FTC warns telemarketers about prohibition of certain payment methods

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The Federal Trade Commission (FTC) issued an alert this week reminding businesses that the Telemarketing Sales Rule (TSR) amendments that went into effect in November of 2015, prohibit telemarketers from using three types of payment methods that have been used by con artists and scammers.

According to the FTC, “as of this month, it is illegal for telemarketers to ask consumers to pay for good or services using cash-to-cash money transfers, such as MoneyGram and Western Union provide, or by providing PIN numbers from cash reload cards such as MoneyPak, Vanilla Reload or Reloadit packs. It also is illegal for telemarketers to use unsigned checks called ‘remotely created payment orders’ to withdraw money directly from consumers’ bank accounts.’”

The FTC has provided business guidance for telemarketers to use to comply with the new rule, as well as guidance that warns consumers that “any telemarketer requesting payment using these methods is a scammer because the payment method is illegal.”

Telemarketers—be aware of the new rules that go into effect this month. Consumers—beware of any telemarketers that attempt to use these methods as they are illegal.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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