CONSUMER ALERT

FTC calling halt to prerecorded telemarketing sales calls

Submitted by Harold Moldoff

This is another in a series of public service columns. The following information was compiled and issued by the Federal Trade Commission.

The Federal Trade Commission recently announced two amendments to the
Telemarketing Sales Rule (TSR). One will expressly bar telemarketing calls that deliver prerecorded messages, unless a consumer previously has agreed to accept such calls from the seller. The other related technical amendment modifies the TSR's method of calculating the maximum permissible level of "call abandonment."

The amendments will not affect consumers' ability to continue to receive calls that deliver purely "informational" prerecorded messages notifying recipients, for example, that their flight has been cancelled, that they have a service appointment, or similar messages. Such purely "informational" calls are not covered by the TSR because they do not attempt to sell the called party any goods or services.

"Just like the provisions of the Do Not Call Registry, these changes will protect consumers' privacy," said FTC Chairman William E. Kovacic. "The amendments now directly enable consumers to choose whether they want to receive prerecorded telemarketing calls."

The amendments are the result of a rulemaking proceeding initiated in 2004 in which the FTC, responding to a petition from the telemarketing industry, proposed a change in the TSR to allow calls that deliver prerecorded messages to consumers with whom a seller had an established business relationship.

The nearly 14,000 comments elicited by that proposal overwhelmingly opposed such a change. Based on that record, in October 2006 the Commission altered its position and instead proposed a broad prohibition on the use of prerecorded messages whenever the consumer called had not previously given express written permission to the seller to place such calls to his or her number. The action announced today adopts the October 2006 proposal, with several refinements suggested by the more than 600 comments it elicited.

The New TSR Amendments

Specifically, the TSR amendments adopted by the Commission:



The prerecorded call amendment requires that any prerecorded telemarketing call must: 1) allow the telephone to ring for at least 15 seconds or four rings before an unanswered call is disconnected; 2) begin the prerecorded message within two seconds of a completed greeting by the consumer who answers; 3) disclose at the outset of the call that the recipient may ask to be placed on the company's do-not-call list at any time during the message; 4) in cases where the call is answered by a person, make an automated interactive voice and/or keypress-activated opt-out mechanism available during the message that adds the phone number to the company's do-not-call list and then immediately ends the call; and 5) in cases where the call is answered by an answering machine or voicemail, 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 anytime after the message is received. The telemarketer, while complying with each of these provisions, also must be in compliance with all other requirements of the TSR and other federal and state laws.

The additional technical amendment the Commission has made pertains to the method of calculating the maximum allowable rate of call abandonment that telemarketers may have. Call abandonment is a side-effect of very efficient telemarketing equipment called predictive dialers. Predictive dialers place calls in anticipation that a salesperson will become available by the time one of the numbers called is answered.

Inevitably, a call will sometimes connect when no sales representative is available. The TSR sets a limit on how often this can occur. It requires that at least 97 percent of a telemarketer's calls that are answered in person not by an answering machine be connected to a salesperson within two seconds after a consumer answers. This is designed to minimize the number of "dead air" and "hang-up" calls that result when no salesperson is available to take the call. The amendment will retain the current three percent
permissible abandonment rate, but will permit it to be calculated over a 30-day period, rather than on a daily basis as is now the case. The change will permit the use of smaller calling lists than before without an appreciable increase in call abandonments. It will enable all sellers to target their calling campaigns to consumers most likely to be interested in their offer, and will benefit small businesses that have smaller customer lists in particular.

Effective Dates

The provision requiring that all prerecorded telemarketing calls provide an automated interactive opt-out mechanism will become effective on December 1, 2008. The provision requiring permission from consumers to receive such calls will become effective September 1, 2009. The amendment modifying the method for measuring the maximum allowable rate of call abandonment will become effective on October 1, 2008.

The Commission vote approving issuance of the Federal Register notice
announcing the amendments to the TSR was 4-0.

Copies of the prerecorded call amendments to the TSR are available from the FTC's Web site at www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC's online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,500 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC's Web site provides free information on a variety of consumer topics.

MEDIA CONTACT:
Mitchell J. Katz,
Office of Public Affairs
202-326-2161

STAFF CONTACTS:
Craig Tregillus or Allen W. Hile,
Bureau of Consumer Protection
202-326-2970; 326-3122




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October, 2008


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