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FTC Ban on Prerecorded Telemarketing Calls Takes Effect September 1

Date: Aug 31, 2009

A new Federal Trade Commission ("FTC") rule takes effect on September 1, 2009 that prohibits prerecorded telemarketing calls, or "robocalls," to consumers absent signed, written consent. The FTC adopted the rule last year as part of several amendments to its Telemarketing Sales Rule ("TSR"). While certain types of entities and calls are exempt from the rule, telemarketers that place prerecorded message calls that are subject to the rule, including prerecorded messages to customers with whom telemarketers have an "established business relationship," will be required to implement changes to their procedures in order to comply. Telemarketers that violate the rule will be subject to penalties of up to $16,000 per call.

The FTC has clarified that telemarketers can obtain signed, written consent from consumers using any manner that is permitted under the Electronic Signatures in Global and National Commerce Act, such as agreements obtained via an e-mail or website form, telephone keypress, or voice recording. Telemarketers must "clearly and conspicuously" disclose that the purpose of the consent is to authorize prerecorded calls, and may not condition the purchase of goods or services on obtaining consent. In addition, a consumer's consent is non-transferable to third parties.

In addition to the written consent requirement, prerecorded message calls must:

  • Allow the telephone to ring for at least 15 seconds or 4 rings before an unanswered call is disconnected;
  • Begin the prerecorded message within 2 seconds of a greeting, and immediately disclose that the person called can use an automated interactive voice and/or keypress-activated opt-out mechanism that automatically adds the number called to the seller's Do-Not-Call list and disconnects the call once invoked (if the call could be answered by an answering machine or voicemail service, then the message must disclose that the person can use a toll-free telephone number that connects to an automated voice and/or keypress activated opt-out mechanism); and
  • Comply with all other requirements of the TSR and applicable laws. Among other things, the TSR also prohibits calls to consumers who have placed their telephone numbers on the national Do-Not-Call registry, mandates certain disclosures at the beginning of telemarketing calls, and limits the times of day that telemarketers can call.

Notably, while the TSR previously provided an "established business relationship" exception for prerecorded message calls, the new rule eliminates that exception. Nevertheless, the new rule does not apply to "informational" calls communicating delivery or service dates and times or similar information, where the calls are not made for the purpose of conveying a sales message. The new rule also does not apply to healthcare-related calls subject to the Health Insurance Portability and Accountability Act of 1996 ("HIPAA"). In addition, telemarketing calls from entities not subject to the FTC's jurisdiction, such as banks, common carriers (when engaged in common carrier activity), and charitable organizations, are exempt. For-profit telemarketers making charitable fundraising calls are exempt from the prior written consent requirement, but must include an automated keypress or voice activated opt-out mechanism and cannot call consumers who opt-out.

The Federal Communications Commission ("FCC") also regulates telemarketing calls, as well as the transmission of unsolicited fax advertisements and e-mail messages to wireless devices. Both the FTC and FCC regulate the transmission of commercial e-mail messages subject to the CAN-SPAM Act of 2003. It is important for marketers to remain aware of the suite of legislation and regulations that apply to unsolicited commercial communications and industry best practices to assure that they are both adhering to legal requirements and responding to consumer requests.