Notice of Proposed Rulemaking Seeking Public Comment on Proposal to Ban Payment Methods Favored in Fraudulent Telemarketing Transactions; FTC Matter No: R411001
The generalization that RCC items are used by only fraudulent telemarketers and there is no systemic monitoring of the items is not an accurate statement. The insurance industry has long since created drafts aka RCC items for the payment of premium. The use of the RCC has in many ways been preferred as the purpose of the transaction can be more clearly identified to the consumer because there is more space available for providing information about the transaction to the consumer. Return rates on these items are monitored and watched closely. The consumers are provided the same protections on these items as if they wrote a physical check. Why wouldn't you look at strengthening regulations around the legitimate use of RCC transactions as many of the alternative methods don't provide enough transaction information for the consumer? Can we not look at strengthening regulations that prohibit the fraudulent operators all together? If you pass this rule you will simply shift fraudulent transactions to other forms of payment and not satisfying the overall objective of stopping fraud. If the objective is to stop fraudulent telemarketing activity wouldn’t it be best to address this at the source of the problem and partner with entities who see these scrupulous telemarketing operations on a daily basis to stop them from operating. Why not provide payment processors a safe way to report activities of fraudulent telemarketers so they can be stopped versus moving their business from one bank/processor to another. Or assist in establishing realistic frameworks around all transaction types used by the telemarketing industry as transactions generated at the point of telemarketing are much different than a face to face transaction and realistic frameworks should be established which support use of all transaction types via legitimate telemarketing. Shutting down a payment method will only shift the bad transactions to another form a payment and not eliminate the fraudulent activities of the bad telemarketer Shutting down this particular payment method will put the consumer in a position of stricter return regulations that actually make it more difficult for them to return a fraudulent item than the RCC item. If you are truly looking for ways to more aggressively address the fraudulent telemarketer why not provide an outlet for payment processors and banks to report potential fraud or suspected fraud of a telemarketer, we see applications from telemarketers daily and decline accounts because we suspect they are operating in a fraudulent fashion. Gathering advance information on suspicious telemarketers would allow you to be more proactive to fraudulent activity versus seeing it when consumer complaints mount. I again stress the payment method is not the problem, and if you are really interested in stopping fraudulent telemarketers the source of the problem needs to be addressed and stopped and that is the telemarketer themselves. In your summary you have concluded consumers have fewer protections with RCC items. This is not accurate; consumers have the same protections as if they wrote the check. In fact, they have longer return windows on an RCC then they would on the ACH (PPD) counter -part or even a transaction that passes thru the credit card network. You have also indicated there is no systemic monitoring for RCC items; banks traditional depository system monitors returned deposited transactions as does the Federal Reserve. The Federal Reserve can tell you how many returns are received at the banks and if return numbers are up versus deposited items. Additionally bank systems can tell if an account has an excessive amount of returned transactions. Payment processors break that monitoring down into type, percentages and patterns similar to the monitoring which is done for ACH items.