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Communications Advisory 803






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Communications Advisory 803 Communications Advisory 803 Document Transcript

  • Advisory August 13, 2003 COMMUNICATIONS LAW BOSTON WASHINGTON RESTON Do Not Call: A Summary of NEW YORK NEW HAVEN New FTC and FCC Regulations LOS ANGELES for Telemarketers LONDON The Federal Communications Commission (FCC) and the Federal Trade w w w. m i n t z . c o m Commission (FTC) have regulated telemarketing since the early 1990s. In 1991, Congress enacted the Telephone Consumer Protection Act One Financial Center Boston, Massachusetts 02111 USA (TCPA), Pub. L. No. 102-243, which required the FCC to enact rules to 617 542 6000 protect residential telephone subscribers’ privacy rights to avoid receiving 617 542 2241 fax unwanted telephone solicitations. In 1994, the Telemarketing Act was signed into law and required the FTC to issue a Telemarketing Sales Rule 701 Pennsylvania Avenue, N.W. Washington, D.C. 20004 USA (TSR) prohibiting deceptive or abusive telemarketing acts or practices. 202 434 7300 15 U.S.C. §§ 6101-08. In addition to federal regulation, numerous states 202 434 7400 fax have enacted their own laws to regulate telemarketing practices. 666 Third Avenue Recent amendments to both the TCPA and the TSR have resulted in New York, New York 10017 USA 212 935 3000 tougher regulation for telemarketers and more options for consumers 212 983 3115 fax to avoid unwanted telemarketing calls. Following is a summary of the new regulations adopted by the FTC and the FCC and an analysis of 12010 Sunset Hills Road Reston, Virginia 20190 USA how each agency’s rules apply to telemarketers as well as companies 703 464 4800 who use third party telemarketing firms to conduct solicitations on 703 464 4895 fax their behalf. 157 Church Street New Haven, Connecticut 06510 USA The FCC and the Telephone Consumer Protection Act 203 777 8200 Following a rulemaking proceeding in which it determined that the 203 777 7111 fax changes in the telemarketing industry over the past decade required Water Garden modification to existing rules, the FCC released amendments to the 1620 26th Street TCPA on July 3, 2003. The TCPA regulates telephone marketing calls Santa Monica, California 90404 USA and practices that are considered an invasion of consumer privacy, and 310 586 3200 in some cases, a threat to public safety. The FCC’s new rules implement 310 586 3202 fax “do-not-call” regulations that allow consumers to opt out of unwanted The Rectory telemarketing calls. The rules also place restrictions on telemarketers 9 Ironmonger Lane when placing telephone marketing calls. All companies that participate London EC2V 8EY ENGLAND +44 (0)207 726 4000 in telemarketing, either through their own telemarketing efforts or by +44 (0)207 726 0055 fax hiring direct marketing firms that make telemarketing calls on their behalf, should be aware of these new rules and their potential conse- Copyright© 2003 by Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. quences. Highlights of the FCC’s rules include:
  • Communications Law Advisory…2 • Predictive Dialers, Caller ID entity under the established During the TCPA rulemaking there Blocks, Unsolicited Faxes. The business relationship exemption. was a fair amount of controversy FCC banned or tightly regulated about whether the “established busi- • Calls to wireless telephone automated dialing systems, which ness relationship” exemption should numbers. It is unlawful to make include predictive dialers, artifi- apply to telemarketed offers for dif- any call to a wireless telephone cial and pre-recorded messages, ferent products and services offered number using an automatic caller ID blocking mechanisms, by the same company that has cur- dialing system or artificial or and the use of telephone facsimile rently, or had in the recent past, a pre-recorded message. Live machines to send unsolicited business relationship with a cus- telemarketing calls to wireless advertisements. The FCC deter- tomer based on only one type of telephone numbers are, however, mined that these practices inap- service that the company offered. subject to the same requirements propriately shift marketing costs The FCC agreed that companies as calls to landline telephone from sellers to consumers, and in could call for 18 months about numbers. some cases, threaten public safety. their additional products and serv- By regulating the use of these • State telemarketing laws limited ices beyond the service previously technologies, the FCC intended to intrastate calls. The FCC sold to the customer. The FCC, to address and reduce customer determined that states will be per- however, did not apply the existing complaints about some of the mitted to continue to use their business relationship exemption in worst abuses of telemarketing. own do-not-call lists, but states the same manner to “affiliates” of a that do so must include in their covered entity with which the con- • Abandoned calls. The FCC’s own registry that part of the sumer has an established business rules require that a telemarketer national do-not-call database relationship. The exemption from may abandon no more than three related to that state. The FCC the do-not-call list would not apply percent of calls answered by a rules set a floor for state “do-not- “unless the subscriber would reason- consumer. When abandoning a call” requirements, but states can ably expect them to be included call, a telemarketer must deliver adopt even more restrictive laws given the nature and type of goods or a pre-recorded message within for intrastate telemarketing calls. services offered by the affiliate and the two seconds after the consumer States cannot regulate interstate identity of the affiliate.” The exam- answers the call. This is known telemarketing calls in a manner ple the FCC gives of an included as the “two-second transfer rule.” inconsistent with federal rules. affiliate is a Bell Operating Company • Caller ID transmission. The that jointly markets the services of • The Established Business Rela- FCC’s rules require telemarketers its long-distance affiliate. The FCC, tionship exemption. The FCC to transmit called ID information however, did not adopt one com- rules allow a company to call a to a consumer’s caller ID equip- menter’s position that the exemption customer with whom it has had an ment, where available. should extend to a common carrier’s “established business relationship” • Company-specific do-not-call within 18 months of the consumer’s unaffiliated “marketing partner” for lists. In addition to the national last “purchase or transaction.” Even purposes of telemarketing joint offers. list, consumers may also, if where the consumer has only made they wish, use company-specific an “inquiry or application regarding The FTC and the do-not-call registries that were products or services offered by” the Telemarketing Sales Rule required to be maintained by company, the “established business The FTC promulgated its amended telemarketers by earlier FCC rules relationship” exemption continues rules as part of the Do-Not-Call to eliminate even the chance of for three months from the date of Implementation Act, Pub. L. No. 108- being called by a telemarketing such an inquiry or application. 10 (“Do-Not-Call Act”), enacted by
  • Communications Law Advisory…3 Congress earlier this year. The Do- keters will be required to connect profit telemarketers for marketing Not-Call Act’s biggest change to the consumers to a sales representa- purposes. Finally, the FTC’s rules do Telephone Sales Rule is the establish- tive within two seconds of the not preempt state do-not-call laws. ment of a national do-not-call registry consumer’s greeting. Where tele- At this time, 38 states have their own that will require covered telemarketers marketers make calls using auto- telemarketing laws. to search the registry every three mated dialing equipment and a months and synchronize their market- representative is not standing by, The FCC’s rules are intended to be ing lists with the numbers on the reg- a recorded message must play, consistent with the FTC’s rules. The istry. While the FTC will administer letting the consumer know who FCC’s authority under the TCPA the registry, the FTC and the FCC is calling and what number they allows it to regulate solicitations will jointly enforce compliance with are calling from. to residential telephone subscribers. the registry. The FCC’s rules apply without excep- • Require caller ID transmission. tion to any entity engaged in any of The FTC’s rules provide for an estab- Effective January 29, 2004, tele- the telemarketing activities targeted by lished business relationship exemp- marketers must transmit their the TCPA and the FCC’s rules, but tion similar to the FCC’s rules. A telephone number and, if possi- they do not apply to (a) calls to resi- company with whom a customer has ble, their name, to customers’ dential telephone subscribers made by an established business relationship caller ID service. tax-exempt non-profit organizations, may call the customer for 18 months Enforcement of Telemarketing such as charities, or (b) calls placed to after the customer’s last purchase, Rules by the FCC Versus business telephone numbers. The unless the customer asks that the the FTC FCC’s rules also do not apply to non- company not call the customer again. The FCC’s TCPA and the FTC’s profit organizations, unless a for-profit Telemarketers may call individuals Telemarketing Sales Rule are parallel organization is conducting telephone who make inquiries or submit appli- regimes of regulation. Each agency’s marketing on their behalf. cations to companies for up to three rules apply to those entities subject months after the individual contacts The FCC agreed with the FTC that to the agency’s jurisdiction. The the company. one national do-not-call list is pre- FTC’s jurisdiction over telemarketing ferred, so the FCC approved the extends to those entities subject to In addition, the amended TSR national do-not-call registry estab- the FTC’s jurisdiction under the FTC contains provisions that: lished by the FTC for consumers Act, which include most for-profit who wish to avoid telemarketing • Restrict unauthorized billing. Tele- businesses and sellers. The FTC’s calls and did not establish a separate marketers must obtain a customer’s rules under the Do-Not-Call Act list. The FTC will administer and express informed consent to charge apply to these entities’ plans, pro- maintain the database, and the FCC a specific amount to the customer’s grams or campaigns to sell goods or will participate in enforcing compli- credit card. Where telemarketers services through interstate phone ance with the registry. already have a customer’s billing calls, but do not extend to compa- information on file from a previous nies’ intrastate telemarketing calls. The FCC recognized that the FTC’s transaction, the telemarketer must Additionally, the FTC’s rules do not rule changes expanded the FTC’s ask the customer to confirm the cover in-house calls made by com- jurisdiction over telemarketing sig- credit card number by repeating the mon carriers or calls by airlines, nificantly. However, significant gaps last four digits on the card and must banks, credit unions, savings and exist in the FTC’s authority over record the entire phone transaction loans, and companies engaged in telemarketing activities. The FCC’s for the customer’s protection. the business of insurance. The FTC’s rules are designed to co-exist with rules also do not apply to non-profit the FTC’s rules, and as a result, cre- • Reduce abandoned calls. Effec- organizations unless they use for- ate an overlap in federal regulation. tive October 1, 2003, telemar-
  • Communications Law Advisory…4 Telemarketers may be subject to keting area and will not limit its enforcement strategy. The FCC, both FTC and FCC rules. The FCC enforcement activities to only activi- along with the FTC and the states, has therefore stated that its enforce- ties, transmissions, or entities outside will begin enforcing the national do- ment efforts will focus on those enti- the FTC’s jurisdiction. The FTC not-call registry and their respective ties that are outside the scope of the and the FCC will jointly negotiate regulations on October 1, 2003. FTC’s jurisdiction, including com- a Memorandum of Understanding mon carriers, banks, insurance com- that outlines the agencies’ overlap- * * * * * panies, and airlines. However, the ping as well as conflicting areas Please call if you have any questions as FCC plans to assume a prominent of regulation and creates uniform to the application of the FCC’s or role in enforcement in the telemar- national regulations and an effective FTC’s rules in specific circumstances.