Tuesday, May 21, 2013

FTC Proposes Ban On Payments Over The Phone By Telemarketers

In an ongoing effort to protect consumers from deceptive telemarketing, the Federal Trade Commission seeks public comment on proposed amendments to strengthen the Telemarketing Sales Rule’s protections against bogus charges and services.   

The Commission’s Notice of Proposed Rulemaking announced today would curtail the use of four payment methods favored by con artists and scammers.  The proposed changes would:
  • Stop telemarketers from dipping directly into consumer bank accounts by using unsigned checks and “payment orders” that have been “remotely created.”  These instruments can make it easy for unscrupulous telemarketers to debit bank accounts without permission, according to the FTC. 
  • Bar telemarketers from getting paid with traditional “cash-to-cash” money transfers, as well as “cash reload” mechanisms, that scammers rely on to get money quickly and anonymously from consumer victims. 
The FTC says that it has found that unscrupulous telemarketers rely on these payment methods because they are largely unmonitored and provide consumers with fewer protections against fraud.  The FTC’s proposed changes to the TSR would make it a violation for telemarketers and sellers to accept any of these payment methods in any telemarketing transaction.

The proposed changes also would expand the TSR’s ban on telemarketing “recovery services” in exchange for an advance fee.  In the Commission’s experience, telemarketers who call consumers offering to help recover losses they suffered through an earlier fraud are often engaged in deceptive practices.  Currently limited to offers to recoup losses suffered in a prior telemarketing transaction, the existing ban would be expanded to include offers to recoup losses suffered in any prior transaction.

Other proposed amendments to the Rule would clarify and improve various provisions of the TSR.  Adopted by the FTC in August 1995, the TSR requires certain disclosures and prohibits misrepresentations during telemarketing calls.  It also bars abusive practices, including charging up-front fees for certain services such as credit repair, recovery services, and loan or credit offers presented as “guaranteed” or having a high likelihood of success.  Previous TSR amendments created the National Do Not Call Registry, curtailed telemarketing calls that deliver prerecorded messages, and combatted deceptive and abusive telemarketing of debt relief services.

Political campaigns are exempted from most of the anti-telemarketing laws.  In some circumstances, companies with an existing business relationship are also exempt as well as charities.

The Notice of Proposed Rulemaking announced today describes the need and basis for the proposed amendments to the TSR.  Public comments on the proposed amendments will be accepted until July 29, 2013.  Instructions for submitting comments are found in the Notice.  The Commission vote approving the Notice of Proposed Rulemaking was 4-0.

PHOTO CREDIT: Wiki Commons /  "TonyTheTiger"