Intellectual Property Law

The U.S. Telemarketing Rule

By IBLS Editor

Telemarketing includes soliciting services through telephone calls and fax messages.   Because U.S. businesses are increasingly using telemarketing services to advertise their products and services, the Federal Trade Commission (FTC) adopted the Telemarketing Rule (16 C.F.R. pt. 310) in 1995, and subsequent amendments, to protect consumers from the risks associated with this practice.  The Federal Telephone Consumer Protection Act of 1991 (47 U.S.C. § 227), is another federal law that complements the Telemarketing Rule.

TR defines a telemarketing as a plan, program or campaign conducted to induce the purchase of goods or services, or a charitable contribution by making more than one telephone call, including at least one interstate call. The term telemarketing does not include solicitation through the mailing of a catalog issued at least once a year that includes the following information, description and illustration of goods and services; the business' address; and multiple pages of information or illustration. Calls received by the company mailing these catalogs are not considered telemarketing. Similarly, telemarketer means "any person who, in connection with telemarketing, initiates or receives telephone calls to or from a customer or donor."

TR requires businesses to disclose specific information when using this advertising method or they will incur in deceptive advertising practice (§ 310.3). TR concretely requires businesses (1) to clearly and conspicuously disclose material information- orally or in writing-, before the consumer pays for goods or services offered.  Consumer must be aware of this right.  Most telemarketers request immediate debit card payments arguing "limited time" offers and, under the TR, this is not allowed unless additional information is provided; (2) prohibits misrepresenting specified material information, either directly or by implication, regarding the services or goods offered; (3) prohibits false or misleading statements to induce payment for goods or services; prohibits any person from assisting or facilitating abusive or deceptive telemarketing practices; (4) forbids credit card laundering; (5) impose calling time restrictions; and (5) to keep specific records, among others.

In addition to deceptive telemarketing, TR forbids abusive telemarketing practices, e.i., use of threats, intimidation, and profane or obscene language; promising to repair credit scores or remove derogatory information therefrom, and receiving at front payment before any result is shown; requesting or receiving payment or any other consideration for promises to recover money from previous telemarketing transactions (most likely failed transactions for the consumer) before the consumers has been provided with the monies or goods recovered; requesting or receiving money or any other consideration for the extension of a loan or credit before that loan or credit is actually granted; disclosing or receiving for consideration, unencrypted consumers' account numbers for use in telemarketing; submitting billing information for payment without the consumer's express consent; failing to transmit- or blocking- their phone number to caller identification carriers; engaging in a pattern or harassing and annoying calls; initiating outbound telephone calls when the person is registered in the Do-Not-Call list or has stated that do not want to receive telemarketing calls -it is curious how telemarketers go around this rule by calling consumers and leaving a name and phone number for the consumer to call back; of course, they do not identify themselves and the consumer is clueless about the identity of the caller.

Any private person, attorney general, or authorized state officer may bring an action under the TR.  They must serve a written notice of its action on the Federal Trade Commission, Bureau of Consumer Protection, and include a copy of the complaint and any other pleadings filed with the court.  If prior notice to the FTC is not feasible, the state or private party may serve the required notice upon instituting the action. 

Most violations against consumers start by consumers ignoring their rights and wrongdoers acknowledging this fact.  Thus, consumers willing to deal with telemarketers must be aware of the laws that protect them, which in sum provide two main rights: the right to demand information from telemarketers, and the right to abstain from making payments before tangible results are provided. 

Full post as published by IBLS Internet Law Blog on September 15, 2008 (boomark / email).