair operations involve marketing that triggers the rule.

Can a credit repair company charge a monthly fee and still comply with the TSR advance fee ban?

Yes, but timing and structure decide it. You can bill monthly if you bill after each month's work is done and that period's results are documented. You cannot collect the first month's fee before any work happens or any result appears. The FTC looks at whether the consumer paid before receiving anything of value. Billing in arrears, tied to documented outcomes, is the safe structure.

What is the Credit Repair Organizations Act and how is it different from the TSR?

CROA is a separate federal statute, 15 U.S.C. §§ 1679-1679j, enforced through private lawsuits and FTC action. It applies to any credit repair organization whether or not telemarketing is involved. The TSR is an FTC rule aimed at the telemarketing channel. Both ban advance fees and deceptive claims. CROA adds a mandatory written contract, a 3-day cancellation right, and a private right of action with attorney fee shifting. You comply with both at once.

Does the TSR cover text message (SMS) marketing for credit repair services?

TSR coverage of SMS is unsettled in spots, but the FTC has taken the position that texts used as part of a telemarketing campaign to sell goods or services can fall under the TSR, especially if they start or complete a sale. TCPA coverage of commercial SMS is clearer and more litigated. For credit repair SMS campaigns, assume both apply and build consent and disclosure processes accordingly.

Can a lead generator be liable under the TSR for credit repair leads?

Yes. The TSR defines "telemarketer" broadly. A company that makes outbound calls to generate leads, even if it hands those leads to a separate credit repair provider, can be a telemarketer under the rule and carry its own compliance obligations. If those lead calls involve any representation about credit repair or start the sales process, the advance fee ban and disclosure rules attach. Lead generators selling credit repair leads should have counsel review their call practices against the TSR.

What is the current maximum TSR civil penalty per violation?

As of 2024, the FTC can seek civil penalties up to $51,744 per TSR violation. That cap adjusts periodically under the Federal Civil Penalties Inflation Adjustment Act. Each call that requests an advance fee, each material misrepresentation, and each disclosure failure can count as a separate violation. In a large campaign, aggregate exposure can run into the tens of millions before any consumer redress is added.

Are attorneys who do credit repair exempt from the TSR and CROA?

CROA has a partial attorney exemption for lawyers providing credit repair as part of bona fide legal representation where they are licensed and the credit repair is incidental to the legal service. The TSR has no blanket attorney exemption. The FTC has pursued law firms running what were functionally credit repair businesses under a legal services label. The exemption is narrow and fact-specific, not a general shield for any company with a lawyer on staff.

Do credit repair telemarketers need to register with any federal agency?

The TSR requires telemarketers to register with the FTC's National Do Not Call Registry system and pay fees to access registry data for scrubbing. Beyond that, there is no separate federal credit repair telemarketer license. Many states, though, require registration or bonding for credit repair organizations in the state, and those rules apply whether or not you use telemarketing. Check every state where your consumers are located.

Can a consumer waive the 3-day cancellation right under CROA on a telemarketing call?

No. The 3-day right to cancel a credit repair contract under CROA cannot be waived. Any contract term that tries to waive it is void under 15 U.S.C. § 1679d. Collecting payment before the 3-day window expires, or structuring a call to close immediately and skip the cancellation period, breaks both CROA and the TSR's advance fee prohibition.

What records should a credit repair telemarketing company keep for TSR compliance?

The TSR at 16 CFR 310.5 requires sellers and telemarketers to keep records for 24 months from the date each record was produced. Required records include advertising and promotional materials, scripts and sales materials, consumer records showing name and address, employee names and phone numbers, verifiable authorization records for express consent, and prize, premium, or merchandise records. For credit repair, also keep documented results that justify each billing period and all CROA-compliant written contracts.

How does the TSR define 'telemarketing' for credit repair purposes?

Under 16 CFR 310.2, "telemarketing" means a plan, program, or campaign to induce the purchase of goods or services by use of one or more telephones, affecting interstate commerce. Credit repair sold or initiated over the phone fits squarely. The definition covers both outbound calls and inbound calls made in response to advertising, which captures most credit repair sales calls no matter who dials first.

Is there a safe harbor from TSR enforcement for small credit repair companies?

No formal safe harbor exists. The FTC uses prosecutorial discretion and tends to prioritize larger operations with more consumer harm, but there is no size-based exemption in the rule. A small company charging advance fees and making deceptive claims is violating the TSR regardless of its revenue. The FTC has brought actions against small operators when the conduct was egregious or when complaints clustered.

What happens if a third-party lead provider gives a credit repair company leads obtained through TSR-violating calls?

Buying leads from a vendor whose telemarketing broke the TSR does not automatically make you liable for those violations, but it creates downstream risk. If the consumer's consent came through a misrepresentation, that consent may be invalid under both the TSR and TCPA. The FTC has signaled it expects companies to vet lead vendors and not ignore red flags about how leads were generated. Contractual representations from vendors and auditing call recordings are the standard due-diligence tools.

Does the TSR prohibit credit repair companies from calling numbers on state Do Not Call lists?

The TSR's own DNC provisions focus on the federal National DNC Registry. Many states, though, keep their own DNC lists, and state law separately bars calling numbers on them. The TSR does not preempt stricter state rules. A credit repair telemarketer has to scrub against both the federal registry and any applicable state DNC lists for each state where called parties are located.

Sources

1. FTC, Telemarketing Sales Rule 16 CFR Part 310: The TSR, issued under the Telemarketing and Consumer Fraud and Abuse Prevention Act, requires specific disclosures, prohibits advance fees for credit repair, and covers both sellers and telemarketers in a credit repair sales chain.
2. FTC, Credit Repair Organizations Act statute 15 U.S.C. §§ 1679-1679j: CROA bans advance fees, requires a 3-day cancellation right, mandates written consumer disclosures, and creates a private right of action with attorney fee shifting.
3. Electronic Code of Federal Regulations, 16 CFR Part 310 - Telemarketing Sales Rule full text: Section 310.4(a)(2) prohibits requesting or receiving payment for credit repair services before promised results are achieved; Section 310.3(a) prohibits material misrepresentations about goods or services sold by telemarketing.
4. Electronic Code of Federal Regulations, FTC Civil Penalty Adjustments 16 CFR 1.98: The maximum TSR civil penalty is $51,744 per violation as of 2024, adjusted under the Federal Civil Penalties Inflation Adjustment Act.
5. U.S. Court of Appeals, Seventh Circuit, FTC v. Credit Bureau Center LLC, No. 18-2847 (2019): FTC v. Credit Bureau Center LLC involved a district court judgment of roughly $5.2 million in a credit repair enforcement action; the Seventh Circuit's 2019 decision addressed disgorgement authority questions later relevant to AMG Capital.
6. Supreme Court of the United States, AMG Capital Management LLC v. FTC, 593 U.S. 67 (2021): The Supreme Court held unanimously in 2021 that Section 13(b) of the FTC Act does not authorize the FTC to seek equitable monetary relief such as restitution or disgorgement in federal district court without first completing an administrative proceeding.
7. FTC, National Do Not Call Registry for Telemarketers: Telemarketers including credit repair companies must register with the FTC's National DNC Registry and pay applicable subscription fees to access consumer DNC data for scrubbing call lists.
8. National Conference of State Legislatures, Financial Services and Commerce: At least 36 states have their own credit repair organization statutes, many requiring registration or surety bonding before operating in that state.
9. California Legislative Information, Credit Services Act of 1984, Civil Code §§ 1789.10-1789.26: California's Credit Services Act requires credit repair organizations to register with the state and post a $100,000 surety bond before operating in California.
10. FTC, Telemarketing Sales Rule: Record Keeping Requirements 16 CFR 310.5: The TSR at 16 CFR 310.5 requires sellers and telemarketers to retain records for 24 months from the date each record was produced, including scripts, consumer records, and authorization documentation.
11. FTC, Legal Library: Cases and Proceedings: The FTC has brought more than 30 enforcement actions targeting credit repair companies between 2010 and 2023, with settlements frequently exceeding $10 million including consumer redress and industry bans.