FTC Bans Payment Methods Under Its Telemarketing Sales Rule

On November 18, 2015, the Federal Trade Commission (FTC) issued final amendments to the Telemarketing Sales Rule (TSR) banning payment methods that the FTC believes are disproportionately used by scammers (Final Rule). The Final Rule was published in the Federal Register on December 14, 2015.

The Final Rule follows the notice of proposed rulemaking (NPRM) that the FTC published on July 9, 2013. The Final Rule makes some modifications to the proposed amendments to the TSR that were included in the NPRM, but largely adopts the NPRM proposal to ban certain specific types of payment methods in both inbound and outbound telemarketing. 

In this article, we will first provide background on the Telemarketing and Consumer Fraud and Abuse Prevention Act (Telemarketing Act) and the TSR promulgated by the FTC pursuant to the Telemarketing Act. We will then briey describe the FTC’s NPRM. Finally, we will discuss the Final Rule and analyze the impact of the changes to the TSR on financial service providers.