Telemarketing Software Featured Article

Remotely Created Payment Orders Get the Axe by the FTC

December 01, 2015
By Susan J. Campbell - Telemarketing Software Contributing Editor

American consumers are tired of being scammed, which is making it more difficult for those companies practicing legitimate telemarketing activities. What once was a common practice of calling consumers at any time and for any reason is now restricted according to Federal Trade Commission (FTC (News - Alert)) rules. For those companies seeking to continue legal activities, there’s no better time for telemarketing software to ensure compliance.

According to this Mondaq post, the FTC recently amended its Telemarketing Sales Rules (TSR (News - Alert)) regulations, adding new inbound and outbound telemarketing payment method prohibitions. With this change, the initiation of a remotely created payment order is considered an abusive telemarketing practice. The FTC defines a remotely created payment order as one drawn on a person’s account that is created by the payee or an agent of the payee and is then deposited into or cleared through the check clearing system.

In making this change to TSR regulations, the FTC is aiming to prevent scams for advance fee loans, phony medical discount products, magazine subscriptions, credit card interest rate reduction services and other potentially harmful activities. The agency found that the creation of remotely created payment orders led to the “persistent, ongoing and substantial harm to consumers in a telemarketing payment form.”

The problem generally stems from the merchant creating the payment order and then using that method to take money from consumers without permission. At the same time, the agency is also concerned about cash-to-cash money transfer and cash-reload mechanisms, both of which tend to be sold through telemarketing methods and have both anonymity and irrevocability characteristics. Electronic fund transfers and gift cards are not included in the definition of cash-to-cash money transfers.

For those companies practicing legitimate activities pertaining to telemarketing, it’s possible that some of these payment methods were used simply because they were easy to initiate, easy to manage and made it easy to get the sale. This “ease” is exactly why the FTC considers these activities too dangerous for consumers likely to be targeted through predatory practices. Legitimate companies, even with good intentions, will face the same potential for fines and penalties if the new laws are not observed.

When partnering with a proven telemarketing software vendor to ensure compliance with new and existing regulations, companies using telemarketing practices are much better positioned to stay in business. It’s hard enough to keep the pipeline full and sales reps motivated to close. The last thing you need is a citation from the FTC for ignoring rules. Keep compliance at the forefront so you can continue to enjoy market success.

Edited by Rory J. Thompson