Federal Trade Commission Revisions to the Telemarketing Sales Rule
                            Establishing a National Do ...
sellers for whom they place telemarketing calls have paid for access. Both the seller and the
telemarketer will be liable ...
As of March 31, 2003, the following rules are in effect:

“Express Verifiable Authorization” and “Express Informed Consent...
Federal Trade Commission Revisions to the Telemarketing Sales ...
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Federal Trade Commission Revisions to the Telemarketing Sales ...

  1. 1. Federal Trade Commission Revisions to the Telemarketing Sales Rule Establishing a National Do Not Call List Updated – April 21, 2003 Background: The Federal Trade Commission on Jan. 29 published in the Federal Register its revisions to the Telemarketing Sales Rule, allowing consumers to place their phone numbers on a national Do Not Call (DNC) registry. Consumers will begin placing their telephone numbers on the DNC list in July 2003. Access to the registry by sellers will begin on Sept. 1, 2003, and full compliance with the DNC requirements will be required on Oct. 1, 2003. In other words, by Oct. 1, 2003, each newspaper conducting outbound calls over state lines must obtain an access number and pay a fee based on the number of area codes it wishes to access. Newspapers or their telemarketing agents will then be required, every three months, to scrub residential telephone numbers appearing on the Do Not Call registry from their internal calling lists. The Federal Communications Commission, which requires a newspaper to maintain an internal DNC list for intrastate telemarketing calls, will revise its telemarketing rule by late summer. NAA believes the FCC will harmonize its rules by requiring telemarketers to scrub their internal list with this national DNC registry. The FCC has the statutory authority to examine “whether different methods and procedures” for avoiding unwanted telemarketing calls should apply to “local telephone solicitations” or to “holders of second-class mail permits.” NAA has encouraged the FCC to establish an exemption for newspapers from a national registry for telemarketing calls made within a state. Absent a blanket exemption for the industry, NAA is asking the FCC to specifically give continuing force to the 13 state laws that provide newspapers with an exemption from state DNC provisions for intrastate telemarketing. Summary of FTC Rule Changes National Do Not Call Registry for Interstate Telemarketing Calls — Compliance Timeline (July 2003) Consumers will be able to place their phone numbers on the national registry through the Internet or by calling a toll-free number. (Sept. 1, 2003) Newspapers or their telemarketing vendors will be required to search the national registry every three months and drop from their call lists the phone numbers of consumers who have registered. Phone numbers will stay on the national list for five years, with periodic purges of all numbers that have been disconnected or reassigned. Proposals for Access Fees: The FTC plans to require sellers that engage in telemarketing to pay an access fee, on an annual basis, before initiating or causing a telemarketer to initiate, an outbound telemarketing call. The FTC is proposing to charge businesses up to $29 per area code accessed in the national registry, with the annual maximum set at $7, 250 (250 area codes or more). The FTC proposes not charging a fee for businesses that wish to access five area codes or less. The FTC proposes that third-party telemarketers will not have to pay a separate fee for their access to the national registry. Instead, these third-party telemarketers will have the responsibility to ensure that
  2. 2. sellers for whom they place telemarketing calls have paid for access. Both the seller and the telemarketer will be liable for outbound calls initiated before the seller has paid the appropriate fee. Each newspaper of a newspaper/media company will be treated as a separate seller and will be required to obtain its own access numbers and pay the DNC registry access fee. (Oct. 1, 2003) FTC will fine companiesup to $11,000 per violationfor calling potential customers who have added their phone numbers to the national registry. Existing Business Relationship: An “existing business relationship” exemption will allow a newspaper to call an existing or previous subscriber for a period up to 18 months after the consumer’s last purchase, payment or delivery of the product, even if the consumer’s phone number has been added to the national registry. In addition, a newspaper may call a consumer if the individual has given the company written permission or the consumer has made an inquiry to the newspaper. This established business relationship exemption does not, however, mean that a newspaper does not have to place an existing subscriber’s phone number on its Do Not Call list if requested to do so. Prohibition on Abandoned Calls: The FTC rule prohibits abandoned calls, which may occur during telemarketing calls made with predictive dialers. Predictive dialers place calls and route them to available operators once a person answers the phone. If an operator is not available, however, the person called may hear only “dead air.” The FTC has determined that leaving a consumer with “dead air” by failing to route an answered call to an operator within two seconds after a called person completes his or her greeting is an “abandoned” call and an abusive practice. However, a seller or its third-party telemarketing vendors are not liable for abandoned calls if they qualify for a “safe harbor” by conforming to the following practices: • Utilizes technology to ensure no more than 3 percent of the calls answered by consumers are abandoned—measured per day, per telemarketing campaign; • Allows each telemarketing call placed to ring for at least 15 seconds or four complete rings before disconnecting an unanswered call; • If a sales representative or live operator is not available, plays a recorded message that includes the name of the newspaper and a telephone number; and • Maintains records showing compliance with these requirements. On April 4, the FTC announced an extension for the deadline for compliance with the prohibition on abandoned calls and the safe harbor for call abandonment. Telemarketers now have until Oct. 1, 2003, to comply with these provisions. The previous deadline was March 31, 2003. Caller-ID: The amended rule requires telemarketers to transmit their telephone numbers and, if possible, their names to consumers’ ID services. This provision will go into effect Jan. 29, 2004.
  3. 3. As of March 31, 2003, the following rules are in effect: “Express Verifiable Authorization” and “Express Informed Consent”: Newspapers must obtain customers’ “express informed consent” as part of every telemarketing sale. Newspapers also need a customer’s “express verifiable authorization” unless the customer uses a credit card or debit card. Express informed consent. Under the new rule, newspapers must obtain a customer’s “express informed consent” to charge a specific account before they submit billing information for payment, regardless of the customer’s payment method. The FTC clarified that “consent” must be affirmatively and unambiguously expressed, and that consent is “informed” only when newspapers have made all the disclosures required by the Telemarketing Sales Rule. In addition, it is good telemarketing practice for newspapers to ask customers to provide account numbers directly. The FTC requires newspapers to take extra precautions in obtaining consent if they use “preacquired” account information rather than obtaining billing information directly from the consumer. Otherwise, the FTC generally leaves it up to newspapers to determine what telemarketing procedures are necessary to obtain express informed consent. Express verifiable authorization not required for credit card and debit card payments. If a customer uses a credit card or debit card to pay for a subscription, newspapers do not need to obtain more than the customer’s “express informed consent” before submitting billing information for payment. Express verifiable authorization automatically satisfied with a check. Requirements when a customer pays with a check did not change during this rulemaking: a signed check itself represents the customer’s “express verifiable authorization.” With other payment methods (demand drafts, e.g., “phone checks”), “written confirmation” is generally available. In the rare case in which a customer uses a payment method other than a credit card, debit card or check, newspapers may use “written confirmation” to obtain a customer’s “express verifiable authorization” for payment, but an exception bars the use of “written confirmation” if the newspaper is offering a free subscription that automatically turns into a paid subscription at a later time. The written confirmation must be clearly and conspicuously labeled as such on the outside of the envelope in which it is sent. Also, the written confirmation must be sent via First Class mail before a newspaper submits a customer’s billing information for payment. Negative Option Features: Newspapers offering a negative option feature must disclose: (1) the fact that the customer’s account will be charged unless the customer takes an affirmative action to avoid charges; (2) the date the charges will be submitted for payment; and (3) the specific steps the customer must take to avoid those charges. Negative option features include “free-to-pay conversions,” automatic renewal offers and continuity plans. Sweepstakes Disclosure: The amended rule now requires telemarketers to inform the consumer that a purchase will not enhance a customer’s chances of winning a prize or sweepstakes. Existing disclosure requirements still apply. (Additional information on the FTC revisions to the Telemarketing Sales Rule can be found at http://www.ftc.gov/bcp/conline/pubs/buspubs/calling.pdf.)