Businesses engaging in telemarketing must comply with two sets of federal administrative rules issued by the Federal Communications Commission (FCC) and the Federal Trade Commission (FTC), and promulgated under the Telephone Consumer Protection Act (TCPA) and the Telemarketing and Consumer Fraud and Abuse Prevention Act (TCFAPA), respectively.
The FCC and FTC rules are generally consistent, but each agency has different jurisdiction. The FTC has jurisdiction over only interstate calls, and it does not have jurisdiction over certain entities, such as telecommunications carriers, insurance companies, airlines and banks. The FCC, on the other hand, has jurisdiction over intrastate and interstate calls, and its jurisdiction extends to the entities that are excluded from the FTC’s jurisdiction. The FTC also has more comprehensive rules governing transactions that are effectuated during a telemarketing call.
Penalties for failure to comply with the FCC and FTC telemarketing requirements can be severe. As an example, the FTC fined DirecTV $5.3 million for violations of its do-not-call and call abandonment rules.
In addition to the federal regulations, many states have regulations governing intrastate telemarketing. In many instances, these regulations are more restrictive than the federal regulations, especially when it comes to time-of-day calling restrictions. This primer summarizes the federal rules, but companies that engage in intrastate telemarketing must also be sure to check on any state-specific requirements that might be applicable.
Who Can Companies Call?
Under the federal FCC and FTC do-not-call rules, telemarketers are generally prohibited from calling any number that has been registered on the federal do-not-call (DNC) registry. However, a telemarketer may call a consumer with whom it has an “established business relationship” (EBR) even if their number is on the DNC registry. Under the rules, telemarketers may call customers who are on the DNC registry if they are calling them
- within 18 months after the consumer’s last purchase, delivery or payment; or
- within three months after the consumer makes an inquiry or submits an application to the company.
An important exception to the EBR rule is that consumers may make a company-specific DNC request, in which case the company cannot call that consumer, even if it has an otherwise-valid EBR.
As for prospective customers (i.e., customers for whom there is no EBR), a company may only call if it has obtained signed permission from the prospective customer.
The federal do-not-call rules apply to business-to-consumer calls. The rules do not apply to business-to-business calls.
In addition, under the FCC’s rules, no calls can be made to wireless phones through an autodialer (which are used in the vast majority of telemarketing calls). Thus, wireless phone numbers should be excluded from telemarketing campaigns.
When Can Companies Call?
Under the federal do-not-call rules, telemarketing calls can be made between 8 a.m. and 9 p.m. (in the call recipient’s time zone). In some states, the calling hours are more limited.
Caller Identification Requirements
When placing telemarketing calls, every outbound call must transmit the phone number of the seller, service bureau or customer service phone number that will be answered during normal business hours. The caller ID must also include the name of the seller or service bureau. Blocking transmission of the caller ID information is prohibited.
Abandoned Call Rules
Telemarketing calls must be connected to a live representative within two seconds of the consumer’s completed greeting. The abandoned call rule provides a “safe harbor” for abandoned calls that occur as a result of using predictive dialers. To meet the safe harbor requirements, the telemarketer must (1) allow 15 seconds or four rings before disconnecting an unanswered call; (2) play a pre-recorded message that includes the company’s name and phone number, whenever a live sales representative is unavailable within two seconds of the completed greeting of the person answering the call; (3) set abandonment rates not to exceed 3 percent per calling campaign (measured on a 30-day basis); and (4) retain appropriate records documenting compliance.
The FTC has lengthy rules governing how transactions are completed during a telemarketing call. These rules are complex and vary depending upon the types of payment accepted—whether the telemarketer is using a negative option plan or a free-to-pay conversion program, or is retaining pre-acquired account information and the like. Proper application of these rules depends upon the calling campaign at issue, and typically requires a review of the calling scripts to be used during the telemarketing campaign.