The Federal Communications Commission (the “FCC”) issued a Notice of Proposed Rulemaking (“NPRM”) on January 22, 2010 that proposes new restrictions on its rules regarding artificial or prerecorded telemarketing calls (known as “robocalls”) under the Telephone Consumer Protection Act (“TCPA”). The proposed rules would more closely conform the FCC’s telemarketing rules to the Federal Trade Commission’s (the “FTC”) telemarketing rules under the Telemarketing Sales Rule (“TSR”).

Most entities that use robocalls are under the jurisdiction of both the FCC and the FTC, and therefore must comply with the FTC’s more restrictive standards. The FCC, however, has sole jurisdiction over robocalls placed by common carriers (i.e. telephone companies and airlines), banks, and insurance companies. Currently these entities are only required to comply with the FCC’s more lenient telemarketing rules. The FCC’s rules under the TCPA can also apply to intrastate calls as well as interstate calls, whereas the FTC’s restrictions apply only to interstate calls. The FCC’s proposed rule change, if adopted, will, therefore, have its most significant impact on the business sectors identified above, as well as on intrastate telemarketing campaigns.

Written Consent Requirement

The NPRM proposes to eliminate the so called “established business relationship” exception for robocalls. Currently, this exception allows a seller to make both non-commercial and commercial robocalls to any party with whom the subscriber has a prior business relationship. The FTC, on the other hand, rejected such an exception from its rules, reasoning that neither a prior inquiry nor a purchase should be deemed to imply customer consent to receive future prerecorded solicitations from a seller. The FTC’s rules expressly prohibit all unsolicited prerecorded telemarketing calls unless the solicitor has a prior written agreement from the consumer allowing such calls.

The NPRM does not propose to repeal the FCC’s current rules that allow live telephone solicitations to established business customers and non-commercial prerecorded calls that do not include a solicitation (e.g. calls notifying customers of product recalls, or of scheduled deliveries). The NPRM also proposes an exemption for health-care related prerecorded calls that are subject to the Health Insurance Portability and Accountability Act of 1996, such as immunizations reminders, prescription refill reminders, and health screening reminders. This HIPPA exemption already exists in the FTC’s rules.

Opt-Out Mechanism

The NPRM also proposes that the FCC adopt the FTC’s rule that robocalls must contain an automated interactive opt-out mechanism that is announced at the outset of the message and must be available throughout the duration of the call. Once invoked by the consumer, the interactive mechanism must automatically add the number called to the seller’s do-not-call list. Currently, the FCC’s rules only require that, during or after a call, the seller must provide a telephone number that consumers can call to make a company-specific do-not-call request. The NPRM also proposes to change the FCC’s current rules to require the immediate release of a call once the consumer hangs up the call (the FCC’s rules currently allow for 5 seconds before the seller must release the call).

Abandoned Calls/Predictive Dialers

Finally, the FCC’s telemarketing rules currently restricts the amount of calls that a live telemarketer may abandon due to predictive dialers to no more than three percent of all calls answered by a person over a 30-day period. A call is considered “abandoned” when it is not connected to a live sales representative within two seconds of the called person’s completed greeting, thereby leaving the called party listening to “dead” air. The NPRM asks whether the FCC’s rules should be revised to measure the three percent restriction per “campaign” instead of per 30-day period. A telemarketing campaign is defined as the offering of the same product or service on behalf of the same seller. The NPRM explains this change may discourage telemarketers from allocating a greater percentage of abandoned calls to certain marketing campaigns (i.e., one directed at lower income consumers).

Comments are due 60 days after the publication of the NPRM in the Federal Register which, at the date of this update, has not yet occurred. Reply Comments are due 30 days after the Comment Date. The members of the telecommunications group at Dorsey & Whitney LLP will be following the FCC’s proceeding in this matter and can answer any questions you may have about the proposed rules and assist you in filing comments with the FCC. Please contact one of the attorneys listed in the margin for more information.