Billing Authorization on Phone Sales

Selling by phone is one of the quickest ways to land in the high-risk pile. Your underwriter knows the rules that apply to a phone sale. You should know them better.

Authorization comes first

The Telemarketing Sales Rule makes it deceptive to submit billing information for payment without the customer's express verifiable authorization. No proof, no charge. A sale you cannot prove is a sale you may have to give back.

Written or recorded

You have two clean ways to prove it. Express written authorization includes the customer's signature. That signature can be an electronic or digital form of signature recognized as valid under federal or state contract law.

If the customer agrees by voice, the rule says oral authorization must be audio-recorded and made available on request to the customer and the customer's bank. Keep every recording where you can find it fast. A bank that asks for one will not wait long.

Upsells count as new sales

Many phone scripts add an offer at the end. The rule says an upsell is a separate telemarketing transaction, not a continuation of the first one. Get authorization for it on its own, in the same way.

The rule splits these two ways. An internal upsell is made by or for the same seller as in the first transaction. An external upsell is made by or for a seller different from the seller in the first transaction.

Say the limits out loud

The rule requires sellers to disclose all material restrictions, limitations, or conditions on buying or using the goods or services offered. Put them in the script, word for word, and record the call.

Who else is on the hook

The rule also says that providing substantial assistance to a seller or telemarketer known to be violating the rule is itself a violation. That is why a processor reads your phone script before it signs you. Hand it a script that already follows the rule. Your processor answers to its own bank too, which is why banks watch payment processors so closely.