FTC Proposes Changes to Telemarketing Sales Rule
The Federal Trade Commission (FTC) recently announced several proposed changes to the Telemarketing Sales Rule (TSR) in an effort to protect consumers against fraudulent charges and services. The FTC’s changes would curtail the use of several payment methods commonly used by con artists and scammers. Namely, the proposed changes would:
- Stop telemarketers from directly debiting consumer bank accounts by using unsigned checks and “payment orders” that have been “remotely created.” According to the FTC, these tools often facilitate unauthorized debit transactions.
- Bar telemarketers from getting paid with traditional “cash-to-cash” money transfers, as well as “cash reload” mechanisms, which are often used by fraudulent companies to get money quickly and anonymously from consumer victims.
Additionally, although the TSR already bans companies from offering debt relief services and requiring consumers to pay an up-front fee, the proposed changes to the TSR would expand the current ban. Specifically, the current ban is limited to offers to recoup losses suffered in a prior telemarketing transaction. However, under the proposed revisions, the ban would be expanded to include offers to recoup losses suffered in any prior transaction.
Additional changes are proposed to clarify other provisions of the TSR. The full Notice of Proposed Rulemaking can be found here. All companies that use telemarketing should be aware of these proposed changes. Written comments must be received by the FTC no later than July 29, 2013.
Arent Fox is continuing to monitor developments at the FTC. Please contact the listed attorneys with questions.