DNC: The Gathering Storm

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On July 29, the Federal Trade Commission released its final rules regarding fees to be imposed on entities accessing its do-not-call registry. This is the last piece of a complex puzzle that began being assembled in November 1999. Now we'll try to provide insight into how the pieces fit (or in some cases, do not fit) together.


As Confucius said, to understand where we are, we first must understand where we've been. So before looking at how the federal telemarketing regulations interact, this article will provide a tour down memory lane.


In 1991, the Federal Communications Commission was given the right by Congress to examine launching a national DNC program, via the Telephone Consumer Protection Act. The FCC chose not to proceed with such a list, opting for the "company-specific" approach wherein every company responsible for telemarketing calls must honor individual consumers' requests not to be called again. The rules the FCC promulgated in 1992 governed such company-specific lists as well as faxes and calls made by automated telephone dialing systems.


The FTC's telemarketing regulations (the Telemarketing Sales Rule) took effect Dec. 31, 1995. Like the FCC, the FTC adopted a company-specific DNC regime along with a set of extensive regulations governing virtually every aspect of telemarketing, including disclosures; prohibitions against misrepresentations; rules regarding the process of making a purchase; and rules governing specific types of telemarketing campaigns.


In November 1999, the FTC began a mandatory review of its TSR rules, which culminated in the January 2002 release of a Notice of Proposed Rulemaking. In this notice, the FTC proposed to create a national DNC list; to amend its rules regarding purchase and billing requirements; to add provisions regarding blocking of caller ID; and to amend the application of its rules to nonprofit calls. The FTC also requested comment on how best to regulate the use of predictive dialers. After an extensive "review & comment" period, which included a public forum, the FTC released its amended TSR in December 2002.


As many in telemarketing expected, the amended TSR created a national DNC list managed by the FTC. The FTC also enacted a 3 percent abandonment rate for calls made by predictive dialers; required the transmission of caller-ID information by telemarketers; enacted more extensive rules governing purchases and the collection of billing information; expanded coverage of the rule to include upsells; and extended coverage of many of the TSR's rules to calls made on behalf of nonprofits by for-profit call centers.


At the time of the amended TSR's release, many questions remained regarding the FTC rules. Most importantly, the FTC lacked jurisdiction over many major industries (including common carriers, banks, credit unions, savings and loans, companies engaged in the business of insurance, and airlines). In addition, the FTC lacked jurisdiction over calls made completely within a state (or intrastate calls.)


Many of these questions were answered July 3 when the FCC released its new rules and regulations implementing the Telephone Consumer Protection Act. Once again, as expected by many in telemarketing, the FCC enacted rules adopting the FTC's DNC list as the official FCC DNC list. In addition, the FCC promulgated rules mandating a 3 percent abandonment rate for predictive-dialer calls and requiring caller-ID transmission by telemarketers. Finally, the FCC bolstered its existing regulations governing the use of autodialers and faxes.


Taking the above developments together with the FTC's recent promulgation of its DNC fee rules, it would appear that we now have one cohesive set of DNC registry requirements, predictive-dialer rules and caller-ID provisions that govern the vast majority of commercial telemarketing calls made in the United States. However, as so often occurs when dealing with governmental regulations, the devil is in the details.


The FCC was tasked by Congress with "maximizing consistency" between its rules and the FTC's amended TSR. Though the FCC accomplished this in large measure by adopting provisions regarding federal DNC, abandonment and caller ID, differences between these regulatory schemes remain.


As mentioned above, differences exist between the industries and/or types of calls over which the FTC and FCC may assert jurisdiction. Any attempt by a telemarketer to determine what rules must be complied with must start with a consideration of these jurisdictional questions.


In terms of substantive requirements, perhaps the most striking difference between the FTC and FCC rules involves calls made by or on behalf of charities. The FTC extended its jurisdiction to cover calls made by for-profit call centers on behalf of charities. Most importantly, these entities must comply with "in-house" requests by consumers. The FCC declined to extend coverage of its rules to nonprofits and continues to exempt all nonprofit calls independent of source.


Another key difference relates to abandonment-rate rules. The FTC requires record-keeping on a "per-day, per-calling campaign" basis while the FCC requires record-keeping only on a 30-day basis. Also, the FTC considers any call delivering a prerecorded message to be an abandoned call, in that the consumer contacted is not connected with a live sales representative within the mandatory time. The FCC does not consider prerecorded messages delivered either with consent or pursuant to an established business relationship to be abandoned.


The caller-ID and company-specific DNC provisions also provide differences. The FTC's caller-ID transmission rule is more generic than the FCC's rule. It merely requires telemarketers to transmit certain caller-ID information without going into specifics as to transmission criteria. The FCC specifically states a preference for one transmission method of caller-ID information (calling party number or CPN) over another (Automated Number Identification or ANI), and expressly prohibits the blocking of caller-ID information. The FTC rules for company-specific DNC requests state no time limit for how long until the request must be honored, or how long the request itself is honored; the FCC rules are 30 days and five years, respectively.


Finally, areas exist where one agency has a set of rules that are entirely absent from the other agency's rules, including: billing requirements (FTC only); upsells (FTC only); and prohibitions against unsolicited ads to facsimile machines (FCC only).


The FTC is set to enforce the DNC registry as of Oct. 1. Since the FTC released its amended TSR, the number of independently run state DNC programs has risen from 25 to 28. For those in teleservices who saw a federal-level list as a means toward one-stop DNC data shopping, this number is clearly moving in the wrong direction.


To add further complexity to this regulatory maze, neither the FTC nor FCC completely pre-empted state telemarketing regulations. The FTC sidestepped the issue, and the FCC has definitely indicated only that less-restrictive intra/interstate state rules will be pre-empted.


Finally, there is the wild card of the actions filed by the American Teleservices Association against both the FTC and FCC regulations. Though many in the industry disagree as to the outcome of these actions, the $2 million war chest assembled by the ATA speaks volumes about the desire and will of the teleservices industry to protect its interests.


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