Updates to the Telemarketing Sales Rule Aimed at Curbing Scammers and Fraud

On November 18, 2015, the Federal Trade Commission (FTC) announced amendments to the Telemarketing Sales Rule (TSR). The ruling, which can be found on the FTC website, has been amended to better protect customers from abusive and deceptive telemarketing practices through the means of limiting several non-conventional payment methods that are often favored by scammers and frauds.

New Limits on Payment Methods

The payment methods that have been banned for the use of telemarketing are actually not commonly used in the industry, but are favored by con artists thanks to their difficulty in source tracking and reversal. The specific methods are remotely created checks, cash reload mechanisms, cash-to-cash money transfers, and remotely created payment orders.

The common thread among these four payment methods, in addition to their difficulty in being traced to the source, is the gap in our financial system between the jurisdiction of the FTC and other federal and state law enforcers that makes it nearly impossible to detect and stop the fraudulent use of these methods.

And while scammers commonly seek out these methods for this exact reason, the FTC found very little evidence that any of these payment methods were used regularly for legitimate telemarketing purposes. The intent is that by banning these payment methods from legitimate practices, consumers will be better able to tell the difference and avoid getting scammed.

As far as the FTC is concerned, use of any of these four banned payment types constitutes an abusive practice and will be met with swift and harsh penalties.

Additional Revisions in the Amended TSR

In addition to the ban on select payment methods, the FTC has made several notable revisions to the TSR’s Do Not Call (DNC) provisions, which limit a telemarketing company’s ability to contact their customers.

According to the revisions, a seller or telemarketer can no longer contact a customer on the DNC Registry unless they have the person’s written agreement to receive calls or if they can prove an existing business relationship with the customer.

In addition, the TSR now states that if a telemarketer or seller doesn’t have the necessary information to add a customer to their entity-specific DNC list, that business is disqualified from the “safe harbor for isolated or accidental violations,” according to the FTC article on the TSR updates.

What the Ruling Means for Your Business

So what does all of this mean for your business practices? In terms of the payment method, it simply means that you can’t use those select payment methods for your customers. Since these aren’t typically used by legitimate sales and telemarketing companies, that likely won’t be a problem.

On the other hand, the fact that the FTC is now ruling on acceptable payment methods could lead you to wonder what they plan on regulating in the future and how those future rulings could affect your business practices.

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