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Compliance Guide™ Features

June 2009: Inquiries about Inquiries? Inquiring Minds Want to Know

by Joseph Sanscrainte, an attorney specializing in telemarketing law.

As an attorney, I'm often asked by clients for my interpretation of "nuance" issues in telemarketing laws - and there are plenty of them. Generally speaking, the legislators pass the laws based upon whatever information (usually incomplete) that they have on hand. The baton is then passed to the regulators, who draft regulations while pretending to listen to feedback from the industry.

The final product is... well, you know what the final product is. A series of confusing, often conflicting, laws and regulations that in many circumstances, upon closer inspection, fail to provide the sort of nuts and bolts directives that the industry can easily follow.

This is where enforcement actions come in. Very often, even the enforcers don't know exactly what a rule may mean unless and until they actually sit down and start applying it to specific circumstances. This is why it is critically important to cull whatever nuggets of insight you can from the experience of those unfortunate enough to find themselves in the enforcement cross-hairs.

One area of concern for any seller relying upon an outside source for leads is how to firmly establish that the consumer in question is in fact registering an "inquiry" or "express written agreement" with the seller for DNC exemption purposes. This is an extremely important nuance, since a "good" inquiry/agreement means being able to call the consumer, even if he or she is on the national DNC registry, without breaking the rules. A "bad" inquiry/agreement? Well, here are two recent cases on point - the FTC's enforcement actions against Westgate and All In One (from January of 2009).

Westgate engaged in the common practice of obtaining leads from a third-party lead generator. Nothing in particular wrong with doing this - but if you want to call these leads relying upon a DNC exemption, you have to make sure that the lead-generator is doing what it's supposed to do. It's this latter part of the equation that was never spelled out precisely by the FTC in its regulations.

Westgate's lead generator (Brandarama) used a website that asked visitors a series of travel-related survey questions - and those consumers that responded were sent over to Westgate. Here's the key language from the FTC's complaint regarding Brandarama's (and thus, Westgate's) practices:

"The online form did not identify [Westgate.] The website's only reference to [Westgate] appeared at the end of either the site's privacy policy statement and its terms and conditions statement. The online form contained a pre-checked box indicating that consumers had agreed to the site's privacy policy statement and its terms and conditions statement, which were accessible to consumers via hyperlinks. Consumers were not required to access those statements before submitting their responses to the online form." (Emphasis added)

What's the take-away here? If you're a seller-telemarketer obtaining leads from a third-party, and you're relying upon "inquiry" to exempt you from national DNC rules, take a close look at the practices of your lead generator. The lead-generator needs to provide information such that a reasonable consumer would expect a follow-up call from you - and simply burying such notice in the terms and conditions, in a manner whereby consumers generally don't receive this information - is not enough.

Another common means of generating leads is via sweepstakes. As All In One Vacation Club found out, however, proper notice to consumers is required if you want to rely upon inquiry or express agreement as your DNC exemption.

All In One used a sweepstakes entry form that, on its front, required a consumer to provide his or her name, telephone number, homes address, email address and signature. The back of the form contained a number of disclaimers, including the following:

By filling out this entrance form you are consenting to be removed from any no call registry for the specific purpose of allowing the sponsor to contact you with a discounted travel opportunity that is separate from the sweepstakes offered above.

Some may think that as long as the above disclosure is located somewhere on the form in question, then you have a viable DNC exemption - express agreement most likely, but if not, certainly an inquiry. The problem is, the FTC does not agree. With regard to the above, the FTC determined that the form did not generate either express agreement or an inquiry, and thus the follow up calls made by All In One were violations of the DNC rules. The key concepts here are: a reasonable consumer must be given sufficient notice to expect a prompt follow-up call by the seller (for inquiry); and consumers must be advised clearly and conspicuously that express authorization is being given by filling out the form (for express agreement.)

Bottom line - if you rely upon third-parties or sweepstakes entry forms to generate inquiries or express agreement to make follow up calls, make sure to review your practices in light of the All In One and Westgate cases (available at www.ftc.gov.)

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