FTC Rules that must be on the pre-recorded Terms and Conditions for Users of "Demand Drafts" or "Phone Checks"?

The Rule requires verifiable authorization for use of bank account information to obtain payment. The Rule requires that a seller or telemarketer have a consumer's "express verifiable authorization" to use that consumer's bank account information to obtain payment through so called "phone checks" or "demand drafts." (This requirement does not apply to conventional checks, written, signed, and mailed to the seller or telemarketer by the consumer.) The requirement for verifiable authorization for "phone checks" can be satisfied by an advance written authorization from the consumer, by a tape recording of the consumer giving express oral authorization, or by a written confirmation of the transaction sent to the consumer prior to the submission of the draft for payment. If the tape recording method is used, the seller or telemarketer must provide the consumer's bank, upon request, with a copy of the consumer's verifiable authorization. If the post-sale written confirmation method is used, the seller or telemarketer must offer, and at the consumer's request provide, a full refund to the consumer in the event the confirmation is inadequate or incorrect. The seller or telemarketer must keep the consumer's verifiable authorization for two years from the date of the sales transaction.

Written Authorization

Any form of written authorization from a consumer is acceptable. For example, a consumer may transmit written authorization to the seller or telemarketer by facsimile, or may send a "voided" signed check as written authorization.

Tape Recorded Authorization

Any tape recorded authorization for a demand draft must clearly demonstrate that the consumer has received each of six specific pieces of information about the transaction and that the consumer has authorized that funds be taken from his or her bank account based on the required disclosures that the seller or telemarketer has provided. Without more, a general question such as "Do you understand all the terms of the sale?" followed by a consumer's "uh-huh" or "yeah" is not enough to demonstrate authorization. The tape recording must show that the consumer received each piece of information listed below and that, based on that information, the consumer understood and acknowledged each term of the transaction, and authorized the transaction. A consumer must be told and must acknowledge:

This information can be found on.....