Markets Wired

The Federal Trade Commission today announced two amendments to the Telemarketing Sales Rule (TSR). One will expressly bar telemarketing calls that deliver prerecorded messages, unless a consumer previously has agreed to accept such calls from the seller. The other related technical amendment modifies the TSR’s method of calculating the maximum permissible level of “call abandonment.”

The amendments will not affect consumers’ ability to continue to receive calls that deliver purely “informational” prerecorded messages – notifying recipients, for example, that their flight has been cancelled, that they have a service appointment, or similar messages. Such purely “informational” calls are not covered by the TSR because they do not attempt to sell the called party any goods or services.

“Just like the provisions of the Do Not Call Registry, these changes will protect consumers’ privacy,” said FTC Chairman William E. Kovacic. “The amendments now directly enable consumers to choose whether they want to receive prerecorded telemarketing calls.”

The amendments announced today will be published in the Federal Register shortly, and are available now as a link to this press release on the FTC’s Web site. They 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.

The nearly 14,000 comments elicited by that proposal overwhelmingly opposed such a change. Based on that record, in October 2006 the Commission altered its position and instead proposed 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 action announced today adopts the October 2006 proposal, with several refinements suggested by the more than 600 comments it elicited.

The New TSR Amendments

Specifically, the TSR amendments adopted by the Commission and announced today:

• Expressly prohibit telemarketing sales calls that deliver prerecorded messages, whether answered in person by a consumer or by an answering machine or voicemail service, unless the seller has previously obtained the recipient’s signed, written agreement to receive such calls;
• Permit sellers to obtain the required permission for prerecorded message sales calls from a consumer in any manner permitted by the Electronic Signatures In Global and National Commerce Act (E-SIGN Act);
• Exempt healthcare-related prerecorded message calls that are subject to the Health Insurance Portability and Accountability Act (HIPAA) from the prohibition on telemarketing calls that deliver prerecorded messages;
• Exempt from the written agreement requirement all 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 nonprofit, but require that such calls include a prompt keypress or voice-activated opt-out mechanism;
• Require that, by December 1, 2008, sellers and telemarketers provide, at the outset of all prerecorded messages, an automated keypress or voice-activated interactive opt-out mechanism so that consumers can opt out as easily as they can from a live telemarketing call;
• End the FTC’s current policy of forbearing from bringing enforcement actions against sellers and telemarketers who place prerecorded calls that meet certain specified conditions that would be inconsistent with the new requirements; but
• Permit sellers, as under the forbearance policy, 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, after which no prerecorded message calls can be made to consumers without their express permission.

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) in cases where the call is answered by a person, 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. The telemarketer, while complying with each of these provisions, also must be in compliance with all other requirements of the TSR and other federal and state laws.

The additional technical amendment the Commission has made pertains to the method of calculating the maximum allowable rate of call abandonment that telemarketers may have. Call abandonment is a side-effect of very efficient telemarketing equipment called predictive dialers. Predictive dialers place calls in anticipation that a salesperson will become available by the time one of the numbers called is answered.

Inevitably, a call will sometimes connect when no sales representative is available. The TSR sets a limit on how often this can occur. It requires that at least 97 percent of a telemarketer’s calls that are answered in person – not by an answering machine – be connected to a salesperson within two seconds after a consumer answers. This is designed to minimize the number of “dead air” and “hang-up” calls that result when no salesperson is available to take the call. The amendment will retain the current three percent permissible abandonment rate, but will permit 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 than before without an appreciable increase in call abandonments. It will enable all sellers to target their calling campaigns to consumers most likely to be interested in their offer, and will benefit small businesses that have smaller customer lists in particular.

Effective Dates

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. The amendment modifying the method for measuring the maximum allowable rate of call abandonment will become effective on October 1, 2008.

The Commission vote approving issuance of the Federal Register notice announcing the amendments to the TSR was 4-0. The notice will be published in the Register shortly and can be found on the FTC’s Web site as a link to this press release.

Copies of the prerecorded call amendments to the TSR are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,500 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

(FTC File No. R411001)
(TSR – Prerecorded.final.wpd)