A proposal to update telemarketing regulations could restrict most "business-to-consumer" transactions to credit cards or mailed payments. In a statement to reporters, Federal Trade Commission officials announced their intentions to amend the Telemarketing Sales Rule so it forbids telemarketers from using remote checking account withdrawals or money transfers as forms of payment.
FTC investigators reported that "unscrupulous telemarketers" prefer unmonitored payment methods because they lack the fraud protection of credit cards. Since 1995, the Telemarketing Sales Rule has helped prevent abuse during aggressive sales calls by barring misrepresentations, banning robocalls, and prohibiting many high-pressure sales tactics. However, some companies have skirted the specifics of the TSR by requesting that customers place their checking account numbers on file for validation purposes, then deducting fees directly from those accounts.
FTC officials also indicated their intent to further restrict "advance fee" telemarketing schemes. Some callers promise low-interest balance transfer offers, credit report services and other financial products that require an upfront payment. In many cases, FTC investigators found that these offers didn't provide the expected results. Furthermore, follow-up calls offering "recovery services" promised to facilitate refunds from previous transactions drained even more cash from callers' checking accounts.
During calls, telemarketers requested that consumers submit fees using money transfer services like Western Union or MoneyGram, or by purchasing prepaid debit cards at retail locations. Without the purchase protection offered by major credit cards, consumers often experience difficulty requesting refunds for unused or ineffective services. When consumers use credit cards, they can initiate chargebacks that require merchants to prove they delivered a valid service. Unlike a dispute with a debit card or cash transfer, the credit card chargeback process doesn't tie up funds from a customer's checking account.
The FTC will accept public comments on the proposed rule changes until July 29, 2013. Consumers and business representatives can make comments via a secure form on the FTC's website. In the meantime, FTC officials advised consumers to protect themselves by registering phone numbers with the National Do Not Call Registry. Officials also recommend declining to provide payment details during unsolicited phone calls, noting that legitimate companies offer information or samples for consumers to review before completing a purchase.