These FTC telemarketing rules are critical for businesses to know before engaging in any type of telemarketing.
- The Telemarketing Sales Rule is a federal law regulating the activities of telemarketers and many other companies.
- The Telemarketing Sales Rule applies to almost all companies, with limited exceptions.
- To comply with the Telemarketing Sales Rule, you should keep thorough records, adhere to the Do Not Call Registry, limit your call times and more.
- This article is for small businesses looking to avoid telemarketing lawsuits.
Most small businesses hire out call center work to third-party companies who already have trained staff and fully outfitted facilities. However, even if you're outsourcing your telemarketing, you should know the basic requirements the Federal Trade Commission (FTC) has set forth for the industry. Following these guidelines will not only keep you in compliance with the FTC but also protect you against unfounded lawsuits. Make sure you read the source material, linked within, which describes in detail what is required of telemarketers.
What is the Telemarketing Sales Rule?
The Telemarketing Sales Rule is an FTC law mandating that telemarketers specifically disclose material information, not misrepresent themselves, only call consumers within certain timeframes, not call consumers on a do-not-call list and follow guidelines regarding how certain goods and services can be sold.
Who does the Telemarketing Sales Rule Apply to?
The Telemarketing Sales Rule applies to any entity that places calls to, or takes calls from, consumers. It also applies to entities that directly offer, or arrange the providing of, products or services in return for consumer payment. Factors that do not influence whether a company or person must follow the Telemarketing Sales Rule include its call placement and receiving technology and the origin location of its calls.
In other words, the rules govern all calls placed to American consumers.
As with any regulation, the Telemarketing Sales Rule has exceptions. Some banks, federal savings unions, federal credit unions, common carriers and companies that conduct research surveys may be exempt. However, third-party companies calling on behalf of a financial institution often must follow the rule, though another exemption exists if the third party is calling directly on the institution’s behalf to offer the institution’s services.
Additionally, non-profit charities that conduct telefunding operations in-house are exempt from the Telemarketing Sales Rule. However, the federal PATRIOT ACT of 2001 effectively requires for-profit third parties placing calls on behalf of a non-profit charity to follow the rule.
Key takeaway: The Telemarketing Sales Rule applies to all companies except certain banks, federal credit unions, federal savings unions, common carriers, non-profit charities, some third parties and people conducting research surveys.
How to comply with the Telemarketing Sales Rule
Follow the below steps to comply with the Telemarketing Sales Rule:
1. Secure your access to the Do Not Call Registry.
Annual fees are required for access to the Do Not Call Registry, and the fees are based on either each area code you access ($63 per code) or a flat fee for all area codes ($17,021). Before you open the doors to your firm or sign on with a third-party telemarketing service, make sure access to the registry is settled.
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2. Live by the 31-day rule.
The Federal Trade Commission (FTC) requires telemarketing agencies to check the National Do Not Call Registry once every 31 days. Fines for telemarketers who don't follow this rule or don't respect the do-not-call list can run up to $40,000, so make sure you or any companies you outsource telemarketing to have a set plan for updating your internal do-not-call list.
3. Restrict calling times.
Telemarketers may not call people outside the hours of 8 a.m. to 9 p.m. unless they obtain written consent to do so, even if the person is not on the Do Not Call Registry. Calling outside of these times may result in a fine or a lawsuit.
4. Maintain meticulous records.
Records come in handy in the event that you face a lawsuit, but they're also required for FTC compliance. The Telemarketing Sales Rule (TSR) generally requires telemarketers to maintain records for at least two years, and those records must include advertising and promotional materials, sales records, employee records, information about prize recipients if there are any, and records of consent.
5. Observe all payment restrictions.
There are unique payment restrictions and authorization requirements that apply to business conducted via telemarketing. Payments made via credit or debit card are relatively straightforward, but other methods of payment may require "express verifiable authorization," which the FTC outlines in its compliance documentation. Cash, checks and money orders are exempt, but other payment methods are forbidden outright, like remotely created payment orders and cash-to-cash money transfers.
6. Know the exceptions to the rule.
Some types of telemarketing are exempt from the do-not-call list. If the telemarketing your organization does revolves around surveys, political calls or calls on behalf of a charitable organization seeking donations, you are exempt. However, calls that are exceptions to the Do Not Call Registry still need to meet FTC guidelines.
7. Base your telemarketer training on the most recent FTC guidelines.
When you read the FTC documentation regarding telemarketing regulations, you'll see lot of specific guidelines that have less to do with how you set up your telemarketing division than with exactly what your telemarketers tell potential clients.
Certain things must be disclosed during a telemarketing call, such as cost and quantity, material restrictions, limitations or conditions, refund policies, prize promotions, and other specific information that applies only to certain telemarketers (like those offering credit card loss protection plans). There are also rules that apply specifically to telemarketers calling on behalf of charitable organizations and calls that have multiple purposes.
Prior to opening up shop or signing a contract with a third-party company, ensure there is a comprehensive plan for training new hires with customer service and compliance in mind.
8. Seek out debt-specific guidelines if you are in the debt collection or repayment business.
If your telemarketing business includes debt collection or debt repayment services, the guidelines by which you must operate are even more stringent. According to the FTC, "debt collectors generate more complaints to the FTC than any other industry." Due to the excess of fraudulent debt calls, there are firm restrictions on what can and cannot be said during a debt-related telemarketing call and how charges and other relevant information is disclosed.
Key takeaway: Small businesses can comply with the Telemarketing Sales Rule by limiting call times, adhering to the Do Not Call Registry, keeping thorough records and more.