Telemarketing is a practice in which a business initiates a phone call to propose a commercial transaction. Most people are familiar with the practice, as millions of telemarketing calls are made to individuals each year. Needless to say, this is a highly unpopular practice among Americans. Public opinion surveys on the telemarketing industry reflect that the majority of Americans object to unsolicited sales calls.
In the US, telemarketing is regulated by two federal statutes:
Telephone Consumer Protection Act of 1991 (TCPA)
Under the Telephone Consumer Protect Act (TCPA), the following practices are prohibited:
- Automatic dialing systems or prerecorded voices to make sales calls to emergency phone lines, medical offices, hospital rooms, homes for the elderly, paging services or cellular phones.
- Use of artificial or prerecorded voice telemarketing, except where there is an emergency, or the recipient has given prior consent.
- Transmission of unsolicited commercial facsimile messages (i.e. “junk faxes”).
The TCPA makes the following requirements:
- All commercial facsimile messages must include accurate date, time and sending telephone number information in the margin.
- The creation of a private right of action allowing individuals, businesses, and state officials to bring a case in court for minimum damages of $500 and up to $1500 in damages, where the telemarketer “knowingly,” or “willfully” violated the TCPA.
- The opportunity for the Federal Communications Commission (FCC) to issue regulations to improve protections against telemarketing, including the ability to create a national Do-Not-Call list.
- The opportunity for states to enact legislation to increase protections against the sending of junk faxes, the use of autodialing systems, the use of prerecorded and artificial voice systems and the making of telephone solicitations.
The TCPA is enforced by the FCC.
The national Do-Not-Call Registry gives consumers a choice about whether they want to receive telemarketing calls at home. Once individuals register their phone number, telemarketers covered by the national register have up to 31 days to stop calling the number.
The Registry is managed by the Federal Trade Commission (FTC) and is enforced by the FTC, FCC and state law enforcement officials.
Telemarketing and Consumer Fraud Abuse Prevention Act (TCFAP Act)
The TCFAP Act addresses specific aspects of telemarketing and permits the FTC to issue the Telemarketing Sales Rule (TSR).
The TSR imposes the following restrictions on telemarketers:
- Telemarketers must make certain disclosures at the outset of the sales call:
- Name of the seller
- That the call is made for sales purposes
- Total charge of the sale
- Any restrictions on the sale
- If a refund policy exists
- Sweepstakes telemarketing involves special disclosures:
- No purchase is necessary in order to participate
- The odds for winning
- If there is a cost associated with participation
- Calls cannot be initiated before 8AM or after 9PM in the recipient’s time zone.
- Telemarketers must obtain “express verifiable authorization” before engaging in certain transactions (e.g. making a draft directly from a bank account).
- Telemarketers must maintain records, including records of advertisements, sales records and employee records.
Note that the TSR does not apply to certain forms of telemarketing. For instance, most business-to-business sales calls; telemarketing by banks, federal financial institutions, common carriers, insurance companies and non-profit organizations are exempt from the TSR.
Telemarketing is a common practice in the US, as it is an inexpensive way to market products. However, public opinion polls reflect that it is highly unpopular among Americans. The article introduces two federal laws that regulate telemarketing: the Telephone Consumer Protection Act of 1991 (TCPA) and the Telemarketing and Consumer Fraud Abuse Prevention Act (TCFAP Act). The article also discusses the Federal Trade Commission’s (FTC’s) Telemarketing Sales Rules (TSRs) and the national Do-Not-Call Registry.
CIPP Exam Preparation
In preparation for the Certified Information Privacy Professional/United States (CIPP/US) exam, a privacy professional should be comfortable with topics related to this post, including:
- Telemarketing Sales Rules (TSR) and the Telephone Consumer Protection Act of 1991 (TCPA) (II.E.a.)
- Do-Not-Call Registry (DNC) (II.E.a.i.)