Telemarketers Warned of Crackdowns by FTC, States

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WASHINGTON -- The Federal Trade Commission and state attorneys general are cracking down more than ever on businesses that engage in telemarketing, attorneys for the teleservices industry said yesterday.


Speaking at the American Teleservices Association's annual legislative conference at the Grand Hyatt hotel, attorney Reed Freeman warned that the FTC is focusing on some offers commonly used by telemarketers. The commission also is giving less leeway to teleservices agencies that act as third-party outsourcers for businesses.


In particular, the FTC is focusing on offers that include magazine subscriptions, Visa and Mastercard credit cards, credit card protection and repair services, and buying-club upsells, Freeman said. Federal regulators also are watching negative-option offers, which typically involve a free trial for which customers must cancel or be billed.


"I want to be as clear as possible," Freeman said. "They hate negative-option marketing. The reason is that silence equals consent."


Though the government cannot make negative-option offers illegal, it is requiring marketers who use them to give extensive disclosures to consumers, including clear instructions on how to cancel, Freeman said.


Furthermore, the FTC under chairman Timothy Muris and consumer protection division chief Howard Beales is taking an aggressive stance toward telemarketing agencies that provide companies with outbound calling, Freeman said. More often, these companies are being held liable for offers made by the companies they serve.


On the state level, do-not-call lists continue to blossom, said C. Tyler Prochnow, the ATA's state legislative counsel and a contributor to DM News. Twenty states had active DNC lists when the year began, and Oklahoma and Pennsylvania have enacted list laws since.


Kentucky enacted a "zero-call" list law that bolstered the state's DNC list by removing most exemptions, Prochnow said. Other states can be expected to follow.


Of the remaining states, only five have not considered DNC list legislation this year, and four of those weren't scheduled to meet this year. The legislature in North Dakota was the only one to meet this year and not consider DNC list legislation, Prochnow said. DNC list laws are nearing passage in Illinois, Kansas, Michigan and Minnesota, though some have encountered snags and may not pass.


Iowa, Maryland, Mississippi, Nebraska, New Hampshire, South Dakota, Utah, Virginia, Washington and West Virginia have defeated DNC list laws.


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