FTC TARGETS TELEMARKETERS WITH NATIONAL DO-NOT-CALL LIST
FTC proposed Tues. amendments in Telemarketing Sales Rule (TSR) that included new restrictions and a nationwide “do-not-call” registry (DNCR). FTC Consumer Protection Dir. Howard Beales said rule changes wouldn’t affect all sectors of telemarketing. FCC regulates some telemarketing, including that on common carriers. Direct Marketing Assn. representative said organization was likely to oppose proposed changes. In addition to registry, proposed changes would include: (1) Expansion of sales rule to charitable solicitations made by commercial enterprises. (Nonprofit charity solicitors aren’t under FTC jurisdiction.) (2) Clarification that predictive dialers resulting in “dead air” violated rule. (3) Prohibition of telemarketers’ receiving or selling consumer’s billing information. (4) Requirement that credit card protection sales include disclosure of legal limits of cardholder’s liability for unauthorized charges. (5) Requirement of “express verifiable authorization” for all transaction where payment method lacked dispute resolution protection or protection against unauthorized charges similar or comparable to those under Fair Credit Billing Act and Truth in Lending Act. (6) Prohibition against blocking caller identification devices.
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Beales said help from FCC was needed to make changes more effective. “We're hopeful the FCC follows what the [FTC] is doing,” he said. And while FTC Comr. Orson Swindle said he supported TSR changes, he had concerns about FTC jurisdiction. “The Commission’s regulatory scheme would be more effective if it covered the entire spectrum of entities that engaged in telemarketing,” he said. Entities that aren’t covered include banks, telephone companies, airlines, insurance companies, credit unions, charities, political campaigns, political fund raisers. Swindle cited as example that while telephone companies were exempt from FTC regulations, some industries that competed with telephone weren’t, “which may confer a competitive advantage in marketing on telephone companies.” He also said FTC should follow congressional examples cited in Telemarketing Act to define what would be “abusive” practices. But Swindle said he didn’t believe unfairness principles in FTC act should be used to determine abusive practices.
FTC is taking comments on proposed TSR changes until March 29, and on June 5-7 will host public forum on changes and subsequent comments. Beales said DNCR, if approved by FTC, wouldn’t be in service until early next year. FTC is hoping public comments will help agency get better idea of how much DNCR would cost and how many people would participate on list. “We don’t have an estimate of how many will sign up,” said Beales, and he didn’t believe such list would destroy telemarketing industry. Attorneys Gen. (AGs) in 20 states have adopted DNCRs and DMA has similar list. Beales said another consideration for comments was whether to make national DNCR preemptive of states. He said DNCR participation in states varied, as did jurisdictions each list covered. FTC DNCR will have some notable exclusions. Intrastate telemarketers aren’t covered, allowing newspapers to continue local telephone marketing. Banks and other financial institutions aren’t covered, although Beales said many credit card solicitations would be covered because banks often used subsidiaries, which FTC could regulate, to sell credit services.
Some of changes are mandated by USA Patriot act, Beales said. Specifically, Act requires FTC to amend TSR to include solicitation of charitable contributions by for-profit telemarketers. He said ban on billing information transfer was needed to prevent unauthorized billing. Beales said he didn’t believe there’s “constitutional problem” with DNCR and other TSR changes. He said goal of protecting consumers’ privacy would withstand constitutional arguments.
“The government may be overstepping its boundaries by spending taxpayer dollars to limit communication -- that is protected by the First Amendment -- to American consumers who benefit from and shop via telephone solicitations,” DMA Pres. Robert Wientzen said. DMA Senior Vp Jerry Cerasale expressed concerns over ability of FTC to interact with state DNCR and DMA list (formally called Telephone Preference Service [TPS]). TPS has signed 4.1 million users to list since it started in 1985, DMA said. It expressed concern about cost of list, which Beales said could be up to $4-$6 million in first year including start-up costs. DMA highlights telemarketing industry, which creates $668 billion in sales and 6 million jobs. Proposed changes also include provisions to clarify TSR definitions so fax, direct mail and e-mail marketing would be classified as direct mail and wouldn’t fall under TSR jurisdiction. Beales said it was conceivable that DNCR list could be created for unsolicited commercial e- mail (spam) but since e-mail addresses often were changed, it would be difficult to keep list up to date.