FTC Adopts New Amendments to the Telemarketing Sales Rule

Posted: December 8, 2015

ftc_tsrJust last month, after nearly two and a half years since their initial proposal, several amendments were made to the Federal Trade Commission’s (FTC) Telemarketing Sales Rule (TSR). These amendments to the TSR are intended to protect consumers, as well as clarify some issues for businesses.

With this latest release, the FTC has attempted to crack down on fraudulent electronic payment methods.  Under the TSR, the Commission has banned certain payment methods from being used in telemarketing due to their nature of being less secure and more susceptible to fraud. Specific methods that are now banned from use in telemarketing include remotely-created checks, remotely-created payment orders, cash-to-cash money transfers, and cash reload mechanisms. The more common methods of electronic payment, such as credit/debit cards and bank account transfers, will remain unaffected as they have been deemed secure by the FTC.

The FTC also included other expansions to the TSR’s ban on advance fees for recovery services. Companies sometimes offer to provide account recovery services designed to recover losses suffered from earlier telemarketing transactions. It was determined, these services do not work and are now banned by the FTC.

Lastly, several terms within the TSR were clarified by either further interpreting their current definitions or supplementing their original definitions. These clarifications arguably have the most significant impact to the telemarketing industry.

The key implications are summarized below.

  • Express verifiable authorization was a major focus of these clarifications. Per the FTC, “any recording made to memorialize a customer’s or donor’s express verifiable authorization” are required to “clearly and conspicuously” state an accurate description of the goods, services, or charitable contribution prior to accepting payment.
  • Proof of the exemption claimed from the Do Not Call (DNC) Registry is firmly placed on the seller and/or the telemarketer. (It is also important to note here that any third-party telemarketers placing calls must verify the established business relationship (EBR) status of any lead they call. This can be done by examining lead sources and through contractual language with partners.)
  • DNC Registry fees cannot be shared among numerous sellers. Where no exemption is available, each seller must individually subscribe and pay for the National DNC Registry.
  • Unlawful burdens that interfere with a consumer’s right to be added to an internal DNC list were further outlined to avoid their occurrence. Interferences such as harassment, hang-ups, failure to honor a request, blatant continuance of the sales pitch, fee assessment, referral to a different telephone number the consumer must call to make a DNC request, and requirement to identify are all classified as interfering with the consumer’s DNC rights.

The business to business exemption (B2B) cannot be applied to personal calls to employees of a business. It must be from one business to another, not employees of the receiving business. Also, the product offered must be a business product.

The TSR was originally designed as an anti-fraud rule and these amendments support that purpose. While the TSR does need some significant updates, these changes significantly help modernize the Commission’s Rule.

The DNC-related changes and the two additional revisions will take effect 60 days after the amended Rule is posted in the Federal Register. The payment prohibitions become effective 180 days after Federal Register publication.

The document with statements from the FTC can be found at this link- https://www.ftc.gov/system/files/documents/public_statements/881213/151118tsrcommissionstatement.pdf

If you have any questions regarding the impact of these amendments to your business, please contact us at consulting@compliancepoint.com. You can also reach out to us for a copy of our full analysis of the amendments that includes recommendations.

Logan Murray

Author: Logan Murray

Logan Murray is a Consultant at CompliancePoint working with clients in a variety of industries. He is committed to providing resources and effective consultation regarding federal and state consumer contact rules and assists with implementing successful direct marketing compliance programs. Logan has earned his Customer Engagement Compliance Professional (CECP) certification from the Professional Association for Customer Engagement (PACE) and has a B.S. in Economics from Georgia College and State University.

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