Recorded-Message Rule Delayed Until October

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Trade groups mounting a legal defense for the telemarketing industry have won a six-month delay in the implementation of a new requirement that telemarketers play a recorded message to avoid abandoning calls.

Late Friday, the Federal Trade Commission sent letters to the Direct Marketing Association and the American Teleservices Association informing them that the requirement will take effect Oct. 1, 2003. The FTC originally had slated the requirement to take effect March 31.

Several other new telemarketing rules, including those affecting call abandonment, free-to-pay offers and use of pre-acquired account information, still go into effect March 31.

"The Commission is persuaded that telemarketers may be unable, despite their best efforts, to comply" with the recorded-message rule, the FTC wrote.

Industry observers said last week that many telemarketers would be unable to upgrade their equipment to play recorded messages by the deadline.

The FTC gave telemarketers 60 days from the day the changes to the Telemarketing Sales Rule were announced at the end of January to comply. That is barely enough time to get an appointment from a predictive-dialer provider to perform the upgrades to meet the recording requirement, according to industry experts.

Making matters worse, many telemarketers waited until the last minute to schedule the upgrades. Given the cost of the upgrades -- upward of $25,000 per location, some industry experts say -- telemarketers wanted to be sure the FTC was going through with the rule changes before investing in the technology.

That cost could be a killer for some smaller agencies that can't afford the upgrades, experts said.

The new rule states that all abandoned calls violate the TSR but that telemarketers can avoid FTC lawsuits by following "safe harbor" rules. These included a requirement that telemarketers play a recorded message identifying themselves when a sales representative is unavailable within two seconds of the consumer answering the phone.

"Other abandoned-call requirements postponed to Oct. 1 include a maximum 3 percent abandonment rate and a requirement that telemarketers let phones ring 15 seconds or four rings before they hang up."

The FTC also rejected the DMA's request to delay a requirement that telemarketers tape-record the entire phone conversation with consumers when they use pre-acquired account information in conjunction with free-to-pay or "negative option" offers. Even if telemarketers lack needed equipment to record entire conversations, they still can use free-to-pay offers if they cease use of pre-acquired account information, the FTC said in its explanation of its decision.

In separate statements, ATA chairman Tom Rocca and DMA president/CEO H. Robert Wientzen praised the FTC's decision to delay the recorded-message requirement. But Wientzen noted the FTC's rejection of the request to grant delays to the other rule changes and said the DMA will review the FTC's denial as it relates to the association's lawsuit challenging the creation of the national no-call registry.


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