The Telemarketing Sales Rule 16 C.F.R. Part 310. Karen S. Hobbs Division of Marketing Practices Federal Trade Commission

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1 The Telemarketing Sales Rule 16 C.F.R. Part 310 Karen S. Hobbs Division of Marketing Practices Federal Trade Commission

2 What is the FTC proposing to do? Prohibit the use of the following payment methods in all telemarketing transactions: Remotely Created Checks ( RCCs ) Remotely Created Payment Orders ( RCPOs ) Cash-to-Cash Money Transfers Cash Reload Mechanisms

3 Definitions Remotely created check means a check that is not created by the paying bank and that does not bear a signature applied, or purported to be applied, by the person on whose account the check is drawn. For purposes of this definition, account means an account as defined in Regulation CC, Availability of Funds and Collection of Checks, 12 CFR part 229, as well as a credit or other arrangement that allows a person to draw checks that are payable by, through, or at a bank. Remotely created payment order means a payment instruction or order drawn on a person s account that is initiated or created by the payee and that does not bear a signature applied, or purported to be applied, by the person on whose account the order is drawn, and which is deposited into or cleared through the check clearing system. The term does not include payment orders cleared through the Automated Clearinghouse Network or subject to the Truth in Lending Act, 15 U.S.C et seq., and Regulation Z, 12 CFR part 1026.

4 How are RCPOs like RCCs? How are RCPOs different from RCCs? RCPOs are all-electronic versions of RCCs (i.e., unsigned, created by the payee, and sent through the check clearing system). RCPOs never exist in paper form; and RCPOs are deposited (electronically) into the check clearing system, not the ACH network.

5 Definition Cash-to-cash money transfer means the electronic (as defined in section 106(2) of the Electronic Signatures in Global and National Commerce Act (15 U.S.C. 7006(2)) transfer of the value of cash received from one person to another person in a different location that is sent by a money transfer provider and received in the form of cash. The term includes a remittance transfer, as defined in section 919(g)(2) of the Electronic Fund Transfer Act ( EFTA ), 15 U.S.C. 1693a, that is a cash-to-cash transaction; however it does not include any transaction that is (1) an electronic fund transfer as defined in section 903 of the EFTA; (2) covered by Regulation E, 12 CFR part , pertaining to gift cards; or (3) subject to the Truth in Lending Act, 15 U.S.C et seq. For purposes of this definition, money transfer provider means any person or financial institution that provides cash-to-cash money transfers for a person in the normal course of its business, whether or not the person holds an account with such person or financial institution.

6 What are cash-to-cash money transfers? Money transfers initiated and received in cash, using a money transfer provider (e.g., Western Union or MoneyGram transfers). Definition covers both domestic and foreign cash-to-cash transfers. Includes cash-to-cash remittances that may be covered by the disclosure and error resolution provisions of the Remittance Transfer Rule.

7 Definition Cash reload mechanism makes it possible to convert cash into an electronic (as defined in section 106(2) of the Electronic Signatures in Global and National Commerce Act (15 U.S.C. 7006(2)) form that a person can use to add money to a general-use prepaid card, as defined in Regulation E, 12 CFR part , or an online account with a payment intermediary. For purposes of this definition, a cash reload mechanism (1) is purchased by a person on a prepaid basis, (2) enables access to the funds via an authorization code or other security measure, and (3) is not itself a general-use prepaid card.

8 What is a cash reload mechanism? How are they different from GPR cards? A device/code that acts like a virtual deposit slip for consumers who need to add cash to their existing general purpose reloadable ( GPR ) cards without the use of direct deposit or bank transfer. Not GPR (not used/accepted for purchases no magnetic stripe).

9 Prohibit the use of these four novel payment methods in all telemarketing transactions by: Adding new definitions to 310.2; Adding new prohibitions to 310.4(a) (abusive telemarketing practices); and Amending the general media and direct mail exemptions ( 310.6(b)) to require compliance with the proposed ban in order to qualify for the inbound call exemptions.

10 Notice of Proposed Rulemaking (NPRM) text is available at (78 Fed. Reg (July 9, 2013)) Comment period ended August 8, 2013 Public comments are posted at: o American Bankers Association o Federal Reserve Bank of Atlanta o Department of Justice o NACHA o National Consumers Law Center