Our March 15, 2012 advisory below described how the FCC revised its telemarketing rules in an attempt to reconcile them with parallel FTC regulations, but in doing so exceeded what the FTC did, in several key areas. The new FCC requirements were to take effect after an implementation period following approval of the rules by the Office of Management and Budget (OMB). On Oct. 16, 2012, the FCC published a notice in the Federal Register stating that OMB approval has occurred, and followed it with a Federal Register correction a short time later. The notice of OMB approval and the ensuing corrective notice together mean that:

  • The FCC's requirement for prior written signed consent for (a) prerecorded telemarketing (and elimination of an established business relationship permitting some such calls), (b) auto-dialed live-agent (and prerecorded) telemarketing calls to cell phones and (c) telemarketing text-messages, takes effect Oct. 16, 2013. This effectively mirrors the already-effective FTC rule for prior written signed consent for prerecorded telemarketing calls to residential and cellular phones, though it newly raises the level of consent for auto-dialed live-agent telemarketing and telemarketing texts from prior express consent to prior written signed consent.
  • The FCC's requirements for automated opt-out mechanisms for prerecorded telemarketing calls and for the recorded message that must play when a live-agent telemarketing call is "abandoned" take effect Jan. 14, 2013. This mirrors an FTC rule already in effect as to prerecorded telemarketing, but for abandoned-call recordings involves a new obligation that goes beyond what the FTC requires.
  • The FCC's revisions mirroring the FTC requirements for how to calculate the 3% of live-agent telemarketing calls that may permissibly be abandoned take effect Nov. 15, 2012.

The details of the rule changes are discussed in our advisory below, which was originally posted when the rules were adopted.

On Feb. 15, 2012, the Federal Communications Commission ("FCC") issued new rules under the Telephone Consumer Protection Act ("TCPA") that primarily sought to reconcile the FCC's regulations for prerecorded telemarketing with rules the Federal Trade Commission ("FTC") issued several years ago, as we described hereSee FCC Report and Order 12-21. As with the FTC's prerecorded telemarketing rules, the FCC will now also require prior written signed consent for prerecorded telemarketing, as well as an automated opt-out mechanism. The FCC's action also confirms that text messages are covered by the new prerecorded telemarketing requirements. However, the FCC upped the ante by also requiring—unlike the FTC—the same prior written signed consent for auto or predictive-dialed live agent calls to cell phones, and an automated opt-out for "abandoned" live-agent auto/predictive-dialed telemarketing calls to residential lines and cell phones.

Previously, even after the FTC's rule revision, common carriers, banks and other financial institutions, and the business of insurance, when placing prerecorded telemarketing calls on their own behalf, could operate under the FCC's formerly less-strict telemarking rules. Now the new stricter FCC rules will apply to all of these fields. But though the FCC parted company with the FTC in certain respects, as with the FTC's prerecorded telemarketing rules, the new FCC rules do not affect non-telemarketing calls (prerecorded or otherwise), such as political messaging, informational and customer care calls, debt collection, etc., and like the FTC rules, the new FCC rules exempt calls covered by the Health Insurance Portability and Accountability Act ("HIPAA") rules.

Prior written signed consent required—no more EBR exemption

The FCC has long allowed telemarketers to use a prerecorded or artificial voice to call residential lines under the TCPA to reach consumers that had an existing business relationship with the seller. Unlike the FCC, starting in 2008 the FTC restricted  prerecorded telemarketing, so that it could not be based solely on an EBR, but instead is allowed only when the seller or telemarketer has obtained prior written signed consent. The FCC's new rules adopt this prior written signed consent requirement, while deleting the EBR exception, making EBRs irrelevant for this aspect of the FCC rules (it still operates in certain do-not-call and unsolicited fax contexts). This new rule takes effect one year from the date that the FCC publishes in the Federal Register a notice that the Office of Management and Budget has approved the new rules (which notice should appear in March or April 2012, making the new rule effective in March or April 2013).

As with the FTC's existing written signed consent requirement, the FCC will require that a consumer consent in writing to receive prerecorded telemarketing calls. The consent must be sufficient to show that the consumer: (1) received "clear and conspicuous" disclosure of the consequences of providing the requested consent, i.e., that the consumer will receive future prerecorded calls by or on behalf of a seller; and (2) unambiguously agreed to receive such calls at the number called. In addition, the consent cannot be obtained as a condition to any purchase of a good or service. The "written," "signed" consent can be given by any medium or format permitted by the E- Sign Act, meaning consent via email, website form, text message, telephone keypress, or voice recording, are all acceptable.

Extension of the new rule to require heightened consent for auto/predictive-dialed live-agent telemarketing to cell phones

Though the FCC's recent action was designed primarily to reconcile its rules with FTC regulations that apply to prerecorded telemarketing, and which did not implicate live-agent calls or differentiate between calls to residential lines and cell phones, the new FCC rules extend into these areas. The TCPA prohibits using an automatic telephone dialing system (i.e., any auto- or "predictive" dialer) oran artificial or prerecorded voice, regardless of the content of the call, to reach phone numbers assigned to cellular (or similar wireless) phones, unless "prior express consent" of the called party has been obtained. This prior express consent is somewhat more flexible than the new prior written signed consent the FCC (and FTC) recently adopted in that it allows less formal means gathering consent, though callers still bear the burden of proving they have consent. The FCC rules implement these requirements virtually verbatim. For residential lines, the TCPA and FCC rules restrict the use of an artificial or prerecorded voice, but in this regard do not reach auto/predictive-dialing equipment.

The FCC's present update of its prerecorded telemarketing rules changes the consent required for such sales calls from "prior express consent" to prior written signed consent, just like the FTC, and applies regardless whether the call goes to a residential line or cell phone. However, in revising its rules, the FCC applied this new heightened consent requirement for cell phones not just for the prohibition on artificial/prerecorded voice calls, but also to the prohibition on auto/predictive-dialed calls. Consequently, even if a company uses only live sales agents to reach consumers, if it utilizes an automated/predictive dialer to do so—as virtually all telemarketing does —it must have prior written signed consent, not just "prior express consent." To be sure, the longstanding duty to document "prior express consent" to auto/predictive-dial cell phones may mean companies already meet the new requirement for prerecorded and auto/predictive-dialed telemarketing to cell phones. But if those existing consents do not meet the new prior written signed consent requirements in any way, those phone numbers would have to be "requalified" under the new rules. Meanwhile, non-sales prerecorded/artificial-voice, text-message, and/or auto/predictive dialed calls to cell phones continue to require only "prior express consent."

Immediate automated opt-out—including expansion beyond FTC requirements

In addition to the new prior written signed consent requirements, the updated FCC rules also require prerecorded telemarketing to include a means of offering consumers an "opt-out" mechanism during each call that allows them to revoke consent to the call, which would immediately end the call and automatically add their phone number to the calling party's internal "do not call" list. The opt-out must appear "promptly" at the start of the call – i.e., after any required disclosures, but before any pitch and not intermingled with any "call to action" or "advertising" language – and offer an automated interactive keypress or voice-activated mechanism. Where the call is answered by a person, the prerecorded message must provide the automated interactive voice- and/or keypress-activated opt-out during the message; where the prerecorded call is answered by an answering machine or voicemail, the message must provide a toll-free number that connects to an automated interactive voice and/or keypress-activated opt-out mechanism. This rule again largely mirrors the FTC's existing rule, and prerecorded telemarketing requires complying with this portion of the rules within 90 days of the date the FCC publishes OMB approval in the Federal Register (likely June or July 2012).

However, here, too, the FCC adds its own unique wrinkle. Since the FTC and FCC overhauled their telemarketing rules nearly a decade ago to institute a national do-not-call registry (among other things), they have maintained and enforced "abandoned" call rules. Abandoned calls occur when campaigns using live sales agents are dialed by auto/predictive-dialing systems, which can result in the called party not connecting to the agent upon picking up the phone. When such connection to a live agent is not made within two seconds, a call is considered "abandoned." The FTC and FCC rules limit such abandoned calls to no more than 3 percent of telemarketing calls (abandoned call rules do not apply to non-sales calls). In addition, for those (3 percent of) permissible abandoned calls, the rules require a recorded message identifying the calling party and its phone number, and stating the call was for telemarketing purposes.

Because prerecorded telemarketing, by definition, never connects to live agents, and would thus run an impermissible 100% abandonment rate, the FTC decided to adopt two special rules to accommodate prerecorded telemarketing. These required prior written signed consent and an automated opt-out option. These two rules did not apply to auto/predictive-dialed live-agent calls, which continue to require playing a recorded message when a call is abandoned. Unlike the FTC's rules, the FCC's new rules extend the automated opt-out requirement to also apply to the recorded message that must be left for abandoned auto/predictive-dialed live-agent calls.

Accordingly, companies that use auto/predictive-dialing equipment to place live-agent sales calls and that allow their equipment to abandon some calls (up to 3 percent) will have to retrofit their systems so the recorded message that plays upon abandonment includes an automated opt-out. This requires the same kind of keypress or voice-activated mechanism, and/or leaving of a phone number for voicemails and answering machines, as described above. (The FCC also mirrored the FTC's rule change in requiring that the 3 percent of abandoned calls be calculated on a 30-day or per-campaign basis, and compliance with this change is required within 30 days of the rules taking effect).

Scope of coverage of new rules 

The new rules do not change the fact that the restrictions on telemarketing calls do not apply to calls for "political purposes" or to calls for "informational" purposes that do not solicit goods or services (such as calls consumers receive concerning bank account activity or credit card fraud alerts, airline flights, school closures, debt-collection calls, or HIPAA-related call from health-care entities), calls from charities, or calls from surveyors. The new rules also do not change the existing rule that cellular carriers do not need to obtain additional consent from cell subscribers for prerecorded telemarketing (including text-messages) for which the cell subscriber is not charged. See n.3 to the FCC's Feb. 15, 2012, Report and Order.