September 2008: Mixed Messages: The FTC's New Rules
by Joseph Sanscrainte, an attorney with Bryan Cave, LLP, specializing in telemarketing law.
On August 19th, the Federal Trade Commission finally put an end to one its longest-running soap operas, "As the Abandoned Call Turns." Viewers across the U.S. had been watching this program for almost four years, and were finally rewarded with a final "up or down" vote on two cliff hangers: 1) when can prerecorded telemarketing calls be sent?; and 2) how does the industry measure "abandonment" rate?
For companies that send or are in the business of sending pre-recorded messages, the news is not that good. As of September 1, 2009, all prerecorded telemarketing messages are prohibited unless the sender has a signed, written agreement from the recipient. As laws go, this is of the "do not pass go" variety - that is, it starts with an overall prohibition ("it is a violation of this rule for any telemarketer to initiate any outbound call that delivers a prerecorded message"), and then allows for certain limited carve-outs (abandoned call messages, express written permission, true informational calls, and healthcare-related calls subject to HIPAA.)
The starting point for analyzing any prerecorded campaign, starting as of 9/1/09, is therefore: "Assuming that all of the calls I'm making are prohibited - does my campaign nonetheless meet any of the applicable exemptions?" (Note that charity calls by a third-party telemarketer seeking a donation from one of its members or previous donor get a free pass from the express writing requirement.)
The FTC's current practice regarding prerecorded calls (which will remain in place until 9/1/09) is to allow such calls (under certain guidelines) when made in the context of an established business relationship. Many companies have been making use of the FTC's "forbearance" policy with regard to such calls, but there's a twist starting as of December 1, 2008.
On this date, all such EBR prerecorded calls must allow the called consumer to, via an automated key press or voice-activated mechanism, assert a Do Not Call request to the company making the call. After 12/1/08, key press or voice-activated mechanisms are all that is allowed - simply providing the consumer with the ability to call a number to opt-out will no longer be enough.
As a new and interesting wrinkle, the FTC also decided to enter the previously unregulated "wild west" of answering machine messages. Specifically, the new FTC rules state that in any prerecorded telemarketing call "that could be answered by an answering machine," the telemarketer must make all required identification disclosures followed immediately by a disclosure of a toll-free number to be used for Do Not Call requests.
Interestingly, the FTC also decided that in any call "that could be answered in person," the automated key press or voice-activated Do Not Call opt-out mentioned above must be provided to the consumer answering the call. What the FTC failed to address, however, is the means by which telemarketers can reliably figure out, in real-time, which calls could be answered by an answering machine and which could be answered in person.
Perhaps the biggest news of this ruling is the FTC's abandonment of its per-day/per-calling campaign abandonment measurement rule. This new rule was met with a sigh of relief by telemarketers, since it enables a more reasonable approach to abandonment rate measurement. Rather than having to worry about relatively small campaigns that make it difficult to achieve the volume of calls necessary to truly maintain a reliable 3% rate, telemarketers can now combine calls within campaigns over successive 30-day periods.
For those popping champagne corks in celebration, there's an important caveat: the FTC's rules still do not match the FCC's more lenient standards. The FCC rule is broader - that is, a telemarketer must not abandon more than 3% of its telemarketing calls "over a 30 day period." This allows telemarketers to combine calls across campaigns, and the 30-day period in question is a rolling one.
The new FTC rule restricts the measurement to a "single calling campaign" ("campaign" being defined as an "offer of the same good or service for the same seller") over "successive" 30-day periods. For entities making millions of calls for single campaigns, these differences between the FTC and FCC may not amount to much - however, for smaller shops, the FTC's rules still take a larger compliance bite.