FTC Seeks To Narrow Telemarketing Sales Rule

The FTC has proposed new amendments to the Telemarketing Sales Rule. Importantly, the proposed changes would bar non-traditional payment mechanisms such as remotely created checks. The proposed rules also clarify other provisions of the Rule.

The FTC issued a Notice of Proposed Rulemaking seeks comments on the following proposed amendments.

- Barring sellers and telemarketers from accepting remotely created checks, remotely created payment orders, cash-to-cash money transfers, and cash reload mechanisms as payment in inbound or outbound telemarketing transactions;

- Expand the scope of the advance fee ban on "recovery" services, now limited to recovery of losses in prior telemarketing transactions, to include recovery of losses in any previous transaction;

-Clarify that the business-to-business exemption extends only to calls to induce a sale to or contribution from a business entity, and not to calls to induce sales to or contributions from individuals employed by the business;

-Emphasize that the prohibition against sellers sharing the cost of Do Not Call Registry fees; and

-Illustrate the types of impermissible 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.

Public comments on the proposed amendments will be accepted until July 29, 2013.

The proposed changes, if accepted, will dramatically impact a marketers ability to accept alternative payments. Under the current law, the seller has the burden of showing express verifiable consent. Because of concerns that these payment forms underlie significant consumer fraud, the FTC now seeks to ban these payment forms out right.

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