Any marketer can tell you it takes work to stay at Number One. Often you have to innovate, update and keep your product fresh.
Perhaps that’s the dilemma the FTC faces as the keeper of the self-proclaimed most popular federal program — The Telemarketing Sales Rule (“TSR”). The TSR has already been amended 3 times in the last 10 years. Now in an effort to keep pace with a rapidly evolving marketplace and the boundless imagination of those who would seek to defraud consumers the FTC has proposed yet another series of changes to the TSR.
The Telemarketing Sales Rules is probably best known for its Do Not Call provisions. However, it regulates a great deal more. For example, it regulates when calls can be made, prohibits certain misleading representations and limits the use of certain types of fees.
The FTC’s proposed amendments cut a broad swath across the TSR. Perhaps the most significant proposed change involves a ban on four increasingly common forms of payment.
- “Remotely created” unsigned checks and payment orders that the FTC believes make it easier to debit bank accounts without permission;
- Cash to cash money transfers which involve a sender providing money to a money transfer company, such as Western Union and a recipient who claims the funds at the other end;
- Cash reload mechanisms which allow consumers to load cash onto either their own or someone else’s prepaid debit card by supplying an authorization code.
The FTC justified its proposed ban on several grounds. First, unlike credit card transactions, there are few federal protections available to consumers who feel they have been defrauded and little or no ability by third parties to monitor complaints or refund requests associated with these types of transactions. Second, it is almost impossible for consumers to get refunds from fraudulent telemarketers since these forms of payments are essentially equivalent to cash, and, in some cases, it may not be possible for the consumer or even regulators to identify who the actual recipient of the funds was.
The FTC is also proposing one other more minor expansion of the TSR. The current ban on upfront fees for promising to assist consumers in recovering losses from earlier telemarketing transactions would be expanded to cover losses from any prior transactions.
Finally, the FTC is proposing several changes to the TSR to better reflect its current interpretation of the Rule. These are:
- Any recording of a consumer’s express verifiable authorization must also include a description of the product they are purchasing;
- The telemarketer has the burden of proof with regard to whether there is an existing business relationship with the consumer or they have express written consent to contact a consumer on the Do Not Call Registry;
- The Business to Business exemption applies only to calls intended to bring about a sale or a contribution from a business and not calls targeted to persons employed by that business;
- The prohibition against companies sharing the cost of Do Not Call Registry fees is absolute; and
- Prohibiting companies that receive requests from consumers to be placed on their do not call lists from harassing such persons, imposing any conditions on such a request, such as listening to a sales pitch or avoiding having to honor such a request by terminating the call. In addition, if such a consumer is subsequently called the company cannot claim inadvertent error if they failed to obtain the information necessary to honor the consumer’s request.
The deadline for comments on these proposed amendments is July 29, 2013.