Friday, November 10, 2006

FTC Extends Comment Period on Proposed Amendments to Telemarketing Sales Rule

This post was written by Jeffrey May, editor of CCH Trade Regulation Reporter.

The FTC is still accepting public comments on two proposed amendments to the Commission's Telemarketing Sales Rule, 16 CFR Part 310. One proposal would prohibit telemarketers from using prerecorded messages in calls answered by a consumer without that person’s prior consent to receive such calls. The other proposal would modify the method for measuring the maximum allowable call abandonment rate in the rule’s call abandonment safe harbor. The comment period, which was originally set to expire on November 6, has been extended 40 days to December 18, 2006, in response to a request from the Direct Marketing Association.

The Telemarketing Sales Rule (CCH Trade Regulation Reports ¶38,058; CCH Advertising Law Guide ¶16,000; CCH Business Franchise Guide ¶6800) prohibits deceptive and abusive telemarketing acts or practices. In 2003, the Telemarketing Sales Rule was amended to include a provision limiting the number of calls to consumers that telemarketers may “abandon” without risking FTC enforcement action. “Abandoned calls” (those answered by consumers who find nobody on the line) often result from the use of predictive dialers. To preserve telemarketers' ability to use automatic dialing systems, but to avoid “dead air,” the FTC included a “safe harbor” in the amended rule that allows a telemarketer to play a prerecorded message when a consumer answers. The prerecorded message is permitted only in a maximum of three percent of calls answered by consumers in person (rather than an answering machine).

Under the first proposed amendment, telemarketers would no longer be permitted to place calls delivering a prerecorded message to consumers with whom the seller has an “established business relationship.” The amendment would explicitly prohibit sellers and telemarketers from delivering a prerecorded message when a person answers a telemarketing call, except in the very limited circumstances permitted in the call abandonment safe harbor, or when a consumer has consented, in writing, to receive such calls. Telemarketers now have until January 2, 2007, to revise their practices to discontinue calls that deliver a prerecorded message to consumers with whom the seller has an established business relationship and that conform to the previously proposed, and now rejected, safe harbor.

The agency’s second proposal is to amend the method of calculating the three percent maximum under the rule’s safe harbor provision from three percent per day per calling campaign to three percent per 30-day period per calling campaign. The Direct Marketing Association had petitioned the FTC for this change.

Comments on the proposed amendments should be mailed or delivered to: Federal Trade Commission/Office of the Secretary, Room H-159 (Annex K), 600 Pennsylvania Avenue, NW., Washington, D.C. 20580. They should refer to “TSR Prerecorded Call Prohibition and Call Abandonment Standard Modification, Project No. R411001.” The original notice of the proposed amendments appears at 71 Federal Register 58716, October 4, 2006; the extension appears at 71 Federal Register 65762, November 9, 2006.

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