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  Lieber & Associates
  3740 N. Lake Shore Dr.,
  Suite 15B-2
  Chicago, IL 60613-4202

  Tel: 773-325-9400
  Fax: 773-325-0621
  *Watch for our new
    Chicago area address in     2009.


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FCC & FTC Regulations*

Primary federal regulations governing telemarketing in the U.S.A.

The primary federal regulations governing telemarketing in the United States are those of the:

• The Federal Trade Commission (FTC)
• The Federal Communications Commission (FCC)

Certain regulated industries, such as financial services, also have their own industry regulations. Most states also have regulations governing telemarketing that apply to that state.

The national do-not-call (DNC) list is part of the Federal Trade Commission (FTC) revised Telemarketing Sale Rule (TSR) and of the Federal Communications Commission (FCC) revised Telephone Consumer Protection Act (TCPA).

The FCC has jurisdiction over all telephone calls. The FTC has jurisdiction over most commerce, except for certain regulated industries. The FTC and FCC passed nearly identical rules regarding a national do-not-call list, predictive dialers and abandoned calls. The FTC rules also govern offers, disclosures and related communications via fax, e-mail and mail. The FCC rules also govern broadcast faxes.

Here are some details about the well-publicized parts of the rules and an introduction to a few of its less widely known requirements.

On June 27, 2003 the FTC began enrolling consumers in a national Do-Not-Call (DNC) List. As of December 2003 there were 55 million registrants (including those on state do-not-call lists that were rolled into the national list). More than 63 million were registered by the end of June 2004. Consumers anywhere may enroll via a web site or toll-free number. Enrollment in the registry is for five years and may be renewed.

Existing Business Relationship (EBR) Exceptions
Both the FCC and FTC allow your company to call those on the national do-not-call registry who:

1. Purchased from you in the past 18 months, or
2. Inquired/applied to you in the past 3 months, unless the consumer requested that you not do so, in which case they should be placed on your company-specific do-not-call list (required since 1991 by the FCC and 1995 by the FTC).

Acquiring and Using the National DNC Registry
The national DNC list will be available for sale to telemarketers, who are required by law to “scrub” call lists against the names on the registry at least once every 31 days. In fact, even if you outsource your call center you cannot use the outsourcer’s subscription. A separate fee is required for each company using the list. The contract to build and administer the national Do-Not-Call Registry was awarded to AT&T. To access the list, follow the links at the end of this article.

State Do-Not-Call Lists and Regulations
This new DNC Registry regulates calls across state lines and within states (with the June 26, 2003 adoption of similar rules by the FCC). Also, 35 states have DNC lists that govern calls to consumers within state borders or have passed such laws and are in the process of implementing them. Of course, marketers making calls to consumers must comply with rules for company-specific DNC lists.

Many states also have telemarketing regulations regarding registration of firms, blocking caller ID and prohibiting use of rebuttals (objection-responses) when a consumer states that they are not interested. Additionally, most states have eavesdropping statutes that require one party (such as the rep) or all party (rep and consumer) permission to monitor or record calls; and some states have charitable solicitations acts requiring registration of charities that solicit funds.

Politicians and Charities Exempt
There are exceptions to the new FTC-DNC rules, notably politicians and charities. Politicians are exempt from just about all telemarketing regulations (when it involves politics lawmakers consider it to be a matter of free speech).

Charities are also exempt. However if a third-part telemarketing firm calls on behalf of a charity, the consumer may ask not to be called again and must be placed on the charity’s do-not-call list. In such cases calling again on behalf of the charity is punishable by a fine of up to $11,000.

Although regulated business sectors such as telephone companies, airlines and many financial institutions are outside of the FTC’s jurisdiction, this is irrelevant with respect to do-not-call and abandoned call compliance, because they are within the Federal Communications Commission’s (FCC’s) jurisdiction. The FCC has adopted DNC and predictive dialer rules in harmony with the FTC’s.

Regulations Governing Predictive Dialers, Caller ID, Offers, E-mail and More
There’s much more to the new rules that affect those who sell by phone than the national Do-Not-Call list. Here are a few highlights.

Predictive dialers are regulated by the new FTC/FCC rules. These rules state that those using dialers may not have abandoned calls at all and then establishes a “safe harbor” of 3% abandoned calls or less. Also, all calls must be allowed to ring for at least 15 seconds or four rings before discontinuing an unanswered call. This typically requires modification of technology by dialer firms and call centers. Additional predictive dialer rules take effect in October 2003. They require that an identifying message be played when a consumer is called and a rep is not available for two seconds or more and also mandate new record-keeping requirements.

All telemarketers will be required to transmit caller ID information by January 29, 2004. In some cases, this requires technology upgrades, so that the equipment can transmit the proper company name and telephone number.

The new FTC rules also regulate, among other things:
1. Offers that include free trial periods followed by a charge
2. Negative option offers, such as book/record club type offers
3. Automatic billing of customers
4. Use of pre-acquired customer account information
5. Upsells of additional products from your company or another company
6. E-mail and fax solicitations that result in inbound calls
7. Disclosures made on calls
8. Types of calls that must be recorded

Of course other requirements of the original (1995) FTC Telemarketing Sales Rules remain in effect.

In an effort to further curb unsolicited broadcast faxes. the new FCC rules originally required a recipient’s written permission prior to sending them a fax. This renders most faxing impractical and after a huge outcry from business the FCC delayed enactment of this aspects of its rules until June 30, 2005.

However, other parts of the fax rules are in effect and recipients may request that a fax sender not send faxes and the fax sender must comply, even if there is an existing business relationship (EBR). All faxes must identify, on the top or bottom of the fax, the legal name of the sender, the date and time of the fax and the sender's fax number.

Court Challenges Completed
Judicial review has been completed. The rules are in effect, are being enforced and compliance is required.

Compliance and Links
Telemarketing regulations have become much more complicated and affect many different types of businesses. Compliance is not an option it’s the law. Your business must comply or face hefty fines the FTC rules specify $11,000 per occurrence or per day of non-compliance. Read and learn the rules (see useful links below), consult your attorney, compliance officer or compliance consultant and implement practices to comply fully.

These links provide overviews and detailed information about the new rules from the FTC and FCC:

FTC Do Not Call Registry Home Page

FTC Guide – Complying with the Telemarketing Sales Rule

The January 29 Federal Register report containing the amendments to the Telemarketing Sales Rule (101 Pages)

FTC Documents for Business about the Telemarketing Sales Rule

FCC Press Release - Overview of Its Rules

July 3, 2003 FCC Order Containing It’s Rules

August 18, 2003 FCC Order Delaying A Part of the New Fax Rule until January 1, 2005

Consult a Compliance Expert
The above is an introduction to the FCC and FTC rules and is not legal advice. For further information on regulatory compliance please consult with your attorney, call center compliance consultant and/or compliance officer.

*These are general recommendations. Specific strategies and tactics should be based on a review of your needs, market and operation. For outside support, contact Lieber & Associates.

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