New FTC Rules: How Are Telemarketers Affected?

opinionThe following is a guest contributed post from Todd Bryant, the president and founder of Bryant Surety Bonds.

Recently, the telemarketing industry has been falling under tighter regulations. Just last year the FCC gave robocall-blocking technology the green light in an effort to protect consumers from unwanted phone calls.

This year, it’s the FTC that has proposed new regulatory rules in the forms of amendments to the Telemarketing Sales Rule (TSR). The majority of these amendments have been in effect since Feb. 12 2016, so it’s important for telemarketers to know them in detail. Failure to comply with them can trigger a claim against their telemarketing bond, as well as other punitive action. So what should telemarketers be careful about?

#1 Making or Accepting Remote Payment Orders

Effective June 13, telemarketers will not be allowed to receive remote payment orders, whether inbound or outbound. This is an attempt at cutting a fraudulent practice where a telemarketer can debit funds from a client’s bank account for a sum larger than the payor agreed upon. Experience shows that payments like this are then harder to reverse by the bank, leaving numerous consumers disgruntled.

Of course, many telemarketers use remote payment orders just out for convenience, but this would no longer be possible. Even if a payor agrees that you generate a payment order with their payment details and then deposit it on their behalf, you still shouldn’t do it.

#2 Requesting Cash-to-Cash Transfers

Another frequently spread practice that is getting banned by the FTC is cash-to-cash money transfers, using services such as MoneyGram or Western Union. A cash-to-cash service is one way fraudulent telemarketers can request money from one location, pick it up at another and leave with the money without offering any real service.

Another similar method being banned is that of “cash reload”, where funds are added to a prepaid card. Major cash reload providers are already using a safer alternative, called the swipe reload process. Both measures are also coming into effect June 13.

#3 Oral Authorization of Charges

Amendments to the rule will require a tape recording with the buyer’s express verifiable authorization to be charged for a particular telemarketing transaction. This recording should clearly state and describe the goods, services or charitable contribution the payor is agreeing to. While a recording of the oral authorization of charges is not something new, the description of the purchase must now always be in it.

#4 Collecting Advance Fees on Non-Telemarketing Transactions

A ban is introduced on collection advance fees for loss recovery services on telemarketing transactions, but now the language of the TSR has been amended to include non-telemarketing ones as well. The purpose of this is mostly to include online scams under the ban.

#5 Calling People from the DNC Registry

There are a few exceptions introduced to when a telemarketer can call a person who is in the Do Not Call (DNC) registry. One of them is if you can prove you have an existing business relationship with the person you are calling. The second one is if you obtain an express written consent. Keep in mind: telemarketers are prohibited from calling a person at their workplace in an effort to circumvent the DNC. It’s also illegal to split the cost of accessing the DNC registry with another seller.

#6 Interfering With People’s Right to Be on the Entity-Specific Do Not Call List

There has been numerous attempts to prevent telemarketers from persuading people in any way to opt out of the DNC registry. The TSR amendment explicitly states a few examples to make the rule more clear:

  • harassing consumers who make such a request,
  • hanging up on them
  • failing to honor the request
  • requiring the consumer to listen to a sales pitch before accepting the request
  • assessing a charge or fee for honoring the request
  • requiring the consumer to call a different number to submit the request
  • requiring the consumer to identify the seller or charitable organization making the call or on whose behalf the call is made.

As you can see, the amendments to the TSR introduce some important changes to the telemarketing industry. Make sure you read the full text of the rule, so you can stay out of surety bond claims and other legal issues.

What do you think of the amended rules? How are you going to protect your business, so you are not in violation of them? Share your thoughts in the comments below.