Changing the Debate Over the TSR

My hometown, Kansas City, was hit by an ice storm this month that downed tree limbs and caused extended power outages. As cleanup crews cleared the wreckage, my neighborhood saw large, noisy vehicles trimming damaged limbs and cleaning up the streets from early morning to sunset.

The trucks woke me up several times, but I don't think I could seriously argue that they invaded my privacy, despite that I was sleeping in my own home and the time was 5 a.m.

The nuisance of the noise in a residential neighborhood at an early hour was clearly outweighed by the benefit of safer streets, electrical power and the general good of the residents. My inconvenience was not substantial while the benefit to the neighborhood was great. A court would reach the same conclusion by balancing the harm of an activity against the benefits it causes. That's basic nuisance law.

The telemarketing industry may want to consider this analysis when responding to the Federal Trade Commission's proposals to amend the Telemarketing Sales Rule. These revisions, proposed in January, will change how your company can conduct outbound telemarketing. You need to review the changes and take appropriate action before the revised Rule takes effect. Items such as the national do-not-call list, how the FTC will apply the TSR to charitable solicitations, Caller ID issues and other changes are all up for debate and subject to a waiting period before implementation, so your business can still tell the FTC what form you think the final rule should take.

The comments to the revision argue that abandoning, or dropping, a call is an abusive practice in violation of the TSR. The FTC document addresses call abandonment at some length but declines to make any change in the TSR to address dropped calls. Instead, the FTC argues that dropped calls violate the general prohibition on abusive practices:

“In this regard, moreover, one fact is clear: telemarketers who have abandoned calls are violating 310.4(d) of the Telemarketing Sales Rule. Section 310.4(d) requires that telemarketers promptly and clearly disclose specified information to the person receiving the call. The Commission intends for the phrase 'receiving a call' to mean when the consumer answers the telephone. Once the consumer answers the telephone, the consumer has 'received the call' for purposes of rule; the required disclosures must then be made. Once the consumer has answered the telephone, the telemarketer violates 310.4(d) if the telemarketer disconnects the call without the required disclosures.”

Thus, it is the FTC's position that any call that does not result in the delivery of the required disclosures is a violation of the TSR. Because of the way this new interpretation is made, i.e. businesses “are violating” the TSR, the FTC could conceivably enforce a ban on abandonment today.

The FTC bases this interpretation at least in part on the claim that abandoned calls violate consumers' right to privacy, stating: “[u]sing predictive dialers in a way that produces many abandoned calls is a practice that clearly 'the reasonable consumer would consider coercive or abusive of such consumer's right to privacy.' ” (Notice of Proposed Rule Making, Page 84.)

There are two notable problems with this argument. The first is the difference between the FTC's stated position that even one abandoned call is an abusive practice, and this argument that many abandoned calls are required before privacy is intruded upon.

The second is the mistaken notion that privacy is affected when actually the FTC is making an argument against the nuisance of a phone ringing when no sales representative is there to take the call.

If privacy was the concern of the FTC, why do the existing and proposed rule exempt many types of calls, including calls where no sale is completed until a face-to-face meeting, calls for the sale of franchises and calls for the solicitation of support by political or religious organizations? In addition, the TSR does not apply to several other types of organizations, such as banks and telecommunications carriers, which are outside the jurisdiction of the FTC.

Do these phone calls ring in a less intrusive manner than covered calls? Remember, the FTC states that it is the dial itself, disconnected before any message is delivered, that is the abusive practice. How do these calls differ in their supposed effect on privacy from covered calls? They don't.

Because privacy is not the true goal of this interpretation, the benefits of calling using predictive dialers should be balanced against the costs of that use, as a court would do when considering an alleged nuisance.

This is where the industry needs to martial statistical data supporting the benefits of predictive dialers, such as how much money predictive dialing saves consumers through lower labor costs or how more accurate dialing enables businesses to better target presentations to potential customers, thus saving time for consumers unlikely to be interested.

It may be that a national standard concerning abandonment may be the goal of the FTC in addressing this issue, but two things are clear: first, this interpretation is a change in the existing TSR and should be addressed as such with proper comments, debate and implementation periods, and second, the alleged nuisance should be balanced against the benefits of predictive dialing to come to a reasonable interpretation.

Comments to the FTC are due by March 29.

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