Kudos to the Federal Trade Commission (FTC) for making it harder for fraudulent telemarketers to steal consumers’ money. The agency announced that it is amending its Telemarketing Sales Rule (TSR) to ban certain forms of payment that don’t offer consumers adequate protection if they’ve been scammed. These payment methods – remotely created checks and payment orders, money transfer services such as Western Union and MoneyGram, and cash reload systems like MoneyPak, Vanilla Reload, and Reloadit – have been favored by crooks because they can get the money quickly and it’s nearly impossible for the victims to find them or retrieve the funds. None of these payment methods give consumers the dispute rights and protections that credit cards and, to a lesser extent, debit cards do.

In the comments that Consumer Federation of America and other groups filed when the amendments were proposed, we argued that legitimate telemarketers don’t ask consumers to use these payment methods; they don’t need to. In fact, we said that remotely created checks and payment orders shouldn’t be used for any consumer transactions.  It’s too easy for fraudsters who have obtained consumers’ bank account information to pretend that the consumers have OK’d payments to be withdrawn from those accounts, and too hard for consumers to prove that they didn’t.

Using money transfer services and cash reload mechanisms can also pose dangers for consumers if they’re unwittingly dealing with scammers. Anyone can pick up money transfers at the other end, in cash, and vanish without a trace. If an ID is required, the scammer simply provides a fake one. Cash reload systems, which are used to load money onto prepaid cards, have provided another convenient way for crooks to get cash, as we explained in the tips and video that we released in 2011 about new payment methods being targeted by scam artists. Since then, MoneyPak and some other major cash reload providers have changed these products so that crooks can no longer use a PIN number to transfer the money to prepaid cards of their own, which they would then cash in. Still, it’s important to ban these payment mechanisms in telemarketing transactions to ensure that all cash reload systems are covered.

While we applaud the new payment bans and other amendments to the TSR that the FTC is making to provide stronger consumer protections, they only apply to telemarketing, not to transactions that are made online. Just this week, the Consumer Financial Protection Bureau (CFPB) took action against an online lender that deceived consumers about the cost of the loans and got money from their bank accounts using remotely created checks even after the consumers said to stop automatic withdrawals. Two years ago, we joined other groups in asking the Federal Reserve and CFPB to eliminate remotely created checks and payment orders in all consumer transactions. We’re still waiting for a response.