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FTC Closes the Door On Prerecorded Message Telemarketing

The Federal Trade Commission (FTC) recently announced amendments to the Telemarketing Sales Rule (TSR) provisions regarding prerecorded message telemarketing.  See 73 FR 51163 – 51204 (August 29, 2008).  While the amendments do not affect a consumer’s ability to continue to receive calls that deliver purely “informational” prerecorded messages (for example, notifying consumers that their flight has been cancelled, that they have a service appointment, or similar messages), the amendments do: (1) expressly bar telemarketing calls that deliver prerecorded messages, unless a consumer previously has agreed to accept such calls from the seller; and (2) modify the TSR’s method of calculating the maximum permissible rate of “call abandonment.”

I.  Prerecorded Message Ban.  The first amendment adopted by the FTC:

  • Expressly prohibits, effective September 1, 2009, all telemarketing sales calls that deliver prerecorded messages, whether answered in person by a consumer or by an answering machine or voicemail service, unless the seller has previously obtained the recipient’s signed, written agreement to receive such calls;
  • Permits sellers to obtain the required permission for prerecorded message sales calls from a consumer in any manner permitted by the Electronic Signatures In Global and National Commerce Act (E-SIGN Act);
  • Exempts healthcare-related prerecorded message calls that are subject to the Health Insurance Portability and Accountability Act (HIPAA) from the prohibition on telemarketing calls that deliver prerecorded messages;
  • Exempts from the written agreement requirement all charitable solicitation calls placed by for-profit telemarketers (telefunders) that deliver prerecorded messages on behalf of non-profits to members of, or previous donors to, the nonprofit, but require that such calls include a prompt key-press or voice-activated opt-out mechanism (see next bullet);
  • Requires that, effective December 1, 2008, sellers and telemarketers provide, at the outset of all prerecorded messages, an automated key-press or voice-activated interactive opt-out mechanism so that consumers can opt out as easily as they can from a live telemarketing call;
  • Ends the FTC’s current policy of forbearing from bringing enforcement actions against sellers and telemarketers who place prerecorded calls that meet certain specified conditions that would be inconsistent with the new requirements.  See 71 FR 77634 (Dec. 27, 2006); but
  • Permits sellers, as under the previous forbearance policy, to continue until August 31, 2009, to place calls delivering prerecorded messages to consumers with whom they have an established business relationship, after which no prerecorded message calls can be made to consumers without their express permission.

Accordingly, from December 1, 2008, through August 31, 2009 (in addition to other TSR and federal and state law requirements), all prerecorded telemarketing calls must:

  • Allow the telephone to ring for at least 15 seconds or four rings before an unanswered call is disconnected;
  • Begin the prerecorded message within two seconds of a completed greeting by the consumer who answers;
  • Disclose at the outset of the call that the recipient may ask to be placed on the company’s do-not-call list at any time during the message;
  • In cases where the call is answered by a person, make an automated interactive voice and/or key-press-activated opt-out mechanism available during the message that adds the phone number to the company’s do-not-call list and then immediately ends the call; and
  • In cases where the call is answered by an answering machine or voicemail, provide a toll-free number that allows the person called to be connected to an automated interactive voice and/or key-press-activated opt-out mechanism anytime after the message is received.

II.  Abandoned Call Rate Calculation.  The second amendment adopted by the FTC pertains to the method of calculating the maximum allowable rate of call abandonment that telemarketers may have.  Call abandonment is a side-effect of very efficient telemarketing equipment called predictive dialers.  Predictive dialers place calls in anticipation that a salesperson will become available by the time one of the numbers called is answered.  Inevitably, a call will sometimes connect when no sales representative is available.  The TSR sets a limit on how often this can occur.  It requires that at least 97 percent of a telemarketer’s calls that are answered in person — not by an answering machine — be connected to a salesperson within two seconds after a consumer answers.  This is designed to minimize the number of “dead air” and “hang-up” calls that result when no salesperson is available to take the call.

While the amendment retains the current three percent permissible call abandonment rate, effective October 1, 2008, it permits it to be calculated over a 30-day period, rather than on a daily basis as is now the case.  The change permits the use of smaller calling lists than before without an appreciable increase in call abandonments. It also enables sellers to target their calling campaigns to consumers most likely to be interested in their offer, and benefits small businesses that have smaller customer lists in particular.