Telemarketing Regulations

1
Telemarketing Regulations

• Do Not Call
• McGimpsey Cafferty
• Thomas J. Cafferty Arlene M.
  Turinchak

2
Sources Of Telemarketing Regulation
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The TCPA

• Created in 1991 in response to consumer concerns
  about growing number of unsolicited telephone
  marketing calls to their homes

4
The TCPA

• FCC rules adopted pursuant to TCPA prohibited
  telephone solicitation calls to a home before 8am
  or after 9pm
  
• Callers must provide their name, name of
  person/entity on whose behalf call is made and,
  if asked, telephone number or address at which
  the person/entity may be contacted, the number to
  be called may not be a 900 number or any other
  number for which charges exceed local or long
  distance transmission charges

5
Telephone Solicitation

• Telephone solicitation is a call that acts as an
  advertisement
  
• Telephone solicitation does not include
• Calls or messages placed with the receivers
  prior consent
  
• On behalf of a tax exempt non-profit entity
• To a person/entity with whom the caller has an
  established business relationship

6
Established Business Relationship

• Where the person has made inquiry, application,
  purchase, or transaction regarding products or
  services offered by the caller
  
• Includes both subscribers and advertisers

7
Prerecorded voice messages

• Limits artificial or prerecorded voice messages,
  to where there is prior consent, non-commercial
  calls, emergency calls necessary to the
  consumers health and safety, calls made by tax
  exempt entities and calls from businesses where
  there is a prior business relationship
• Prohibits calls to emergency lines, hospitals,
  wireless numbers, or any other number which would
  result in a charge to the person called

8
Autodialers

• Autodialers produce, store and dial telephone
  numbers using a random or sequential number
  generator
  
• Calls using autodialer, or prerecorded voice
  messages may not tie up two or more lines of a
  business at one time
  
• Must be programmed to release the line within 5
  seconds of a caller hang-up
  

9
Company Specific Do-not-call Lists

• The person or business called could request that
  no more calls be placed to their residence
  
• Caller is required to maintain a do-not-call
  list
  
• Person or business was to be kept on the list
  for 10 years

10
Company Specific Do-not-call

• Caller required to
• Maintain internal written procedures to comply
  with the TCPA do-not-call rules
  
• Insure the individual callers provide the
  required identifying information to person/entity
  called
  
• Train callers on internal procedures including
  how to place person/entities on the do-not-call
  list
  
• Insure that a caller would be provided a copy of
  the internal policy if they request
  

11
Changing Landscape

• 1991 TCPA enacted 300,000 solicitors were used
  to telemarket goods and services to approximately
  18 million Americans daily
  
• 1990 sales generated thru telemarketing amounted
  to 435 billion dollars annually

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Changing Landscape

• 2003 estimated 104 million telemarketing calls to
  consumers each day
  
• 2003 estimated telemarketing calls generate over
  600 billion in sales each year
  
• 2003 telemarketing industry is largest direct
  marketing system in US, representing 34.6 of
  total direct market sales

13
National Do-Not-Call List

• FTC
• Maintains the list
• Enforces the rules as to interstate calls
• FCC
• Enforces the rules as to intrastate calls and
  interstate calls outside FTC jurisdiction
  

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National Do-Not-Call

• Requires FTC and FCC to coordinate and establish
  rules and regulations for implementation to
  attain maximize consistency and avoid
  redundancy between the agencies
• Goal is a single national database for consumer
  registration
  
• Permits FTC to collect fees from telemarketers
  for implementation and enforcement of the
  national registry

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2003 Do-Not-Call Rules

• FTC Rules
• December 2002 establishes National Do-Not-Call
  registry effective October 1, 2003
  
• Consumers can register their telephone numbers
  by
  
• Calling toll free number from phone number they
  wish to registeror
  
• Via the internet

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Exempt Businesses

• FTC do-not-call rules will not apply to entities
  over which it has no jurisdiction
  
• Common Carriers
• Banks
• Insurance companies
• Airlines
• Intrastate telemarketing calls

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Exempt Calls

• FTC exempts
• Calls made by or on behalf of charitable
  organizations except where the calls are made by
  outside telemarketers
  
• Calls to consumers with whom the caller has an
  established business relationship
  
• Calls to businesses
• Calls expressly permitted by the caller

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FCC Rules

• Apply to all businesses including those exempt
  from FTC jurisdiction
  
• Apply to both inter and intra state
  telemarketing
  
• Exempts tax exempt non-profit entities except
  interstate calls by for-profit telemarketers
  hired by the non-profit to solicit on its
  behalf
• Exempts calls made to persons with whom the
  telemarketer has a personal relationship - an
  individual personally know to the telemarketer
  

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Established Business Relationship

• a prior or existing relationship formed by a
  voluntary two-way communication between a person
  or entity and a residential subscriber with or
  without an exchange of consideration, on the
  basis of the subscribers purchase or transaction
  with the entity within the eighteen (18) months
  immediately preceding the date of the telephone
  call or on the basis of the subscribers inquiry
  or application regarding products or services
  offered by the entity within the three (3) months
  preceding the date of the call, which
  relationship has not been previously terminated
  by either party

20
Established Business Relationship

• EBR with one company may extend to affiliates and
  subsidiaries provided the consumer would
  reasonably expect them to be included given the
  nature and type of goods or services offered and
  identity of the affiliate

21
Established Business Relationship

• EBR does not permit companies to make calls based
  on referrals from existing customers
  
• Any company asserting an EBR must demonstrate,
  with clear and convincing evidence, that EBR
  exists
  

22
Application of the EBR rule

• 18 months runs from the last date of payment or
  transaction with the caller
  
• 3 months runs from the date of the inquiry

23
Application of the EBR rule

• Inquiry must be the type that a person would
  expect a call from the business
  
• For example, an inquiry as to location or hours
  of operation would not create an EBR
  
• EBR is not limited by products and services.
  Business is permitted to offer full range of
  services and products
  

24

• EBR may be terminated by the customer by request
  to be placed on the company specific Do-Not-Call
  list

25
Non-profit Entities

• FCC says calls by a for-profit telemarketer on
  behalf of the tax exempt non-profit entity are
  exempt except where bundled with a commercial
  message for a for-profit entity

26
Non-profit Entities

• For-profit can not claim the exemption by stating
  a portion of the proceeds of the purchase will be
  donated to a charitable cause
  
• FTC exempts interstate calls by non-profits
  except where the calls are made by a for-profit
  telemarketer hired by the non-profit. Calls by
  the non-profit are subject to the company
  specific Do-Not-Call rules

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Automated Telephone Dialing Equipment

• TCPA definition
• equipment which has the capacity (A) to store or
  produce telephone numbers to be called, using a
  random or sequential generator and (B) to dial
  such numbers
• Key concept is the capacity to dial numbers
  without human intervention
  
• Predictive dialer is equipment thats dials
  numbers and predicts when a sales agent will be
  available to take a call. The principal feature
  of predictive dialing is a timing function.

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Prohibitions on Autodialers

• Dialing emergency numbers, health care
  facilities, telephone numbers assigned to
  wireless services and any other numbers for which
  the consumer is charged for the call
• War dialing the practice of using autodialers
  to dial large blocks of telephone numbers in
  order to identify lines that belong to fax
  machines

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Artificial or Prerecorded Voice Messages

• TCPA prohibits calls using prerecorded or
  artificial voice to deliver a message to
  residences without the express consent of the
  called party unless the call is for emergency
  purposes or is specifically exempted
• In 1992 the FCC exempted non-commercial and
  commercial calls that do not contain an
  unsolicited advertisement. The FCC also exempted
  EBR calls.

30
2003 Rules

• Prerecorded messages containing free offers and
  information about goods and services that are
  commercially available are now prohibited by the
  FTC rules. The FCC rules permit a EBR exception
  to the prohibition.

31
2003 Rules

• Also prohibited are prerecorded messages that
  include or introduce an unsolicited
  advertisement.
  
• For example calls from a credit card company
  to an existing customer offering overdraft
  protection would constitute unsolicited
  advertisement or a call from a phone company to
  customers regarding new calling plans would in
  most instances constitute unsolicited
  advertisements.

32
Identification Requirements

• Now applies to all live and artificial or
  prerecorded messages regardless of how
  delivered.
  
• Must provide
• Legal name under which caller is registered to
  operate. May use d/b/a or alias provided legal
  name of business is also stated.
  
• The telephone number or address of the caller.
  Must be a number that consumer can use during
  normal business hours to ask not to be called
  again.

33
Abandoned Calls

• Predictive dialers that put the consumer on hold
  or abandon the call if a sales rep is not
  available, creating dead air or hang-ups
  
• Predictive dialer users may not abandon more than
  3 percent of calls in a 30 day period (3 per day
  for interstate calls)
  
• Call is considered abandoned if it is not
  transferred to a live agent within 2 seconds of
  recipients greeting

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Abandoned Calls
SUPERVISOR
SUPERVISOR
SUPERVISOR

• Abandoned calls must deliver a recorded message
  providing the telemarketers name, telephone
  number, and notification that the call was for
  telemarketing purposes.
• Caller must allow the telephone to ring for 15
  seconds or 4 rings before disconnecting any
  unanswered call
  
• Callers must keep records to prove compliance
  with the 3 rule
  

35
Wireless Telephone Numbers

• Autodialed, prerecorded or artificial voice
  messages prohibited
  
• FCC rules permit live calls to wireless numbers
  in recognition that consumers may use a wireless
  telephone as the primary or only phone

36
Caller ID

• All callers must transmit caller ID information
• Callers are prohibited from using any technology
  to block caller ID information
  
• Caller ID requirements not effective until
  January 29, 2004

37
Unsolicited Faxes

• Prohibits the sending of any unsolicited
  advertisements to a fax machine
  
• unsolicited advertisement means any material
  advertising the commercial availability of
  quality of any property, goods, or services
  transmitted to any person without prior express
  consent or invitation

38
Unsolicited Faxes

• FCC requires consent to be in writing and include
  recipients signature, and fax number and may not
  in form of negative option (call if do not wish
  to receive faxes)
• EBR does not confer permission to send
  unsolicited faxes
  
• Prohibition does not become effective until
  January 2005

39
Time of Day Restrictions

• Calls may only be made between 8am and 9pm local
  time at the recipients location
  

40
Procedures for Compliance

• Effective October 1, 2003
• Register with the FTC
• Provide identifying information about business
• Identify a contact person
• Business will be provided a unique account
  number
  
• Agree to use the telephones numbers for
  telemarketing only

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Procedures for Compliance

• Obtain a copy of the Do-Not-Call list at least
  every three months, no more than once every 24
  hours
  
• NO TELEMARKETING CALLS TO ANY NUMBERS MAY BE MADE
  UNTIL THE BUSINESS HAS A COPY OF THE LIST
  
• Business must cease calls to a number within 45
  days of it appearing on the list

42
The Do-Not-Call List

• List is prepared by area codes and any business
  is only required to obtain the list for the area
  code it will be calling
  
• Fees
• Cost is 25.00 per area code, paid annually
• 15.00 for each area code added to company list
  in the second 6 months of the annual term
  
• Access to less than 5 area codes is free

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Types of Lists

• List contains only 10 digit telephone numbers, no
  names or other information
  
• Initial list is the full list of all
  do-not-call numbers in the specified area code
  
• Thereafter business can obtain the change list
  containing the additions and deletions to the
  list (designated A or D) and the date of the
  change

44
Third Party Telemarketers

• May obtain access to the registry through its own
  account or through the business account, no
  additional fees for an outside agency using the
  business account number
• Business must still register even if using a
  telemarketing service

45
Company Specific Lists

• Business is still required to keep company
  specific Do-Not-Call lists
  
• Only change is that numbers now remain on the
  list for only 5 years

46
Safe Harbor

• Caller will not be liable for violating the
  National Do-Not-Call rules if can demonstrate
  that as part of its routine business practice
  
• It has established and implemented written
  procedures to comply with the rules and implement
  the list
  
• It has trained its personnel and any entity
  assisting in its compliance in the procedures
  established under the rules
  
• Caller has maintained and recorded a list of
  telephone numbers the caller may not contact
  
• Caller has accessed the National Do-Not-Call
  list, and purchased the list of numbers at least
  every 3 months

47
Safe Harbor

• Caller uses a process to prevent telemarketing to
  any telephone number on any list obtained from
  the registry no more than 3 months prior to the
  date the call is made and maintains a records
  documenting this process
• Any subsequent call otherwise violating the rules
  is the result of error and was not called more
  than once in the preceding 12 months
  

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Private Enforcement

• Consumer may file suit in state court for
  violation of autodialer, artificial or
  prerecorded voice messages, and unsolicited fax
  provisions
• Consumer may file in state court if received more
  than one telephone call within any 12 month
  period by or on behalf of the same entity in
  violation of the rules

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Violations and Defenses

• Up to 11,000.00 fine per violation if suit is
  brought by the FCC/FTC
  
• 500 fine per violation if suit by private
  person
  
• Safe Harbor - defense that the caller had
  internal policies, performed training, and
  maintained a do-not-call list
  
• Caller is permitted one call to a person or
  business on the do-not-call list in a 12 month
  period

50
State and Federal Do-Not-Call

• Goal to permit States to download the State to
  list to the National list
  
• Federal rules do not create a blanket preemption
  of state law

51
State and Federal Do-Not-Call

• State laws may be more restrictive but complaints
  of inconsistency may be brought to the FCC,
  determinations will be made on a case-by-case
  basis
• FCC has declared any state regulation of
  interstate telemarketing calls that differs from
  our rules almost certainly would conflict with
  and frustrate the federal scheme and almost
  certainly would be preempted

52
New Jersey

• Adopted in May 2003, to be effective when the DCA
  certifies it is prepared to establish and
  maintain a Do-Not-Call list - no later than May
  21, 2004
• Statewide Do-Not-Call list to be established and
  administered by the Division Of Consumer Affairs
  
• Applies to all telemarketers doing business in
  the State

53
Registration

• All telemarketers and businesses using
  telemarketers must register with DCA
  
• Annual registration fee not yet set
• Each telemarketer must certify that he/she has
  not been convicted of a crime involving fraud,
  theft, forgery, or any crime of the first degree
  
• DCA may require the telemarketer post a bond of
  up to 25,000

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Compliance

• New copy of the list must be obtained at least
  quarterly
  
• No calls may be made to any number more than 45
  days after the number appears on the list
  
• No calls to a commercial mobile service device
  except service provider to customer

55
Compliance

• No calls between 9pm and 8am local time at the
  recipients location
  
• Telemarketer may not block caller ID
• Within 30 seconds of the recipient answering the
  call the call must
  
• Identify the telemarketers name
• Identify the entity on whose behalf the call is
  being made
  
• State the purpose of the call

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Established Business Relationship

• NO SPECIFIC EXCEPTION FOR ESTABLISHED BUSINESS
  RELATIONSHIP IN NJ STATUTE
  
• Telemarketing sales call is defined as a
  telephone call made by a telemarketer to a
  customer to encourage the purchase or rental of,
  or investment in, merchandise, except for
  continuing services

57
Established Business Relationship

• Unsolicited telemarketing sales call is defined
  as any telemarketing sales call other than a
  call made (2) an existing customer
  
• Will this form the basis for an EBR exemption in
  the regulations?
  
• If not, how is this exemption likely to work?

58
Safe Harbor

• Telemarketer not liable if
• Has updated the list quarterly
• Has established and implemented written policies
  and procedures to comply with the law
  
• Individual callers have been trained
• Business maintains records demonstrating
  compliance
  
• Call to person on the list is isolated call, not
  more than once in 12 months

59
Violations

• Violation of Act is a violation of laws against
  fraudulent sales
  
• First offense fine up to 7500
• Subsequent offenses fines up to 15,000
• Additional fines are possible if the violation is
  found to be part of a scheme to defraud

60
Federal Regulatory Coordination

• Tax exempt charitable and non-profit
  organizations
  
• Personal relationship calls
• Abandoned Calls

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Recent Developments

• Oklahoma District Court found no statutory
  Authority for the FTC Do-Not-Call list
  
• Remedied by Congressional passage of statute
  authorizing the creation of the list
  
• Denver District FTC Do-Not-Call rules violate
  First Amendment
  
• based upon exclusion of certain calls by
  charitable and political groups