CEO Perspective: FTC Proposal to Limit Payment Methods under the Telemarketing Sales Rule

Jason Oxman
August 13, 2013 – Earlier this year, the FTC asked for comment on a proposed rule that would ban the use of four payment methods used by telemarketers. The FTC suggested that the proposed rule would eliminate methods favored by con artists and scammers who choose these channels because they are “largely unmonitored and provide consumers with fewer protections against fraud”.

On behalf of the payments industry, ETA has responded to the FTC to oppose this proposed rule.  ETA supports efforts to successfully reduce fraud within the electronic payments industry. However, the FTC’s recently proposed rule will also prohibit legitimate uses of what the FTC calls “novel” payment methods – specifically remotely created checks, remotely created payment orders, cash-to-cash money transfers and cash reload mechanisms – while doing little to reduce fraud. ETA is concerned that a payment processor’s legitimate acceptance or processing of a “novel” payment method in a non-fraudulent telemarketing sales transaction would be deemed an abusive act or practice.

ETA is additionally concerned that the rule will discriminate against consumers who do not utilize payment methods such as cash, check, credit card and debit card in favor of the convenience, flexibility and safety of reloadable, or prepaid, cards. These cards mimic the features of a checking account or of a credit card without requiring the consumer to open an actual checking account or line of credit at a bank. Such cards are essential to consumers with little or no traditional bank access. If the rule were implemented, it would disenfranchise non-banking individuals to whom more traditional payment methods are not readily available.

ETA has submitted comments to FTC regarding the Telemarketing Sales Rule. The comments can be accessed here.

[spacer height=3] [divide] [spacer height=3] Jason Oxman is the CEO of the Electronic Transactions Association.