FTC Rejects Prerecorded Calls to EBRs

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The Federal Trade Commission rejected a petition last week from Voice Mail Broadcasting Corp. that would have let telemarketers deliver prerecorded solicitation calls with an opt-out option to consumers with whom the seller has an established business relationship.

Because the 2004 petition from VMBC -- also called Voice Message Broadcasting Corp. -- was rejected, the FTC can take enforcement action against sellers who use prerecorded messages. The commission is giving telemarketers until Jan. 2 to discontinue prerecorded calls to consumers with whom the seller has an EBR.

"Whereas we disagree with the FTC's decision, we as well as our clients are pleased that the FTC has provided sufficient time to adjust their campaigns to comply with the rules by January 2007," said Jesse Crowe, president of the Costa Mesa, CA, company.

In 2003, the FTC amended the Telephone Sales Rule to include a provision limiting the proportion of calls to consumers that telemarketers may "abandon" without risking FTC enforcement action. In an abandoned call, the consumer answers but finds no one on the line. To remedy such calls, the FTC amended the TSR to prohibit call abandonment but permitted telemarketers to play a prerecorded message when a consumer answers, in a maximum of 3 percent of calls answered by consumers in person.

VMBC petitioned the FTC to change the abandonment provisions to let telemarketers place calls delivering a prerecorded message to consumers with whom the seller has an established business relationship. In seeking public comment, the FTC received about 13,600 responses to the proposal, with more than 13,000 in opposition. The FTC cites widespread consumer opposition as one reason for its rejection of the proposal.

"A lot of companies have been working under the impression that it is acceptable under FTC rules to send off prerecorded messages to people as long as there is that established business relationship," said Joseph Sanscrainte, an associate with Bryan Cave LLC, New York. "A lot of companies are going to be surprised to find out that under current FTC rules, they are not allowed to send off prerecorded message because it violates the abandonment rate rule."

Mr. Crowe said the ruling does not appear to affect prerecorded informational calls, messages delivered to a voice mail or answering machine, collection calls, certain business-to-business calls and surveys. The FTC said that solicitation calls with express written consent would continue to be allowed.

The FTC also has proposed an amendment that would alter the call abandonment provision of the TSR. The proposal responds to several petitions filed with the FTC by the Direct Marketing Association and other organizations, such as the American Teleservices Association.

The proposal would change the method for measuring the maximum allowable call abandonment rate from 3 percent per day per calling campaign to 3 percent per 30-day period per calling campaign.

Both the Federal Communications Commission and the FTC prohibit call abandonment at a rate of 3 percent. However, the FCC measures the 3 percent rate over a 30-day period while the FTC currently measures per day per calling campaign.

"The dual standards and resulting confusion have caused many outbound contact centers to struggle to adhere to the two conflicting federal standards," said Tim Searcy, CEO of the ATA, Indianapolis.

The DMA said it was concerned about the FTC's current rule affecting small businesses.

"The larger the number, the easier it is to comply with," said Jim Conway, DMA vice president of government relations in Washington. "So if it is per campaign per day, a small company might make 200 calls, and if they get 7 abandoned calls, then they are in violation because that would be more than 3 percent. However, they would have more of a chance to not violate the law if over 30 days."

The Oct. 3 notice seeks comment on the proposal by Nov. 6. To read the FTC notice, see: www.ftc.gov/os/2006/10/R411001telemarketingruleFRN.pdf.

But Mr. Sanscrainte said the proposal still would not give telemarketers one single measurement rule.

"The FTC would have a per 30-day period per calling campaign rule, and the FCC's rule is just a per 30-day period rule," he said. "The difference is, under the FTC proposed language, you would still have to measure it per calling campaign, but the FCC allows you to aggregate across calling campaigns."

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