On Wednesday, the Federal Trade Commission (FTC) announced that it will ban telemarketers from using certain payment methods, including remotely created checks and remotely created payment orders. Although the purpose of the rule is to protect consumers by banning “payment methods that scammers like, but honest telemarketers don’t use,” some banking industry groups believe that the rule goes too far. They argue, for instance, that there is no proof remotely created checks are associated with increased fraud and that the regulatory regime places unnecessary monitoring burdens on the banking industry.
Other payment methods that will be prohibited for telemarketers under the final rule include cash-to-cash money transfers and cash reload mechanisms on prepaid cards. The FTC’s apparent reasoning for singling out these four payment products is that they are difficult to trace and/or difficult to reverse, making them ideal scamming tools for con-artists. For more information, click here to view the American Banker article discussing this topic.