FTC Crackdown Illustrates the Importance of TSR Compliance

Two recent enforcement actions against so-called “robocallers” illustrate the vital importance of compliance with FTC regulations governing the use of recorded voice messaging in marketing campaigns.  The actions are part of the Commission’s ongoing efforts to crack down on illegal pre-recorded voice messaging.

On November 22, 2011, the Commission announced the filing of charges against Sonkei Communications and its owners, alleging that the company assisted its clients to make illegal “robocalls” and directed thousands of calls to consumers whose numbers were registered on the Federal Do Not Call list.   According to the FTC’s complaint, the defendants provided companies with marketing services that employed recorded voice messages that touted products such as credit card services, home security systems, and grant procurement programs. In addition the defendants allegedly gave clients the means to hide their identity by transmitting inaccurate caller names on caller ID displays, such as “SERVICE MESSAGE” or “SERVICE ANNOUNCEMENT.” The FTC also alleged that the defendants knew, or consciously avoided knowing, that their clients called phone numbers on the National Do Not Call Registry.

Similarly, on December 19, 2011, the FTC announced an enforcement action taken against Roy M. Cox and a number of domestic and offshore corporations, alleging the defendants made illegal robocalls, violated the DNC, and masked Caller ID information.

Both of these actions can be viewed as a playbook on what not to do when engaging in a recorded telemarketing campaign.

Contrary to popular belief, the use of recorded voice messages in telemarketing is not against the law, as long as it is conducted in compliance with a deceptively simple framework of guidelines set forth in the FTC’s Telemarketing Sales Rule.  Simply put, the rules prohibit telemarketing calls that deliver prerecorded messages unless the caller has previously obtained the consumer’s signed, written agreement to receive recorded calls. Once that agreement is obtained, all messages must allow consumers to opt out and revoke their consent with an automated mechanism included in all calls.

While this rule seems simple enough, it takes an enormous amount of effort, dedication, and resources to comply with it, not to mention the numerous other rules governing outbound telemarketing, such as the transmission of accurate Caller ID information, compliance with the DNC registry, the maintenance of internal DNC lists, and a host of others.

Obviously, the defendants in the recent enforcement actions chose not to commit the required time, effort, and resources towards compliance, and are now reaping the grim harvest they have sown.  Here’s what they should have done in order to avoid becoming the latest poster child for the perils of robocalling.

Step One:  Obtain consent to send recorded calls. 

The FTC provides clear instructions on how to go about doing this. When requesting permission:

  • You must clearly and conspicuously disclose that you are asking for their okay to deliver prerecorded telemarketing messages.
  • The call recipient gets to choose the number to which prerecorded messages may be delivered.
  • You cannot directly or indirectly require anyone to agree to prerecorded calls as a condition for purchasing or receiving any goods or services.
  • You must get the call recipient’s signature, either through traditional writing or electronically.
  • You must identify the business that is requesting permission to deliver prerecorded telemarketing messages. An agreement that fails to specify a seller is not sufficient. Moreover, a consumers’ agreement to accept prerecorded messages from your business does not extend to messages soliciting for your affiliates, marketing partners or any other business.

Step Two:  Included an Automated Opt Out Mechanism

The rules also require that you include an automated opt-out mechanism in the script of every recorded call (i.e., “to opt out of receiving calls of this nature, press 3 at any time…”).  If the recording can be left on voice mail, it must include a toll-free number that the consumer can call to place an opt-out request. When consent is revoked, the consumer’s number must be placed on the caller’s internal DNC list.

Step Three:  Identify Yourself

It is a violation of the Rule to fail to transmit or cause to be transmitted the telephone number, and (whenever possible), the name of the telemarketer to any consumer’s caller identification service. To comply with this requirement, a telemarketer may transmit its own number and, where available, its own name, to consumers’ caller identification services.  Because Caller ID is limited to 15 characters, it may be necessary to abbreviate your name, or use a properly recorded fictitious name.

 Step Four:  Abide by the DNC

Unless you have express written consent and have informed consumers that their consent constitutes a waiver of their DNC registration, don’t call consumers whose numbers are on the DNC list.  Even if you have consent to do so, you’ll still need to subscribe to the DNC as a telemarketer in all area codes that you place calls into (failure to do so itself constitutes a violation).

Step Four:  Script All Messages Properly

All outbound telemarketing call scripts must promptly disclose the following four items of information truthfully, clearly, and conspicuously: (1) The identity of the seller; (2) that the purpose of the call is to sell goods or services; (3) the nature of the goods and services being offered; and (4) in the case of a prize promotion, that no purchase is necessary, and that making a purchase does not increase the chance of winning.

Step Five:  Know Who You’re Working With

It is a violation of the Telemarketing Sales Rule to substantially assist a seller or telemarketer while knowing — or consciously avoiding knowing — that the seller or telemarketer is violating the Rule. Thus, the “see no evil” approach (taking deliberate steps to ensure one’s own ignorance of a seller or telemarketer’s violations), won’t work.  To avoid running afoul of this aspect of the Rule, you should conduct a reasonable due diligence investigation of anyone you intend to work with in any telemarketing campaign.  If your investigation uncovers any history of past rule violations or enforcement actions against the company or any of its principals, turn down the business.

The five steps outlined above are not meant to be a comprehensive list of everything you need to do to conduct a compliant telemarketing campaign using recorded voice messaging.  However, if the defendants in the recent FTC enforcement actions bothered to follow these steps (and documented their efforts), they may not have gotten their doors kicked down.


Author: Seth Heyman
Seth D. Heyman is a California attorney with extensive experience in advertising and marketing law, corporate law, contracts, governmental regulations, international business, and Internet law. He has counseled numerous successful companies, both public and private, and was responsible for regulatory compliance, contract management, corporate governance, and HR best practices for multiple organizations in many diverse industries, including marketing, telecommunications, energy, and technology development. He offers insight and guidance on federal and state direct mail, TV, radio, telemarketing, and Internet marketing laws, as well as online promotions, Internet privacy, data protection regulations, and similar matters.

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