Monday, September 15, 2008

FTC Testifies Before Congress on Call Centers, Prepaid Calling Cards

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

Last week, the FTC offered testimony regarding two bills pending in Congress.

Call Center Consumer’s Right to Know Act

On September 11, Lois Greisman, Associate Director of the Division of Marketing Practices at the FTC Bureau of Consumer Protection, testified before the before the U.S. House of Representatives Committee on Energy and Commerce, Subcommittee on Commerce, Trade, and Consumer Protection regarding the proposed “Call Center Consumer’s Right to Know Act” (H.R. 1776). The bill would require call center employees to disclose, in telephone calls with consumers, the physical location of the call center. The testimony offered suggestions for improving the legislation.

First, the requirement that the caller disclose his or her physical location could be tailored more precisely to apply only to call centers operating outside the United States. As currently drafted, the obligation to disclose physical location would apply broadly to all entities that have telephone contact with consumers, whether operating in the United States or abroad. Narrowing the disclosure requirement would reduce unnecessary compliance burdens upon domestic entities, such as a local pizza parlor, that do business by telephone, according to the testimony.

Second, the testimony recommends clarification of the definition of the term “call center.” The agency contends that there is ambiguity over whether a reference to the Internet is intended to bring within the bill’s scope all on-line transactions, including on-line service assistance. Third, the agency questions the wisdom of a provision that imposes an annual certification requirement on U.S. companies that use call centers.

Finally, the Commission notes that jurisdictional issues could significantly complicate enforcement of the bill. The testimony suggested that an agency “well-versed in labor and foreign trade issues would likely be better suited than the FTC to administer and enforce” the proposed measure.

Text of the testimony appears here on the FTC website. Further details regarding H.R. 1776 appear here.

Prepaid Calling Card Consumer Protection Act

A day earlier, FTC Chairman William Kovacic told the Senate Committee on Commerce, Science, and Transportation that the proposed “Prepaid Calling Card Consumer Protection Act” (S. 2998) would greatly benefit the agency by providing it with “a powerful tool to bring enforcement actions against the distributors of prepaid calling cards.”

According to the testimony, the measure “is directed at the conduct of prepaid calling card service providers—carriers—as well as distributors, and therefore would implicitly give the FTC jurisdiction over common carriers engaged in the deceptive practices prohibited by the proposed legislation. Consumers would benefit greatly from legislation giving the FTC jurisdiction over such practices by the telecommunication carriers.”

The testimony notes that the legislation also would give the FTC authority to seek civil penalties for violations, thus providing an additional remedy to those already available to the Commission.

In the Commission’s testimony, Kovacic noted that agency recently brought two cases alleging deceptive marketing of prepaid calling cards. In March, the FTC sued Clifton Telecard Alliance, a national distributor of prepaid calling cards. In May, the FTC filed a similar action against several companies alleged to act as a common enterprise in distributing prepaid calling cards out of Florida, Massachusetts, and New Jersey. The Commission also has other active prepaid calling card investigations, according to the testimony.

Commissioner Kovacic’s testimony appears here on the FTC website.

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