WASHINGTON D.C. (July 1, 2016) — The Federal Trade Commission wants businesses to know about important Telemarketing Sales Rule (TSR) amendments that are now in effect. These changes make it unlawful for telemarketers to use three types of payment methods exploited by con artists and scammers.
As of this month, it is illegal for telemarketers to ask consumers to pay for goods or services using cash-to-cash money transfers, such as MoneyGram and Western Union provide, or by providing PIN numbers from cash reload cards such as MoneyPak, Vanilla Reload or Reloadit packs. It also is illegal for telemarketers to use unsigned checks called “remotely created payment orders” to withdraw money directly from consumers’ bank accounts.
As detailed in a press release issued in November 2015, Jessica Rich, Director of the FTC’s Bureau of Consumer Protection said, “Con artists like payments that are tough to trace and hard for people to reverse. The FTC’s new telemarketing rules ban payment methods that scammers like, but honest telemarketers don’t use.”
The TSR changes will stop telemarketers from dipping directly into consumer bank accounts by using certain kinds of checks and “payment orders” that have been “remotely created” by the telemarketer or seller. These two payment mechanisms make it easy for unscrupulous telemarketers to debit bank accounts without consumers’ permission, and can make it difficult to reverse the transactions with consumers’ banks.
In addition, the amendments will bar telemarketers from receiving payments through traditional “cash-to-cash” money transfers – provided by companies like MoneyGram, Western Union, and RIA. Scammers rely on cash transfers as a quick, anonymous, and irretrievable method to extract money from consumer victims – once it is picked up by the recipient, the money is gone.
The TSR changes also will prohibit telemarketers from accepting as payment “cash reload” mechanisms – such as MoneyPak, Vanilla Reload, or Reloadit packs used to add funds to existing prepaid cards. Scammers use the cash reload mechanism to apply the funds to their own prepaid debit cards and disappear with the money. In 2015, major cash reload providers replaced cash reload mechanisms with a swipe reload process, a safer alternative not affected by the TSR amendments.
In addition, the TSR amendments update several provisions related to the National Do Not Call (DNC) Registry to, among other things:
- Expressly state that a seller or telemarketer has to demonstrate that it has an existing business relationship with, or has received an express written agreement from, a consumer it calls if the consumer’s number is on the DNC Registry;
- Illustrate the types of burdens that deny or interfere with a consumer’s right to be placed on a seller’s or telemarketer’s entity-specific do-not-call list;
- Specify that if a seller or telemarketer does not get the information needed to place a consumer’s number on its entity-specific do-not-call list, the seller or telemarketer is disqualified from the safe harbor for isolated or accidental violations; and
- Emphasize that sellers are prohibited from sharing the cost of the fees to access the DNC Registry
The Federal Trade Commission works to promote competition, and protect and educate consumers. You can learn more about consumer topics and file a consumer complaint online or by calling 1-877-FTC-HELP (382-4357).