Amendments to Telemarketing Sales Rule

By Mike Wilson J.D
May, 2003

The Federal Trade Commission announced amendments to the Telemarketing Sales Rule in December 2002.  Two important changes are described below:

National No-Call List:  The FTC will establish a national no-call list.  It is free for consumers to sign up but telemarketers will have to pay a fee to access the list.  Compliance with this national no-call list is in addition to the current requirement that each seller maintain its own "do not call" list and honor consumers' requests to be placed on that list.  Calling someone on the national no-call list, unless there is a preexisting  established business relationship with the consumer or the consumer has given written consent, is a violation of the rule.  "Established business relationship" means either (a) during the previous 18 months the consumer has purchased, rented, or leased from the seller or there has been a financial transaction between the consumer and seller, or (b) the consumer has inquired about a product or service offered by the seller within the previous three months. 

Telemarketers will have to scrub their calling lists every three months to remove numbers on the no-call list.  What happens if you call someone who was added to the list after you scrubbed?  If you are using a list no more than three months old and otherwise are in compliance with specific requirements set forth in the rule about established policies, record keeping, procedures, training and enforcement, and the call was the result of error, then it's not a violation. 

The national no-call list does not apply to political solicitations or charitable solicitations, though charities must honor specific no-call requests.  The FTC rules apply to interstate selling and include calls originating outside the United States.  The national no-call list doesn't affect the ability of states to continue enforcing their own laws.  The FTC rules apply to calls made for purposes other than selling, such as customer satisfaction or surveys, if the caller also is offering to sell goods or services.

Call Abandonment Rules:  Many consumers complained to the FTC about abandoned or dead air calls, typically occurring when automatic dialing software is used to call many consumers at once, resulting in more connections than there are sales reps to handle the calls.

Call abandonment is a violation of the amended rule unless the telemarketer satisfies the "safe harbor" provisions:

• No more than three percent of calls answered by a person are abandoned per day per calling campaign

• The consumer's phone is allowed to ring at least 15 seconds or four times before disconnecting

• Within two seconds of the consumer's greeting, each call is connected to a sales rep or a recorded message stating the name and phone number (but not the sales pitch) of the seller; and

• Records are kept showing compliance with the foregoing.

Review the Rule:  A review of the amended rule with legal counsel is highly advisable, as there are other important changes.  For example, telemarketers will have to transmit their telephone numbers to the consumer's Caller-ID service, as well as the name if the telemarketer's carrier makes it possible.  Remember, also, that each violation of the rule can result in a penalty of up to $11,000, and that anyone assisting a telemarketer or seller also is guilty of violating the rule if he or she knows or consciously avoids knowing that the seller or telemarketer is violating the rule.

Mike Wilson is an attorney and author.  He teaches at Sullivan University in Lexington, Kentucky.

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