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Federal Telemarketing Sales Rule – Credit Card Laundering

According to the Federal Trade Commission, “credit card laundering” is the misuse of a “merchant account” with a financial institution. A “merchant account” is a payment arrangement between a seller or telemarketer and a financial institution. In a credit card laundering scheme, a seller or telemarketer that does not have a merchant account with a financial institution accesses the institution’s credit card system without the institution’s authorization in order to accept payments by credit card.

The Federal Telemarketing Sales Rule prohibits credit card laundering. Specifically, the Rule prohibits a person:

(1) with a merchant account from depositing into the credit card system any credit card sales draft generated by a telemarketing transaction that is not the result of a sale to the buyer by the person who has the merchant account;

(2) from using or soliciting someone who has a merchant account to deposit into the credit card system any credit card sales draft generated by a telemarketing transaction that is not the result of a sale to the buyer by the person who has the merchant account; or

(3) from obtaining access to the credit card system through a business relationship or an affiliation with a merchant when the access is not authorized by the terms of the merchant account or by the credit card system.


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