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Question & Answer
Question: We have been approached by a telemarketing firm to be their bank. They are taking demand drafts with their telephone orders. What should we be concerned about?
Answer: If you are the bank for the telemarketer, you should do some homework to make sure the telemarketer has done theirs. First, they should be in compliance with the FTC's telemarketing rule. One of the rule's requirements is to maintain a list of customers who have requested that they not be called again. Finding out whether the telemarketing firm is aware of this requirement should give you a quick read on their familiarity with applicable regulations.
Second, the demand drafts are negotiable instruments. By acting as the merchant's bank, you should be sure that the merchant has proper authorization to draw against the consumer's accounts. Any abuse of this sales technique will quickly become a major consumer issue. It would be wise to take steps to be sure that the merchant you provide with banking services is in fact a company that deals honestly and fairly with customers.
Copyright © 1997 Compliance Action. Originally appeared in Compliance Action, Vol. 2, No. 6, 5/97
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