FTC Proposes Tougher Telemarketing Rules

WASHINGTON (CN) - The Federal Trade Commission has proposed rules meant to make it more difficult for telemarketing scammers to get access to money.

The 1994 Telemarketing and Consumer Fraud and Abuse Prevention Act was passed to help combat telemarketing scams and protect the privacy of people who did not wish to receive unsolicited calls.

The act gives the Federal Trade Commission authority to make rules "prohibiting deceptive telemarketing acts or practices." This week, the commission proposed amendments that "would prohibit telemarketers and sellers in both inbound and outbound telemarketing calls from accepting or requesting remotely created checks, remotely created payment orders, money transfers, and cash reload mechanisms as payment."

Among other things, the proposed rule addresses those "novel payment methods" in which a consumer's bank account and routing number can be used to withdraw money without authorization.

"The commission's continuing law enforcement experience has demonstrated that, despite the requirement of express verifiable authorization when accepting a remotely created check as payment for a telemarketing purchase, unscrupulous telemarketers have increasingly exploited remotely created checks to extract or attempt to extract hundreds of millions of dollars from defrauded consumers," the commission wrote.

In 2006 and 2007, for instance, the Justice Department indicted 45 people running a telemarketing scam in Costa Rica that targeted senior citizens by claiming they had won a sweepstakes contest, the commission noted.

"The telemarketers made their calls from Costa Rica using Voice over Internet Protocol, which disguised the originating location of the calls," the commission wrote.

"To date, the case has yielded at least 34 guilty pleas and more than 280 years in combined prison sentences."

Comments on the proposed rule are due by July 29.

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