Revised Federal Telemarketing Rules


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Revised Federal Telemarketing Rules

  1. 1. Revised Federal Telemarketing Rules This paper summarizes the major changes to the telemarketing rules recently adopted by the Federal Trade Commission and Federal Communications Commission. It is important to note that the federal rules constitute a floor, and thus would supersede all less restrictive state do not call rules, particularly those state rules that had specifically exempted newspapers from its do not call requirements. With respect to more restrictive state regulations, neither the FTC nor FCC will preempt more restrictive intrastate requirements; however, the FCC will preempt more restrictive state regulation of interstate telemarketing calls that differs from the federal rules, since those state rules would be in conflict and presumably frustrate the federal objective of creating uniform national rules. In addition, the Telephone Consumer Protection Act prohibits states, in regulating telephone solicitations, from using any database or list that does not include the part of the national DNC database that relates to that state. Some of the rules may be modified further since several organizations, including the NAA, have petitioned the FCC for clarification or a stay of its rules until the agency clarifies the scope of certain rules. In addition, the FTC and FCC plan to negotiate a Memorandum of Understanding that will resolve any inconsistencies and duplicative enforcement, as well as submit a report to Congress within 45 days after publication in the Federal Register that will note any remaining inconsistencies between the agencies’ rules. As of now, the amended rules will go into effect as follows: IMPORTANT DATES TO REMEMBER • March 31, 2003 -- Express verifiable authorization will be required, except for credit card or debit card transactions. • August 25, 2003 – Artificial or prerecorded voice messages that include or introduce an “unsolicited advertisement” are prohibited unless the recipient has given prior express consent or has an established business relationship with the seller or telemarketer. • August 25, 2003 – Unsolicited advertising material must not be sent by facsimile unless the person or entity sending the fax has an established business relationship with the recipient or has obtained the prior express permission of the recipient. • September 1, 2003 – Sellers and telemarketers will be given access to the national do not call database. • October 1, 2003 – Sellers and telemarketers must refrain from calling consumers who register their telephone numbers on the national do not call list, unless the seller or telemarketer falls within a specified exemption. Newspaper Association of America 1921 Gallows Road, Suite 600, Vienna, VA 22182-3900 703•902•1600 FAX 703•917-0636
  2. 2. • October 1, 2003 – Predictive dialers must not drop or abandon more then three percent of all calls and must ring the consumer’s telephone for at least 15 seconds or four rings before disconnecting. • January 29, 2004 – Sellers and telemarketers must transmit caller ID information. • January 1, 2005 – Persons or entities sending unsolicited advertising material by facsimile must have the signed, written consent of the recipient. PERMITTED TELEPHONE CALLS • Newspapers and their telemarketers may call businesses, since the restrictions on telephone solicitations generally do not apply to business-to-business calls1. • Newspapers/telemarketers may call consumers whose telephone numbers are neither registered on the national do-not-call list nor included in the newspaper/telemarketer’s company specific do-not-call list. • Newspapers/telemarketers may call individuals whose telephone numbers are registered on the national DNC list, but (1) who have given your specific company express permission to call them or (2) who have an established business relationship with your company or (3) who have a personal relationship with the caller (e.g., the caller is a family member, friend or acquaintance of the called individual). However, these exemptions do not apply when individuals have asked to be placed on a company’s specific DNC list. • Federal telemarketing laws do not cover—and, thus do not restrict—calls made for purposes other than telemarketing, such as bill collection, conducting surveys, market research, or reporting when a delivery will be made. DO NOT CALL • Newspapers and their telemarketers will be required to access the national DNC database, unless they fall within one of the exemptions (EBR, express consent, personal relationship) mentioned above. Access will become available on September 1, 2003 by going to a fully-automated and secure (website is not yet available). The database will provide the seller/telemarketer with a unique account number. Newspapers that call only persons with whom they have an established business relationship or from whom they have obtained express consent to call are not required to access the national registry prior to engaging in those calls. However, if those newspapers/telemarketers want to access the registry, they do not have to pay for access. • Newspapers that place “cold calls” are required to pay for access to the national registry, regardless of whether their telemarketing vendor pays for independent access. A newspaper’s telemarketer will not be permitted to use the information they obtain from 1 FTC’s rules restrict business to business calls, only if the seller is selling non-durable office or cleaning supplies. 2
  3. 3. the national registry on the newspaper’s behalf unless the newspaper had paid the appropriate fee for access to the information or, in cases where the newspaper is exempt, submitted the appropriate certification to gain access to the national registry. • Separate divisions, subsidiaries or affiliates of a newspaper group or company must pay a separate annual fee for access to the national registry. The FTC will consider whether the entity is separately incorporated (or a separate partnership) and whether the entity has a different name. • A seller or its telemarketer may have free access to up to five areas codes. However, beginning with the sixth area code, the FTC will charge an annual fee of $25 per area code, with a cap of $7,375 for access to the entire national database. Once the annual fee is paid, the newspaper/telemarketer will have unlimited access to the DNC registry throughout the year. However, it will be required to access the registry at least once every three months to synchronize all of its calling lists with an updated version of the registry. • Beginning October 1, 2003, newspapers and their telemarketers will be prohibited from calling persons whose telephone numbers are registered on the national database, unless the newspaper can rely upon one of the three exemptions mentioned above. Consumer registrations will remain valid for five years, with the registry periodically being purged of all numbers that have been disconnected or reassigned. • Newspapers or their telemarketing vendors, who acting in good faith, place prohibited calls may fall within a safe harbor under which they would not be liable for failure to comply with DNC requirements, if they: (1) have established and implemented written procedures to comply with the DNC rules; (2) trained their personnel, and any entity assisting in their compliance, in the procedures established pursuant to the DNC rules; (3) have maintained and recorded a list of telephone numbers the newspaper may not contact; (4) have used and documented a process to prevent telemarketing to any telephone number on any list established pursuant to the DNC rules, employing a version of the DNC registry obtained from the administrator of the registry no more than three months before the date the call was made; and (5) made the call in error. ESTABLISHED BUSINESS RELATIONSHIP • As of now, the Office of Management and Budget has not reviewed or approved the new definition of “established business relationship” so the 1992 definition of EBR will remain in effect pending OMB approval. The 1992 definition refers to “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 an inquiry, application, purchase or transaction by the residential subscriber regarding products or services offered … which relationship has not been previously terminated by either party.” • Once OMB reviews and approves the new definition, which requires “a voluntary two- way communication between a person or entity and a residential subscriber regarding a 3
  4. 4. purchase or transaction made within eighteen (18) months of the date of the telemarketing call or regarding an inquiry or application within three (3) months of the date of the call”, newspapers may call current or former subscribers or advertisers for a period up to 18 months after the consumer’s last purchase, payment or delivery of the newspaper’s product/service or up to three months after the consumer’s inquiry or application regarding the newspaper’s products or services, even if the consumer’s phone number has been added to the national do not call registry. It is important to note that an EBR is formed by a voluntary two-way communication between the newspaper and consumer. It cannot be formed, for example, by a newspaper unilaterally delivering a product to a consumer’s residence and relying on the consumer’s silence as consent. • The FCC recognizes that many companies offer a wide variety of services and products and that a consumer should not be surprised to receive a telemarketing call from that company, regardless of the product being offered. Thus, a newspaper’s circulation department may rely upon the EBR exception to call a consumer who has placed a private party classified ad in the newspaper, but is not a current subscriber. • The EBR remains as long as the consumer does not ask to be placed on the newspaper’s company specific DNC list. Once a consumer asks a newspaper not to call him or her, the newspaper must place the consumer’s telephone number on its own internal DNC list. At that point, the EBR is terminated for purposes of telephone solicitations, even if the consumer still remains a newspaper subscriber or an advertising customer. The newspaper or its telemarketer must honor a company-specific DNC request within a reasonable time of the request, not to exceed 30 days. • A DNC request, whether company-specific or national, must be honored for five years from the time the request is made or the number is registered in the national database. EXPRESS VERIFIABLE AUTHORIZATION • Newspapers and their telemarketing vendors, must obtain express verifiable authorization for all transactions before submitting billing information for payment, except when the method of payment used is a credit card subject to protections of the Truth in Lending Act and Regulation Z, or a debit card subject to the protections of the Electronic Fund Transfer act and Regulation E. • For express oral authorization to be deemed verifiable, a newspaper must ensure the customer’s receipt of the date that the charge will be submitted for payment and identify the account to be charged with sufficient specificity so that the customer understands what account is being used to collect payment. • Express verifiable authorization is particularly important where the newspaper or telemarketer already possess the consumer’s billing information (“preacquired billing information”) and in free-to pay transactions, particularly where there is a “negative option feature” (e.g., the cost of a newspaper subscription is free or reduced for the first six months and automatically continues at the full rate after the six-month period if the customer does not affirmatively decline the offer or terminate the subscription). In these 4
  5. 5. transactions, the newspaper must clearly disclose (1) the fact that the customer’s account will be charged unless the customer takes an affirmative action to avoid the charge; (2) the date the charge will be submitted for payment; and (3) specific steps the customer must take to avoid the charges. Silence should not be construed as acceptance. • Payment by automatic debit from a bank account or phone check, for example, would require express verifiable authorization. Authorization is deemed “verifiable” if it (1) is in writing and includes the customer’s signature, or (2) is given orally, but audio- recorded and made available upon request to the customer and to the customer’s bank or (3) consists of written confirmation of the transaction sent to the customer via first class mail before the customer’s billing information is submitted for payment, with the written confirmation clearly labeled as such on the outside of the envelope in which it is sent. A customer’s signed check or money order would be sufficient to serve as written authorization. Post-transaction written confirmation is not permitted as a means of obtaining a customer’s express verifiable authorization when the goods or services are offered on a “free-to-pay conversion basis. Newspapers/telemarketers that use the oral method of authorization are responsible for determining compliance with state law wiretapping requirements. • To address concerns about identity theft, newspapers/telemarketer providing express verifiable authorization should identify billing information sufficient to understand what account will be used to collect payment, such as the name and last four digits of the account to be charged, rather than the full account number. ARTIFICIAL OR PRERECORDED VOICE MESSAGES • FCC regulations prohibit telephone calls to residences using artificial or prerecorded voice messages that include or introduce an “unsolicited advertisement”, unless the recipient has given prior express consent or has an EBR with the seller or telemarketer. Examples of messages that include or introduce an unsolicited advertisement would be dual purpose calls, such as those to inquire about a customer’s satisfaction with an already purchased subscription but include a sales pitch for additional goods or services or prerecorded messages that contain free offers and information about goods and services that are commercially available to consumers. Thus, newspapers without an EBR or the prior express consent of the recipient should not deliver such prerecorded messages. • All prerecorded messages, whether delivered by automated dialing equipment or not, must identify the name of the business or entity that is responsible for initiating the call, along with the telephone number of the business or entity. The legal name of the business should be given, even if the newspaper gives its “doing business as” name, and the telephone number stated in the message should be one that a consumer can use during normal business hours to ask not to be called again. 5
  6. 6. ABANDONED CALLS • Federal telemarketing rules govern predictive dialers as “automated telephone dialing equipment”, since they have the capacity to store or produce numbers and dial those numbers at random. Telemarketers remain prohibited from using autodialers to dial emergency numbers, health care facilities, telephone numbers assigned to wireless services and any other numbers for which the consumer is charged for the call. In addition, they are prohibited from so-called “war dialing” (i.e., ringing a telephone for the purpose of determining whether the number is associated with a fax or voice line). • Under the FTC’s regulations, newspapers/telemarketers are prohibited from abandoning any outbound telephone call (e.g., where the telemarketer does not connect the call to a sales representative within two seconds of the person’s completed greeting). A safe harbor exists for the telemarketer who (1) ensures abandonment of no more than three percent of all calls answered by a person per day per calling campaign; (2) allows the telephone to ring for at least 15 second or four rings before disconnecting an unanswered call; and (3) plays a recorded message stating the newspaper’s name and telephone number whenever a sales representative is not available to speak with the called person within two seconds after the person’s completed greeting. • The FCC’s regulations have similar requirement, except the three percent of unanswered calls are to be measured over a 30-day period. CALLER ID INFORMATION • Newspapers/telemarketers must transmit caller ID information, regardless of their calling systems. The amended rule, not only prohibits the blocking of caller ID information, but also prohibits the failure to transmit such information. Caller ID information must include the telephone number, and when available by the telemarketer’s carrier, the name of the telemarketer. A telemarketer may elect to transmit the name and telephone number of the newspaper client, rather than its own, as long as the number is one that the consumer may call during reasonable hours to make a do not call request. • In those limited instances where the caller ID information is not passed through to the consumer, through no fault of the telemarketer, then the telemarketer will not be held liable for failure to the comply with the rules. However, the telemarketer must provide clear and convincing evidence that the caller ID information could not be transmitted. FACSIMILE TRANSMISSIONS • Newspapers may not send unsolicited advertisements or promotions by facsimile unless they have the prior express invitation or permission of the recipient. Unlike the telephone solicitation rules, this rule applies to business to business calls, in addition to business to consumer calls. The prohibition applies to faxes sent by stand alone fax machines, computers with modems attached or computerized fax servers, but not to faxes sent as email over the Internet. 6
  7. 7. • The new rule would have required the express invitation or permission to be in writing and include the recipient’s signature, beginning on August 25, 2003, and would have eliminated the existence of an established business relationship as evidence of the recipient’s express permission to receive unsolicited facsimile advertisements. However, the FCC has stayed the section of the regulation that requires the signed, written consent, as well as its determination that an established business relationship is not sufficient to show prior express invitation or permission, and delayed the effective date to January 1, 2005. • Thus, beginning on August 25, 2003 through January 1, 2005, express permission may be evidenced by either an established business relationship or prior express permission. During this period, express permission will not require written authorization. In addition, newspapers should use the 1992 definition of an “established business relationship” (See EBR definition section on page 3). If a newspaper chooses to rely on oral permission, it should keep sufficient evidence that express consent was given. This evidence might include a tape recording of a conversation between the newspaper and the fax recipient that occurred before the facsimile was sent. • Permission cannot be in the form of a “negative option”. For example, a newspaper would not have the requisite permission if it sends a facsimile advertisement containing a telephone number and an instruction to call if the recipient no longer wishes to receive such faxes. Similarly, facsimile requests for permission to transmit faxed ads, including toll-free opt-out numbers would violate the rule. • Fax broadcasters (including any subsidiaries of newspaper companies that might provide this service), who transmit other entities’ advertisements to a large number of telephone facsimile machines, will be liable for an unsolicited fax if they are involved to a high degree or have actual notice of an illegal use of the transmission. For example, fax broadcasters who create or maintain the lists of facsimile numbers or who review or assess the content of a facsimile message would be held responsible. Fax broadcasters that demonstrate a high degree of involvement in the transmission of the facsimile advertisement must be identified in the header of the facsimile, along with the identification of the sender. Adequate identification in the header must include the legal name under which the sender and/or fax broadcaster is officially registered to conduct business, even if the sender also chooses to include its “doing business as” name or other widely recognized name. If you have any questions regarding compliance with the federal telemarketing rules, you may contact René Milam, NAA’s Vice President and General Counsel at or 703-902- 1815. August 21, 2003 7