New limits on telemarketing – the FCC gets tougher on the use of robocalls

Communications Alert

Data Protection, Privacy and Security Alert (US)

The Federal Communication Commission has adopted changes to its rules implementing the Telephone Consumer Protection Act regarding the use of autodialers and pre-recorded messages (also referred to collectively as robocalls) in calls made to both wireless numbers and residential landline numbers. 

In an effort to harmonize its rules with the Federal Trade Commission's Telemarketing Sales Rule (TSR), the FCC's February 15, 2012, Report and Order includes significant changes limiting the use of autodialers and pre-recorded messages. 

What new limitations does the FCC's Order place on the use of autodialers?  Who will be exempt?  When will the most significant aspects of the Order be implemented?

NEW RULES

The FCC affords greater protection to consumers to prevent them from receiving unwanted solicitations and calls made to wireless phone numbers, and, in doing so, imposes more stringent requirements on entities using autodialers and prerecorded voice messages. The new rules, however, do not disturb existing requirements pertaining to live telephone solicitations.

Here is a list of the key new requirements under the Order:

Express written consent

Under the new rules, entities must obtain prior written consent for all autodialed or prerecorded telemarketing calls to wireless numbers and all prerecorded telemarketing calls to residential telephone numbers. Consent must be verifiable and may be provided in writing on paper, through electronic means, including on-line, a telephone key press or a recording of oral consent. The entity must provide clear and conspicuous notice that the consent will allow telemarketing calls and cannot require customers to provide consent as a condition of a purchase.

Importantly, the FCC did not extend the prior written consent requirement to non-telemarketing calls made to either wireless numbers or residential customers, which will continue to be governed by the existing rules.    

"Established business relationship" exemption eliminated

The FCC eliminated the "established business relationship" exemption for pre-recorded telemarketing calls made to residential numbers.  Thus, entities must obtain prior written consent from their consumers before sending a prerecorded call to a residential number, whether or not the entity has an established business relationship with the consumer. 

Automated opt out during a robocall

The Order also requires entities to allow consumers to opt out of receiving additional telemarketing robocalls immediately during a robocall, through an automated menu.  By opting out, a consumer revokes any prior consent to these types of calls.  If a consumer opts out, the call must end and the entity must add the consumer's phone number to the seller's do-not-call list.

Strict limits on dropped calls

The FCC's Order strictly limits the number of abandoned or so-called dead-air calls – in which consumers answer their phones and hear nothing. Consistent with the FTC's TSR, the FCC now requires entities to calculate the permissible call abandonment rate for telemarketing calls on a campaign-by-campaign basis rather than across a number of calling campaigns.

Accordingly, entities must not abandon more than 3 percent of all telemarketing calls answered by a live person, calculated over 30 days on a per campaign basis (or over a successive call period, if the campaign is greater than 30 days).

KEY EXEMPTIONS

The Order spells out key entities and types of calls which are exempt from the new rules.

Tax exempt, debt collection and informational calls and other services

The FCC did not extend the "written" express consent requirement to non-telemarketing and informational calls, such as those made by or on behalf of a tax-exempt nonprofit organization, calls for political purposes and calls made for other purposes, including, "debt collection calls, airline notification calls, bank account fraud alerts, school and university notifications, research or survey calls, and wireless usage notifications." The FCC left in place any existing restrictions for these calls.

Two new exemptions

The FCC also exempted certain autodialed or prerecorded calls by a consumer's loan servicer which, pursuant to the American Recovery and Reinvestment Act, offer certain home loan modifications and refinancing to prevent foreclosures.  It also followed FTC precedent by creating an exception to its telemarketing rules for prerecorded health care-related calls to residential lines, because such calls are already regulated by the federal Health Insurance Portability and Accountability Act.

IMPLEMENTATION TIMING

The Rules go into effect upon Federal Register publication.  From the moment of publication in the Federal Register, the following implementation periods apply:

  • Twelve months for the requirement that prior express consent be in writing for entities employing autodialed or prerecorded calls or messages
  • Twelve months for expiration of the established business relationship exemption concept as evidence of consumer consent to receive prerecorded telemarketing calls
  • Ninety days to implement the automated, interactive opt-out mechanism for telemarketing calls and
  • Thirty days to implement the revised abandoned call rule 

CONCLUDING OBSERVATIONS

Businesses that use telemarketing as part of their marketing should check their compliance procedures and should ensure that any relevant vendors or service providers have adequate compliance procedures.

If you have any questions concerning either what a business needs to do to become compliant or what exposures your business may face if it is currently non-compliant, please contact:

Perrie Weiner

Jennifer Kashatus

* The authors wish to thank Anthony Portelli for his invaluable contributions to this article.