FTC’s TSR Changes Address Prerecorded Calls, Abandonment

The Federal Trade Commission issued two amendments to its Telemarketing Sales Rule (TSR). The first prohibits telemarketing calls that use prerecorded messages, unless a recipient has previously agreed to receive such calls from the marketer. The second amendment changes the method under which call abandonment rates are calculated.

Under the terms of the first amendment, telemarketers are only allowed to make prerecorded calls to consumers from whom they have received signed, written agreement to place such calls. Permission for these calls may be obtained by any method allowed by the Electronic Signatures In Global and National Commerce Act (E-Sign Act).

Telemarketers are allowed to continue making calls to consumers with whom they have an established business relationship for a year, after which time they will need to obtain express written permission.

Pre-recorded calls subject to the Health Insurance Portability and Accountability Act, as well as charitable solicitation calls placed by for-profit telemarketers on behalf of non-profits, are exempt from the amendment, but these calls must include “a prompt keypress or voice-activated opt-out mechanism”.

The prerecorded call amendment requires that any prerecorded telemarketing call must: 1) allow the telephone to ring for at least 15 seconds or four rings before an unanswered call is disconnected; 2) begin the prerecorded message within two seconds of a completed greeting by the consumer who answers; 3) disclose at the outset of the call that the recipient may ask to be placed on the company's do-not-call list at any time during the message; 4) in cases where the call is answered by a person, make an automated interactive voice and/or keypress-activated opt-out mechanism available during the message that adds the phone number to the company's do-not-call list and then immediately ends the call; and 5) in cases where the call is answered by an answering machine or voicemail, provide a toll-free number that allows the person called to be connected to an automated interactive voice and/or keypress-activated opt-out mechanism anytime after the message is received.

Another major technical amendment involves call abandonment rates. Under the TSR, at least 97% of calls using predictive dialers must have a sales rep available when the call is answered. Currently, the FTC calculates this on a daily basis. The amendment brings this in line with Federal Communications Commission guidelines, which calculate abandonment rates on a per-campaign basis over a 30-day period.

The provision requiring that all prerecorded telemarketing calls provide an automated interactive opt-out mechanism will become effective on December 1, 2008. The provision requiring permission from consumers to receive such calls will become effective September 1, 2009. The amendment modifying the method for measuring the maximum allowable rate of call abandonment will become effective on October 1, 2008.

Tim Searcy, CEO of the American Teleservices Association, was upbeat about the amendments. “We like ‘em,” he said. “Our problem is not the legitimate use [of prerecorded messages] by people out there. If there wasn’t so much abuse going on, we wouldn’t support this amendment. But people have been using prerecorded calls for cold calls—which is inappropriate under the existing business relationship rules—and for fraudulent purposes.”

Searcy also complimented the FTC on the information and reaction-gathering approach it took before issuing the amendments. The FTC took the time to determine the financial impact, and the number of companies that would be affected, under a variety of scenarios, although it did not tell the ATA what the end-result changes would be.

[The FTC was] “trying to get as much information as possible from the business perspective, which is a welcome change from five years ago when we went to the do-not-call list,” Searcy said.

Searcy is especially gratified over the way the call abandonment rate calculations were amended. Not only are the calculations in line with the way predictive dialing and analytic technology is set up, he said, but it brings the FTC calculations in line with the FCC methods, which will do wonders for alleviating telemarketer headaches.

Jerry Cerasale, senior VP of government affairs at the Direct Marketing Association was less sanguine about the signature amendment, although he did laud the FTC for its changes to how abandonment rates are calculated.

In a statement, Cerasale addressed the permission issue, saying "We believe a marketer's ability to reach consumers is important for jobs and the economy as a whole. DMA had hoped that the FTC would match the FCC's position on this issue by enabling marketers to leave pre-recorded messages for consumers with whom they had a pre-established business relationship. Instead, the FTC has essentially left their old rule intact, and in doing so will increase the administrative costs for marketers — a practice that will increase the price of goods for consumers."

The rule changes have no impact on purely informational calls, such as those informing airline passengers their flights have been delayed, or appointment reminders. These calls, which do not attempt to sell products or services, are not covered under the TSR.