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June 2011: Inbound Calls Covered by the TSR? Say it ain't so, Joe!

by Joseph Sanscrainte, an attorney specializing in telemarketing law.

There are many myths out there in the telemarketing world, many of which are surprisingly resilient. Examples include the idea that referrals provided by one business to another are exempt from Do Not Call restrictions; that you never have to worry about state/federal telemarketing rules if you're only doing business to business calls; and that it's ok to send off prerecorded messages so long as you don't get caught doing it.

Today's myth-busting topic? Campaigns designed to generate inbound calls. Part A of the inbound myth is that you are not obligated to pay attention to state by state commercial registration rules so long as you're only doing inbound call campaigns. As most everybody knows, there are thirty-three states that require entities that engage in telemarketing (that are not otherwise exempt from the rule) to register with the state. What apparently many people DON'T know, however, is that twenty-five of these states' rules apply to inbound calls as well, i.e., if you accept inbound calls from residents of the state in question, and you offer goods or services for sale to said consumers, you have to jump through the commercial registration hoop. On average, each commercial registration state has about 20 exemptions to the commercial registration requirements, so loopholes abound. BUT - inbound calling should not be considered as an exemption by any means. (Contact Center Compliance's Registration ExemptionMaster incorporates all elements of registration laws and exemptions, including the inbound calling requirements. Anyone looking for the easiest, most cost-effective way to figure out registration requirements should sign up immediately for the Compliance Guide, which includes the ExemptionMaster.)

Part B of the inbound myth is that the Federal Trade Commission's Telemarketing Sales Rule does NOT apply to inbound calls. All too often, the way this plays out is that entities conducting inbound calling campaigns adopt a bit of a "wild west" mentality - i.e., we're not covered by telemarketing laws, so that means we can do whatever we want, right?

Wrong! First of all, the FTC can, and will, do whatever it wants enforcement-wise just based on Section 5(a) of the FTC Act itself. This section gives the FTC the right to commence enforcement actions against acts in or affecting commerce deemed "unfair" or "deceptive." Bottom line? If you're engaged in interstate commerce, you'd best avoid unfair and/or deceptive practices. More to the point, however, the FTC's TSR exemptions are at first blush pretty simple, but don't let appearances deceive you - they are very complex and there are many telemarketers out there who are working under a false impression that their programs are exempt.

The TSR may cover an inbound program based solely upon the type of offer being made (for example, as Russell Dalbey, the CEO and founder of the company behind the "Winning in the Cash Flow Business" program found out just a couple of weeks ago, the TSR covers inbound calls related to investment opportunities.) The TSR may cover a program based upon how the inbound calls are generated (e.g., inbound calls generated by direct mail pieces that do NOT include all of the TSR pre-purchase disclosures are covered by the TSR.) Finally, any time a marketer offers additional sales opportunities to consumers following the initial opportunity, the resulting "upsell" is covered by the TSR. The FTC requires all telemarketers to think of upsells in the following manner: imagine that you hung up after the first transaction, and then called the consumer back to offer another product or service. You do NOT have to worry about Do Not Call, but you DO have to worry about identification disclosures (for "external" upsells) and purchase disclosures (ensuring the consumer understands what he/she is getting.)

There are many reasons why some telemarketers may feel like they're flying under the radar, but more often than not, that feeling is based on ignorance rather fact. A wise man once opined that "ignorance is bliss" - but he never operated a call center, did he?

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