With the goal of limiting certain types of payment methods most commonly used by “con artists and scammers,” the Federal Trade Commission is seeking public comment on proposed amendments to the Telemarketing Sales Rule.
Four payment methods will be treated as TSR violations and would be banned: unsigned checks, “payment orders” that have been “remotely created,” “cash-to-cash” money transfers, and “cash reload” mechanisms.
“The FTC has found that unscrupulous telemarketers rely on these payment methods because they are largely unmonitored,” the agency said in a press release about the proposed amendments. The targeted methods “make it easy” to debit bank accounts without permission or get money quickly and anonymously.
The FTC also proposed expanding the TSR’s ban on telemarketing “recovery services” for an advance fee. Under the current Rule, offers to recoup losses suffered in a prior telemarketing scheme are prohibited. The change would expand the Rule to cover an offer to recoup losses suffered in any prior non-telemarketing transaction.
In addition, the agency proposed “clarifications” of other existing TSR requirements that reflect the enforcement policy of the Commission, including a clear prohibition on sharing the costs of nontransferable Do Not Call Registry fees between sellers. Further changes require telemarketers to include a description of the goods or services being purchased in all consumer express verifiable authorization recordings. The agency also made clear that the business-to-business exemption under the TSR extends only to calls to induce a sale to or contribution from a business entity, and not to calls to induce sales to or contributions from individuals employed by a business entity.
Finally, the amended TSR would make clear that the burden falls on a seller or telemarketer to demonstrate an existing business relationship with, or an express written agreement to receive calls from, a person whose number is listed on the Do Not Call Registry. Sellers or telemarketers who fail to obtain the necessary information cannot rely upon the safe harbor provision for isolated or inadvertent violations under the TSR.
The FTC posed questions regarding compliance matters and whether other changes, if any, should be made to the proposed amendments to minimize cost to consumers or industry. It also asked whether a systematic fraud monitoring and dispute resolution procedure was in place that would protect consumers who are scammed by the four payment methods the agency proposes to prohibit.
The agency is accepting comments on the proposal until July 29.
To read the proposed Rule changes, click here.
Why it matters: “These proposed amendments reflect evolutions in the marketplace toward the use of certain retail payment methods in fraud transactions and the growing expansion of recovery services to include losses incurred in non-telemarketing transactions,” the agency explained in the Federal Register notice of the proposed amendments. Entities covered by the TSR should review the proposal to understand the impact of the changes.