Transcript Telemarketing Regulations - New Jersey Press Association

Telemarketing Regulations
“Do Not Call”
McGimpsey & Cafferty
Thomas J. Cafferty
Arlene M. Turinchak
Sources Of Telemarketing
Regulation
The TCPA
The FTC
The FCC
N.J.
The TCPA
• Created in 1991 in response to consumer
concerns about growing number of
unsolicited telephone marketing calls to
their homes
The TCPA
• FCC rules adopted pursuant to TCPA prohibited
telephone solicitation calls to a home before 8am
or after 9pm
• Callers must provide their name, name of
person/entity on whose behalf call is made and, if
asked, telephone number or address at which the
person/entity may be contacted, the number to be
called may not be a 900 number or any other
number for which charges exceed local or long
distance transmission charges
Telephone Solicitation
• Telephone solicitation is a call that acts as
an advertisement
• Telephone solicitation does not include:
» Calls or messages placed with the receiver’s prior
consent
» On behalf of a tax exempt non-profit entity
» To a person/entity with whom the caller has an
established business relationship
Established Business
Relationship
• Where the person has made inquiry,
application, purchase, or transaction
regarding products or services offered by
the caller
• Includes both subscribers and advertisers
Prerecorded voice messages
• Limits artificial or prerecorded voice messages, to
where there is prior consent, non-commercial
calls, emergency calls necessary to the consumer’s
health and safety, calls made by tax exempt
entities and calls from businesses where there is a
prior business relationship
• Prohibits calls to emergency lines, hospitals,
wireless numbers, or any other number which
would result in a charge to the person called
“Autodialers”
• Autodialers produce, store and dial
telephone numbers using a random or
sequential number generator
• Calls using autodialer, or prerecorded voice
messages may not tie up two or more lines
of a business at one time
• Must be programmed to release the line
within 5 seconds of a caller hang-up
Company Specific Do-not-call
Lists
• The person or business called could request
that no more calls be placed to their
residence
• Caller is required to maintain a do-not-call
list
• Person or business was to be kept on the
list for 10 years
Company Specific Do-not-call
• Caller required to:
– Maintain internal written procedures to comply with the
TCPA do-not-call rules
– Insure the individual callers provide the required
identifying information to person/entity called
– Train callers on internal procedures including how to
place person/entities on the do-not-call list
– Insure that a caller would be provided a copy of the
internal policy if they request
Changing Landscape
• 1991 TCPA enacted – 300,000 solicitors
were used to telemarket goods and services
to approximately 18 million Americans
daily
• 1990 sales generated thru telemarketing
amounted to 435 billion dollars annually
Changing Landscape
• 2003 estimated 104 million telemarketing
calls to consumers each day
• 2003 estimated telemarketing calls generate
over 600 billion in sales each year
• 2003 telemarketing industry is largest direct
marketing system in US, representing
34.6% of total direct market sales
National Do-Not-Call List
FTC
– Maintains the list
– Enforces the rules as to interstate calls
FCC
– Enforces the rules as to intrastate calls and
interstate calls outside FTC jurisdiction
National Do-Not-Call
• Requires FTC and FCC to coordinate and
establish rules and regulations for implementation
to attain “maximize consistency” and avoid
redundancy between the agencies
• Goal is a single national database for consumer
registration
• Permits FTC to collect fees from telemarketers for
implementation and enforcement of the national
registry
2003 Do-Not-Call Rules
• FTC Rules
– December 2002 establishes National Do-NotCall registry effective October 1, 2003
– Consumers can register their telephone
numbers by:
• Calling toll free number from phone number they
wish to register;or
• Via the internet
Exempt Businesses
• FTC do-not-call rules will not apply to
entities over which it has no jurisdiction:
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Common Carriers
Banks
Insurance companies
Airlines
Intrastate telemarketing calls
Exempt Calls
• FTC exempts:
– Calls made by or on behalf of charitable
organizations except where the calls are made
by outside telemarketers
– Calls to consumers with whom the caller has an
established business relationship
– Calls to businesses
– Calls expressly permitted by the caller
FCC Rules
• Apply to all businesses including those exempt
from FTC jurisdiction
• Apply to both inter and intra state telemarketing
• Exempts tax exempt non-profit entities except
interstate calls by for-profit telemarketers hired by
the non-profit to solicit on it’s behalf
• Exempts calls made to persons with whom the
telemarketer has a “personal relationship” - an
individual personally know to the telemarketer
Established Business
Relationship
“a prior or existing relationship formed by a voluntary twoway communication between a person or entity and a
residential subscriber with or without an exchange of
consideration, on the basis of the subscriber’s purchase or
transaction with the entity within the eighteen (18) months
immediately preceding the date of the telephone call or on
the basis of the subscriber’s inquiry or application
regarding products or services offered by the entity within
the three (3) months preceding the date of the call, which
relationship has not been previously terminated by either
party”
Established Business
Relationship
EBR with one company may extend to
affiliates and subsidiaries provided the
consumer would reasonably expect them to
be included given the nature and type of
goods or services offered and identity of the
affiliate
Established Business
Relationship
EBR does not permit companies to make calls based
on referrals from existing customers
Any company asserting an EBR must demonstrate,
with “clear and convincing” evidence, that EBR
exists
Application of the EBR rule
• 18 months runs from the last date of
payment or transaction with the caller
• 3 months runs from the date of the inquiry
Application of the EBR rule
• Inquiry must be the type that a person
would expect a call from the business
• For example, an inquiry as to location or hours
of operation would not create an EBR
• EBR is not limited by products and
services. Business is permitted to offer full
range of services and products
• EBR may be terminated by the customer by
request to be placed on the company
specific Do-Not-Call list
Non-profit Entities
• FCC says calls by a for-profit telemarketer
on behalf of the tax exempt non-profit entity
are exempt except where bundled with a
commercial message for a for-profit entity
Non-profit Entities
• For-profit can not claim the exemption by stating a
portion of the proceeds of the purchase will be
donated to a charitable cause
• FTC exempts interstate calls by non-profits except
where the calls are made by a for-profit
telemarketer hired by the non-profit. Calls by the
non-profit are subject to the company specific DoNot-Call rules
Automated Telephone Dialing
Equipment
• TCPA definition
• “equipment which has the capacity (A) to store or
produce telephone numbers to be called, using a
random or sequential generator; and (B) to dial such
numbers”
• Key concept is the “capacity” to dial numbers without human
intervention
• Predictive dialer is equipment that’s dials numbers and
predicts when a sales agent will be available to take a
call. The principal feature of predictive dialing is a
timing function.
Prohibitions on Autodialers
• Dialing emergency numbers, health care
facilities, telephone numbers assigned to
wireless services and any other numbers for
which the consumer is charged for the call
• “War dialing” – the practice of using
autodialers to dial large blocks of telephone
numbers in order to identify lines that
belong to fax machines
Artificial or Prerecorded Voice
Messages
• TCPA prohibits calls using prerecorded or
artificial voice to deliver a message to residences
without the express consent of the called party
unless the call is for emergency purposes or is
specifically exempted
• In 1992 the FCC exempted non-commercial and
commercial calls that do not contain an unsolicited
advertisement. The FCC also exempted EBR
calls.
2003 Rules
• Prerecorded messages containing free offers
and information about goods and services
that are commercially available are now
prohibited by the FTC rules. The FCC rules
permit a EBR exception to the prohibition.
2003 Rules
• Also prohibited are prerecorded messages that
include or introduce an unsolicited advertisement.
For example calls from a credit card
company to an existing customer offering
overdraft protection would constitute unsolicited
advertisement or a call from a phone company to
customers regarding new calling plans would in
most instances constitute unsolicited
advertisements.
Identification Requirements
• Now applies to all live and artificial or
prerecorded messages regardless of how delivered.
• Must provide:
– Legal name under which caller is registered to operate.
May use d/b/a or alias provided legal name of business
is also stated.
– The telephone number or address of the caller. Must be
a number that consumer can use during normal business
hours to ask not to be called again.
Abandoned Calls
• Predictive dialers that put the consumer on hold or
abandon the call if a sales rep is not available,
creating “dead air” or “hang-ups”
• Predictive dialer users may not abandon more than
3 percent of calls in a 30 day period (3% per day
for interstate calls)
• Call is considered abandoned if it is not
transferred to a live agent within 2 seconds of
recipient’s greeting
SUPERVISOR:
SUPERVISOR:
Abandoned Calls
• Abandoned calls must deliver a recorded message
providing the telemarketers name, telephone
number, and notification that the call was for
telemarketing purposes.
• Caller must allow the telephone to ring for 15
seconds or 4 rings before disconnecting any
unanswered call
• Callers must keep records to prove compliance
with the 3% rule
Wireless Telephone Numbers
• Autodialed, prerecorded or artificial voice
messages prohibited
• FCC rules permit live calls to wireless
numbers in recognition that consumers may
use a wireless telephone as the primary or
only phone
Caller ID
• All callers must transmit caller ID
information
• Callers are prohibited from using any
technology to block caller ID information
• Caller ID requirements not effective until
January 29, 2004
Unsolicited Faxes
• Prohibits the sending of any “unsolicited
advertisements” to a fax machine
• “unsolicited advertisement” means any
material advertising the commercial
availability of quality of any property,
goods, or services transmitted to any person
without prior express consent or invitation
Unsolicited Faxes
• FCC requires consent to be in writing and include
recipient’s signature, and fax number and may not
in form of negative option (“call if do not wish to
receive faxes”)
• EBR does not confer permission to send
unsolicited faxes
• Prohibition does not become effective until
January 2005
Time of Day Restrictions
• Calls may only be made between 8am and
9pm local time at the recipient’s location
Procedures for Compliance
• Effective October 1, 2003
• Register with the FTC
– Provide identifying information about business
– Identify a contact person
– Business will be provided a unique account
number
– Agree to use the telephones numbers for
telemarketing only
Procedures for Compliance
• Obtain a copy of the Do-Not-Call list at
least every three months, no more than once
every 24 hours
• NO TELEMARKETING CALLS TO ANY
NUMBERS MAY BE MADE UNTIL THE
BUSINESS HAS A COPY OF THE LIST
• Business must cease calls to a number
within 45 days of it appearing on the list
The Do-Not-Call List
• List is prepared by area codes and any
business is only required to obtain the list
for the area code it will be calling
• Fees
– Cost is $25.00 per area code, paid annually
– $15.00 for each area code added to company
list in the second 6 months of the annual term
– Access to less than 5 area codes is free
Types of Lists
• List contains only 10 digit telephone
numbers, no names or other information
• Initial list is the “full list” of all do-not-call
numbers in the specified area code
• Thereafter business can obtain the “change
list” containing the additions and deletions
to the list (designated A or D) and the date
of the change
Third Party Telemarketers
• May obtain access to the registry through its
own account or through the business’
account, no additional fees for an outside
agency using the business’ account number
• Business must still register even if using a
telemarketing service
Company Specific Lists
• Business is still required to keep company
specific Do-Not-Call lists
• Only change is that numbers now remain on
the list for only 5 years
Safe Harbor
• Caller will not be liable for violating the National
Do-Not-Call rules if can demonstrate that as part
of its routine business practice
– It has established and implemented written procedures
to comply with the rules and implement the list
– It has trained its personnel and any entity assisting in its
compliance in the procedures established under the
rules
– Caller has maintained and recorded a list of telephone
numbers the caller may not contact
– Caller has accessed the National Do-Not-Call list, and
purchased the list of numbers at least every 3 months
Safe Harbor
• Caller uses a process to prevent telemarketing
to any telephone number on any list obtained
from the registry no more than 3 months prior
to the date the call is made and maintains a
records documenting this process
• Any subsequent call otherwise violating the
rules is the result of error and was not called
more than once in the preceding 12 months
Private Enforcement
• Consumer may file suit in state court for
violation of autodialer, artificial or
prerecorded voice messages, and unsolicited
fax provisions
• Consumer may file in state court if received
more than one telephone call within any 12
month period by or on behalf of the same
entity in violation of the rules
Violations and Defenses
• Up to $11,000.00 fine per violation if suit is
brought by the FCC/FTC
• $500 fine per violation if suit by private person
• Safe Harbor - defense that the caller had internal
policies, performed training, and maintained a donot-call list
• Caller is permitted one call to a person or business
on the do-not-call list in a 12 month period
State and Federal Do-Not-Call
• Goal to permit States to download the State
to list to the National list
• Federal rules do not create a blanket
preemption of state law
State and Federal Do-Not-Call
• State laws may be more restrictive but complaints
of inconsistency may be brought to the FCC,
determinations will be made on a case-by-case
basis
• FCC has declared “any state regulation of
interstate telemarketing calls that differs from our
rules almost certainly would conflict with and
frustrate the federal scheme and almost certainly
would be preempted”
New Jersey
• Adopted in May 2003, to be effective when the
DCA certifies it is prepared to establish and
maintain a Do-Not-Call list - no later than May 21,
2004
• Statewide Do-Not-Call list to be established and
administered by the Division Of Consumer Affairs
• Applies to all telemarketers doing business in the
State
Registration
• All telemarketers and businesses using
telemarketers must register with DCA
• Annual registration fee not yet set
• Each telemarketer must certify that he/she has not
been convicted of a crime involving fraud, theft,
forgery, or any crime of the first degree
• DCA may require the telemarketer post a bond of
up to $25,000
Compliance
• New copy of the list must be obtained at
least quarterly
• No calls may be made to any number more
than 45 days after the number appears on
the list
• No calls to a “commercial mobile service
device” except service provider to customer
Compliance
• No calls between 9pm and 8am local time at the
recipients location
• Telemarketer may not block caller ID
• Within 30 seconds of the recipient answering the
call the call must:
– Identify the telemarketers name
– Identify the entity on whose behalf the call is being
made
– State the purpose of the call
Established Business
Relationship
• NO SPECIFIC EXCEPTION FOR
ESTABLISHED BUSINESS RELATIONSHIP IN
NJ STATUTE
• Telemarketing sales call is defined as “a telephone
call made by a telemarketer to a customer to
encourage the purchase or rental of, or investment
in, merchandise, except for continuing services”
Established Business
Relationship
• Unsolicited telemarketing sales call is
defined as “any telemarketing sales call
other than a call made …(2) an existing
customer…”
• Will this form the basis for an EBR
exemption in the regulations?
• If not, how is this exemption likely to work?
Safe Harbor
• Telemarketer not liable if:
– Has updated the list quarterly
– Has established and implemented written
policies and procedures to comply with the law
– Individual callers have been trained
– Business maintains records demonstrating
compliance
– Call to person on the list is isolated call, not
more than once in 12 months
Violations
• Violation of Act is a violation of laws
against fraudulent sales
• First offense fine up to $7500
• Subsequent offenses fines up to $15,000
• Additional fines are possible if the violation
is found to be part of a scheme to defraud
Federal Regulatory Coordination
• Tax exempt charitable and non-profit
organizations
• Personal relationship calls
• Abandoned Calls
Recent Developments
• Oklahoma District Court found no statutory
Authority for the FTC Do-Not-Call list
– Remedied by Congressional passage of statute
authorizing the creation of the list
• Denver District FTC Do-Not-Call rules
violate First Amendment
– based upon exclusion of certain calls by
charitable and political groups