The Telemarketing Sales Rule (TSR)

• Issued by the FTC in 1995

• FCC issued regulations under the Telephone Consumer Protection Act of 1991 (TCPA) that place restrictions on unsolicited advertising by phone and facsimile.

• Does not preempt stricter state laws

o Some states require marketer obtain a license or register w/state o States can create their own DNC with differing exceptions/fines o Some states may require that a written contract be created for certain transactions

• May have private right to action via the intrusion on seclusion tort

• Enforcement: FTC, state AGs, or private individuals

• Defines telemarketing as a plan, program, or campaign which is conducted to induce the purchase of goods or services or charitable contribution, by use of one or more telephones and which involve more than one interstate telephone call

• Created the U.S National Do Not Call (DNC) Registry enforced by the FTC, FCC, and state AGs

o Requires sellers and marketers to update their call lists every 31 days. o Exceptions to list:

▪ Nonprofits calling on their own behalf

▪ Calls to customers with existing business relationships (EBRs)

▪ Inbound calls, provided there’s no upsell of additional products/service

▪ Most business to business calls

▪ Consumer clearly and conspicuously opts in to calls o Telemarketers can avoid liability under the DNC safe harbor:

▪ Seller/telemarketer established and implemented written procedures to honor consumers’ requests

▪ Seller/marketer has trained its personnel and any entity assisting in its compliance

▪ Seller/telemarketer has maintained and recorded an entity specific DNC

▪ Seller/telemarketer uses and maintains records documenting DNC and National DNC within 31 days of call

▪ Seller/telemarketer monitors and enforces compliance with entity’s DNC procedures

• Violations: civil penalties up to $40,654/call

• TSR requires covered orgs to:

o Call only between 8am and 9pm o Screen and scrub names against national DNC list oDisplay caller ID info o Identify themselves and what they are selling o Disclose all material info and terms

o Comply with special rules for prizes and promotions o Respect requests to call back o Retain records for at least 24 hours

o Comply with special rules for automated dialers

• Required disclosures before delivering sales content:

o Identity of seller o Purpose of the call is to sell goods/services o Nature of goods/services o No purchase or payment is necessary to participate to win prize/promotion and does

not increase chances of winning

• Ten broad categories of info that must always be disclosed:

o Cost and quantity o Material restrictions, limitations, conditions o Performance, efficacy, central characteristics o Refund, repurchase, or cancellation policies o Material aspects of prize promotions o Material aspect of investment opportunities o Affiliations, endorsements, or sponsorships o Credit card loss protection o Negative option features o Debt relief services

• Call Abandonment expressly prohibited: telemarketer does not connect the call to a live sales rep within two seconds of the person’s completed greeting. Pre-recorded sales pitches are not allowed (must have opt in from consumer)

o Abandonment Safe Harbor:

▪ Use tech that ensure abandonment of no more than three percent of all calls answered by live person measured per day per calling campaign

▪ Allows telephone to ring for 15 seconds or four rings before disconnecting unanswered call

▪ Plays recorded message stating name and phone number of seller on whose behalf the call was placed whenever a live sales rep is unavailable w/in 2 secs of a live person answering

▪ Maintains records documenting adherence to the preceding three reqs

• Requires sellers and telemarketers to keep substantial records:

o Advertising and promotional materials o Information about prize recipients o Sales records o Employee records o All verifiable authorizations or records of express informed consent or express agreement

• For each record above, sales records must include:

o The name and last known home address of each customer o Goods or services to be purchased

o The date the goods or services were shipped/provided o The amount the customer paid for goods/services

• For all former and current employees involved in sales above:

o Their name

o The last known home address and phone number

o Job titles

• Other provisions to address:

o Credit card laundering o Telemarketing sales of credit repair programs, loss recovery services and advance loans o Telefunding activities (for-profit companies that call on behalf of charitable orgs)

• Updates to the Telephone Consumer Protection Act (TCPA)

o Even if a company has an EBR, it is required to receive prior express written consent for

all robocalls to residential lines. o Consumers allowed to opt out of future robocalls during a robocall o Robocalls to residential lines made by healthcare related entities governed by HIPAA are exempt from these requirements (Ex: CVS pharmacy robocall)

o Robotexts require express consent

▪ Consent can be revoked at any time by any reasonable means

▪ The mere fact that a consumer’s wireless number appears in the contact list of another wireless customer is not sufficient to establish consent

▪ When a caller has consent for a wireless number and the number has been reassigned, the caller is not liable for the first call but will be liable for subsequent calls if the new consumer makes the caller aware of the change