International Law

FTC Issues Telemarketing Rule Amendments for Prerecorded and Abandoned Calls

This posting was written by Darius Sturmer, Editor of CCH Trade Regulation Reporter.

Telemarketing calls that deliver prerecorded messages to consumers who have not previously agreed to accept them will be expressly banned, under a set of amendments to the Telemarketing Sales Rule (TSR) announced by the FTC on August 19.

Amendments further require that sellers and telemarketers provide, at the outset of all prerecorded messages, an automated keypress or voice-activated opt-out mechanism and modify the TSR's method of calculating the maximum permissible level of "call abandonment."

Prerecorded Call Requirements

The prerecorded call amendment requires that any prerecorded telemarketing call must: (1) allow the telephone to ring for at least 15 seconds or four rings before an unanswered call is disconnected; (2) begin the prerecorded message within two seconds of a completed greeting by the consumer who answers; (3) disclose at the outset of the call that the recipient may ask to be placed on the company's do-not-call list at any time during the message; (4) make an automated interactive voice and/or keypress-activated opt-out mechanism available during the message that adds the phone number to the company's do-not-call list and then immediately ends the call; and (5) in cases where the call is answered by an answering machine or voicemail, provide a toll-free number that allows the person called to be connected to an automated interactive voice and/or keypress-activated opt-out mechanism anytime after the message is received.

Rulemaking Proceeding

The amendments are the result of a rulemaking proceeding initiated in 2004 in which the FTC, responding to a petition from the telemarketing industry, proposed a change in the TSR to allow calls that deliver prerecorded messages to consumers with whom a seller had an established business relationship.

After receiving nearly 14,000 comments overwhelmingly opposed to such a change, the Commission altered its position. It proposed in October 2006 a broad prohibition on the use of prerecorded messages whenever the consumer called had not previously given express written permission to the seller to place such calls to his or her number. The final amendments adopt the October 2006 proposal, with several refinements suggested by comments it elicited.

Exemptions and Limitations

The amendments will not affect consumers' ability to continue to receive calls that deliver purely "informational" prerecorded messages (e.g., messages notifying recipients that their flight has been cancelled, that they have a service appointment, etc.). Such purely "informational "calls are not covered by the TSR because they do not attempt to sell the called party any goods or services, the Commission noted.

Exempt from the prohibition of prerecording messages are health care-related calls that are subject to the Health Insurance Portability and Accountability Act (HIPAA). Charitable solicitation calls placed by for-profit telemarketers (telefunders) that deliver prerecorded messages on behalf of non-profits to members of, or previous donors to, the non-profit will be exempt from the written agreement requirement, although the amendments will require that such calls include a prompt keypress or voice-activated opt-out mechanism.

The amendments will permit sellers to continue?for one year after the rule's publication?to place calls delivering prerecorded messages to consumers with whom they have an established business relationship. Overall, though, the changes "will protect consumers' privacy," said FTC Chairman William E. Kovacic, by "directly enabl[ing] consumers to choose whether they want to receive prerecorded telemarketing calls."

Call Abandonment

The TSR requires that at least 97 percent of a telemarketer's calls that are answered in person (as opposed to by an answering machine) be connected to a salesperson within two seconds after a consumer answers. The amendment will retain that required rate, but will allow it to be calculated over a 30-day period, rather than on a daily basis as is now the case. The change will permit the use of smaller calling lists, without an appreciable increase in call abandonments. It aims to enable all sellers to target their calling campaigns to consumers most likely to be interested in their offer and to benefit small businesses that have smaller customer lists in particular.

Effective Dates

The amendment modifying the method for measuring the allowable rate of call abandonment will become effective on October 1, 2008. The provision requiring that all prerecorded telemarketing calls provide an automated interactive opt-out mechanism will become effective on December 1, 2008. The provision requiring permission from consumers to receive such calls will become effective September 1, 2009.

A notice announcing the TSR amendments will be published in the Federal Register shortly. Text of the notice appears here on the FTC website, which also features a news release on the amendments. Full text of the amended TSR will appear in CCH Trade Regulation Reporter.

Full post as published by Trade Regulation Talk on August 27, 2008 (boomark / email).