District of Columbia
Notice of Proposed Rulemaking Seeking Public Comment on Proposal to Ban Payment Methods Favored in Fraudulent Telemarketing Transactions; FTC Matter No: R411001
Re: Telemarketing Sales Rule, 16 CFR Part 310, Project No. R411001 I support the proposed changes to the Telemarketing Sales Rule [TSR] as being generally beneficial for consumers, and a serious attempt at reigning in various kinds of fraud and other abuses perpetrated through telemarketing, including by those who show flagrant disregard for the Do Not Call Registry. I believe the proposal deserves strong support as a positive measure that would: • Help protect consumers from various frauds and scams, including debt relief scams and a host of fraudulent sales pitches for goods and services. o Of special concern in this regard are scams that target elder consumers and other vulnerable populations. • Help credit unions and other financial institutions by restricting the improper use of payment mechanisms such as remotely created checks and payment orders by unregulated entities, which have contributed to ever-increasing costs in terms of charge-backs, Reg E investigations and credits and other fraud-related expenses in recent years. • It is important that the Commission work closely with other regulators to ensure that the final rules are consistent with existing and proposed regulations [such as pending changes to Regulation CC, proposed by the Federal Reserve Board in 2011] – especially for already closely regulated insured financial institutions, to avoid adding to their regulatory burden or stifling legitimate development and innovation in the rapidly evolving payments systems. Specific provisions of the proposal include: • Prohibiting telemarketers, both inbound and outbound, from requesting and accepting remotely created checks, payment orders, money transfers, etc. o We have seen these types of payment mechanisms used by scammers, often targeting elderly or financially distressed members. o An added danger of these types of payment mechanisms is that consumers generally do not realize that the information they provide when they authorize such payments can easily be used to generate additional unauthorized payments. In such cases, either the consumer [member] or the financial institution [credit union or bank] ends up taking a loss. o There are other legitimate payment mechanisms available for use by legitimate marketers that do not expose consumers or their financial institutions to the same levels of risk. • Expanding the scope of the advance fee recovery ban. • Requiring that payment authorizations include “An accurate description, clearly and conspicuously stated, of the goods or services or charitable contribution for which payment authorization is sought.” o Such descriptions can help to reduce confusion and the resulting expenses of charge-backs and Reg E investigations, etc. • Further clarifying the prohibitions as abusive of such acts or practices as harassing, hanging up on or otherwise obstructing or failing to honor requests by consumers who do not wish to receive outbound calls [including those on the Do Not Call Registry as well as those making specific requests to the calling person or entity]. In conclusion, the proposed rule changes should not unduly restrict legitimate commerce, particularly involving already regulated financial institutions, but they should help to protect consumers and financial institutions from unscrupulous telemarketers. Such efforts should be commended and are worthy of support.