On August 19, 2008, the Federal Trade Commission (FTC) issued two amendments to the Telemarketing Sales Rule (TSR) that affect prerecorded calls. The first amendment modifies the TSR’s method of calculating the maximum permissible level of “call abandonment,” and became effective on October 1. The other amendment expressly bars prerecorded telemarketing calls unless a consumer previously has agreed to receive such calls from the seller.

The Technical Amendment

On October 1, 2008, the FTC implemented a new method for measuring the maximum call abandonment rate prescribed by the TSR’s call abandonment safe harbor. Call abandonment generally results when telemarketing equipment known as predictive dialers reach more consumers than can be connected to a sales representative and either hang up on some consumers or leave a period of “dead air” before a sales representative can speak with the consumer.

While the TSR prohibits telemarketers from abandoning calls, the FTC nevertheless provides a safe harbor to preserve telemarketers’ or sellers’ ability to use these predictive dialers. To fall within the safe harbor, telemarketers and sellers must ensure that: 

  1. no more than 3 percent of all calls answered by a person are abandoned; 
  1. the telephone rings for at least 15 seconds or four rings; 
  1. a prerecorded message is played, stating the name and telephone number of the seller whenever a sales representative cannot be accessed within two seconds of the consumer hearing a completed greeting; and 
  1. records documenting compliance are maintained.

The previous TSR standard for measuring the permissible call abandonment rate under this safe harbor required that a seller or telemarketer employ “technology that ensures abandonment of no more than three percent of all calls answered by a person, measured by per day calling campaign.” Sellers and telemarketers will now employ technology that calculates the call abandonment rate “over the duration of a single calling campaign, if less than 30 days, or separately over each successive 30-day period or portion thereof that the campaign continues.”

The amended standard is designed to permit the use of smaller, segmented calling lists, which are intended to ensure that telemarketing offers target those consumers who are most likely to be interested in the product or service, without an appreciable increase in call abandonment. The FTC proposed this amendment to remedy the problem that arises from the use of predictive dialers with such calling lists — when the group of consumers to be called is smaller, the deviation from expected answering and abandonment rates is greater. Now, as a result of this amendment, sellers and telemarketers will not need to implement inefficient procedures, such as relying on manual dialing, slowing outgoing calls, or expanding campaigns to larger groups of consumers to minimize the effect of variations in the abandonment rate, in order to comply with the amended call abandonment standard.

The Prerecorded Call Amendment

The amendment to prerecorded call requirements will take effect in two stages. First, the requirement that prerecorded calls provide an automated interactive opt-out mechanism will take effect on December 1, 2008. This amendment, which added Section 310.4(b)(1)(v)(B) to the TSR, requires that any “outbound telephone call” delivering a prerecorded message must follow six requirements (see sidebar on “Prerecorded Message Requirements”).

Second, the prohibition against delivering prerecorded messages without the prior express written consent of the consumer will take effect nine months later, on September 1, 2009. Consequently, telemarketers and sellers will no longer be able to initiate outbound telephone calls that deliver a prerecorded message “to induce the purchase of any good or service” unless they have obtained from the call recipient an express written agreement that demonstrates or includes: 

  1. the seller obtained the consumer’s authorization to place such calls after providing clear and conspicuous disclosure that the purpose of the agreement is to permit delivery of prerecorded calls to the consumer; 
  1. the seller obtained written consent without requiring the agreement to be executed as a condition of purchasing any good or service; 
  1. the consumer’s willingness to receive prerecorded calls on behalf of a specific seller; and 
  1. the consumer’s telephone number and signature, which may be obtained in any matter permitted by the E-SIGN Act.

When fashioning the Section 310.4(b)(1)(v) amendment, the FTC carved out two exemptions. All healthcare-related calls subject to the Health Insurance Portability and Accountability Act will be exempt from the amended TSR requirements, while calls made by for-profit telemarketers on behalf of a non-profit charitable organization to its members or donors will be subject to the opt-out requirements but will be exempt from the prior written agreement requirement.

The FTC also made clear that calls that comply with the opt-out and written agreement requirements will not violate the call abandonment prohibition, discussed above, solely because the consumer is connected within two seconds to a recording instead of a telemarketer. Otherwise, all calls that deliver non-interactive prerecorded messages will be prohibited.

The FTC will revoke its forbearance policy upon implementation of the opt-out requirements on December 1, 2008. Nevertheless, sellers may place prerecorded calls to both existing and new customers with whom they have an Established Business Relationship (EBR) until stage two of the Prerecorded Call Amendment takes effect on September 1, 2009, so long as they comply with Section 310.4(b)(1)(v)(B). Once stage two of the amendment takes effect, the written agreement requirement will replace the EBR requirement as the sole authorization for placing prerecorded calls to numbers on the registry.

Sellers and telemarketers that deliver prerecorded calls should ensure that their calling systems are modified to reflect the FTC’s recent amendments. In particular, such sellers and telemarketers should conduct the needed employee training on the new TSR requirements and should implement the necessary mechanisms, such as revised contracts, redesigned Web sites, and/or new policies to obtain and record customers’ express written consent before attempting to deliver prerecorded calls.

PRERECORDED MESSAGE REQUIREMENTS 

  1. allow the consumer's telephone to ring for at least 15 seconds or four rings before an unanswered call is disconnected; 
  1. begin the prerecorded message within two seconds of the completed greeting to the person called; 
  1. disclose promptly at the outset of the call the means by which the person called may assert a Do-Not-Call request at any time during the message; 
  1. if the call could be answered in person, promptly make an automated interactive voice and/or key press-activated opt-out mechanism available at all times during the message that automatically adds the telephone number called to the seller's entity-specific Do-Not-Call list and thereafter immediately terminates the call; 
  1. if the call could be answered by an answering machine or voicemail service, promptly provide a tollfree telephone number that also allows the person called to connect directly to an automated voice and/or key press-activated opt-out mechanism that is accessible at any time after receipt of the message; and
  1.  comply with all other requirements of the TSR and applicable federal and state laws.

TAKE A CLOSER LOOK BACK

For more information about other telemarketing milestones, please see:

FCC Proposes to Drop Five- Year Limit on National Do-Not- Call Registrations (December 2007)

FTC Delays Ban on Prerecorded Telemarketing Calls (December 2006)