- December 7, 2015
- Posted by: Seth Heyman
- Category: Marketing & Advertising Law
FTC Amends Telemarketing Sales Rule
The Federal Trade Commission (FTC) announced amendments to the Telemarketing Sales Rule (TSR), the most significant of which prohibits telemarketers from using the following payment methods for inbound and outbound telemarketing transactions:
- Remotely created checks;
- Remotely created payment orders;
- Cash-to-cash money transfers through companies like MoneyGram and Western Union and;
- Cash reload mechanisms such as MoneyPak, Vanilla Reload, or Reloadit packs used to add funds to existing prepaid cards.
This new restriction is intended to protect consumers from fraud as remotely created payment instruments have a high rate of consumer complaints, and have been on the FTC’s radar for some time.
According to the FTC’s press release, “The [amendments] will have no effect on the routine ways people use newer payment technologies – for example, when consumers pay a bill by authorizing an online payment from their bank account. Rather, the amended TSR is carefully crafted to target the ways scammers exploit novel payment methods that reputable telemarketing companies don’t use.”
The amendments also seek to curb deceptive practices by broadening the advance-fee ban on recovery services from losses incurred in prior telemarketing transactions to include non-telemarketing transactions, and now explicitly state that any recording made for the purpose of proving a consumers’ express verifiable authorization to make a purchase or donation for non-credit/debit card payments must affirmatively include a description of the goods or services for which the consumer is paying.
The FTC further clarified that the TSR’s business-to-business exemption applies only for calls for goods and services to be purchased by the business itself, not to personal purchases made as a result of calls to business lines.
Finally, the amendments also imposes the burden of proof on sellers and telemarketers to prove the existence of an either an existing business relationship or prior express written consent if they call a number on the DNC Registry. There are additional clarifications interfering with requests to be placed on an internal do not call list, such as hanging up on the person, failing to honor the request, requiring the person to first listen to a sales pitch, or requiring the person to call a different number to make the request.
Most provisions of the final rule will become effective 60 days after publication. Telemarketers and the companies that hire them should take this opportunity to review their compliance policies to ensure they are in line with these amendments before they go into effect.