FTC Releases Restrictive New Prerecorded Telemarketing Rules: Prior written, signed agreements, automated opt-out mechanisms to be required, HIPAA exempt
The Federal Trade Commission (FTC) has released—but not yet published in the Federal Register—the text of new rules and commentary governing prerecorded telemarketing calls, which will in most cases require prior written, signed consent of the called party in order to place such calls, and an automated interactive opt-out mechanism in cases where such prerecorded calls are permissible.
The rules will not affect non-telemarketing calls, such as surveys, customer care, appointment and refill-reminders, and similar purely "informational messages" that are not part of and that do not incorporate a plan, program or campaign to sell goods or services or to solicit charitable contributions. Also, any health care-related prerecorded messages under the Health Insurance Portability and Accountability Act’s (HIPAA) Privacy Rule are exempt as noted in this advisory. Additionally, other industry sectors may be exempt from this requirement to the extent they do not fall within the FTC's general jurisdiction.
The FTC also has taken this opportunity to reconcile its rule for calculating "abandonment rates" for calls placed by autodialers with parallel rules enforced by the Federal Communications Commission (FCC). The FTC and FCC rules now require calculating the three percent of calls that may be abandoned over a thirty-day period.
The effective dates of the FTC's rule changes, which are discussed in this advisory, are as follows:
- The requirement for written agreements from consumers to receive prerecorded telemarketing calls takes effect Sept. 1, 2009.
- The requirement that all prerecorded telemarketing calls provide an automated interactive opt-out mechanism takes effect Dec. 1, 2008.
- The reconciliation of FCC and FTC rules to allow calculating abandonment rates over a thirty-day period takes effect Oct. 1, 2008.
Following are the major points involved in the FTC's rule changes:
Prior written consent
Starting Sept. 1, 2009, prior written consent signed by the called party must be obtained by entities subject to FTC jurisdiction before placing prerecorded calls to residential landline numbers that are allowed under FCC rules because, while they are commercial and constitute telephone solicitations seeking to sell goods or services, they are made pursuant to an "established business relationship" (EBR) between the calling and called parties. The following points will apply:
- Electronic means of obtaining "signatures" authorized by the E-SIGN Act qualify for purposes of the prior written/signed consent requirement, and include those obtained via e-mail or Web site, telephone keypress, voice recording, or electronic point-of-sale devices.
- Such agreement/consent to receive prerecorded calls is non-transferable from one company to another. The written/signed agreement must specify the seller to which consent is given, and each seller must negotiate its own agreement with the consumer.
- The FTC declined to "grandfather" any telephone numbers that telemarketers may have in their call lists for opt-in purposes. Accordingly, while there is a one-year phase-in of the prior written/signed consent requirement, for any phone number to which companies might wish to send prerecorded messages, and for which they have either no consents or consents that do not conform to those the FTC has now adopted, the company will have to get new prerecorded message consents from those customers.
Compliance not required for entities outside FTC jurisdiction
Entities not subject to the FTC's jurisdiction—including banks, credit unions, savings, and loans, non-profit entities, common carriers engaged in common carrier activity, and insurance providers—do not have to comply with the new prior written/signed consent and related requirements for prerecorded sales calls. The following points will apply:
- The FTC sometimes construes these jurisdictional exemptions narrowly and may claim that conduct-based exemptions, such as for common carriers including phone companies, or insurance, are not exempt from the FTC telemarketing rules.
- Health care-related prerecorded message calls subject to HIPAA are exempt from the prerecorded message rule adopted here—this exemption encompasses "health care messages" made by, or on behalf of any "covered entity or its business associate" as those terms are defined in the HIPAA Privacy Rule.
Automated opt-out requirements
Prerecorded calls permitted under the rules because prior written/signed consent has been obtained must "promptly" offer an automated interactive keypress or voice-activated opt-out mechanism that permits the called party to make a company-specific do-not-call request, i.e., that revokes the prior written/signed consent to the prerecorded call and terminates any prior consent or EBR that permitted telemarketing calls of any sort (live or prerecorded).
- In cases where the call is answered by a person, the prerecorded message must provide an automated interactive voice- and/or keypress-activated opt-out mechanism available during the message.
The automated opt-out must immediately add to the calling party's internal do-not-call list the phone number it called to deliver the prerecorded message, and the prerecorded call then must immediately end.
- In cases where the prerecorded call is answered by an answering machine or voicemail, the message must provide a toll-free number that allows the person called to be connected to an automated interactive voice and/or keypress-activated opt-out mechanism for purposes of lodging an opt-out request.
This toll-free number for inbound automated interactive opt-outs must be accessible at any time - 24/7 - throughout the telemarketing campaign of which the prerecorded call is a part.
All charitable solicitation calls placed by for-profit telemarketers (telefunders) that deliver prerecorded messages on behalf of non-profits to members of or previous donors to, the nonprofit, are exempt from the prior written/signed consent rule, but still must include a prompt automated keypress or voice-activated opt-out mechanism.
- Telefunders must comply with the prior written/signed consent requirement for prerecorded calls when they are reaching out to new donors to the charity at issue rather than calling those who have an EBR with the charity.
- All charitable solicitation calls that non-profits make themselves are exempt from the prior written/signed consent and automated keypress/voice-activated opt-out (and all other FTC telemarketing) requirements.
All companies subject to FTC or FCC telemarketing/telephone solicitation rules may now (starting Oct. 1, 2008), calculate their abandoned call rates on a thirty-day basis (or whole-campaign basis if the campaign lasts less than 30 days) rather than, when subject to FTC jurisdiction, having to calculate it on a daily basis as the FTC's rule previously required.