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DMA: Data and Marketing Association
Consumer Help

10 Steps to Making a Sale Under the FTC’s New Telemarketing Sales Rule

Who is not covered by the Rule?
  • Most business-to-business calls,
  • Common carriers, airlines, some financial institutions, and insurance companies to the extent regulated under state law,
  • Intrastate calls,
  • Non-profits, and third-party marketers calling on their behalf, are not subject to the Rule’s new national Do-Not-Call (DNC) registry. However, third-party marketers calling on behalf of non profits are required to honor in-house suppress requests.
Who is covered by the Rule?
  • Any plan, program, or campaign to sell goods or services through interstate calls,
  • Inbound & outbound telemarketing calls,
  • Sellers that provide or arrange to provide goods/services to consumers in exchange for payment, and
  • Third-party call centers making calls on behalf of exempt entities such as marketers calling on behalf of airlines, insurance companies or financial institutions.

Preparatory Steps

Step 1: Make sure consumers are receiving your calls only between 8 A.M. and 9 P.M. in the consumers’ time zone.

Also, be sure to check state laws because some states have more restrictive requirements.
 
 

State Laws with Day/Time Restrictions
Monday-Friday Saturday Sunday
AL & LA 8am to 8 pm 8am to 8 pm No calls on Sundays & Holidays
KY 10am to 9pm 10am to 9pm 10am to 9pm
MA 8am to 8pm 8am to 8pm 8am to 8pm
CT, MI, MN, NM 9am to 9pm 9am to 9pm 9am to 9pm
TX 9am to 9pm 9am to 9pm 12pm to 9pm

Step 2: Honor in-house suppress requests.

Scrub your lists of telephone numbers of consumers (both prospects and customers) who have asked you not to contact them. This applies to marketers and non-profits and third-parties calling on their behalf.

Step 3: Honor the national Do-Not-Call (DNC) registry.

Scrub your lists of any prospects’ phone numbers that are on the FTC’s DoNot-Call registry.

  • How will the FTC’s Do-Not-Call (DNC) registry work?
    • Registration: Consumers will be able to begin signing up for the registry this summer. The FTC expects that the registry will be operational, and companies in compliance in fall 2003. AT&T has been awarded the contract to administer the registry.

      Consumers will be allowed to sign up via the Internet or by telephone. If they sign-up on the Internet then they will be e-mailed a confirmation notice. If they register by phone then they must call from the phone number they wish to be added to the national DNC registry. It is our understanding that the national DNC registry will only include telephone numbers and not addresses, names or other identifying information.

    • Established Business Relationship (EBR) Exemption: Marketers may still call customers who are on the registry if they are calling them:
      • Within 18 months of their last purchase, transaction, shipment, end of subscription/membership, or
      • Within 3 months of their last inquiry or application.
        Section 310.2 (n) pp. 242-243.
    • Scenario A: Customer A is registered on the national DNC registry and is a magazine subscriber for one of your publications. The last magazine was delivered to Customer A on March 1, 2003. You may continue to call Customer A until September 1, 2004. If, however, Customer A asks at any time to be placed on your company’s DNC list then you must honor the customer’s request and remove him/her from any future telephone marketing campaigns.
    • Scenario B: On March 1, 2003, Consumer B places a call to your company inquiring about a specific product or service. You may continue to call Consumer B until June 1, 2003. If, however, Consumer B asks at any time to be placed on your company’s DNC list then you must honor the consumer’s request and remove him/her from any future telephone marketing campaigns.

      You cannot contact prospects who are on the national DNC registry unless you receive the consumer’s signed permission to do so.
      Section 31.4(b)(1)(iii)(B) p. 252.

Step 4: Check state laws for any additional teleservices requirements such as calling hours (as noted earlier), state DNC registries, state registration, etc.

To review which states currently have DNC laws, click here.
 

Step 5: Meet the new caller identification requirements.

Effective January 29, 2004, every outbound call must transmit the phone number of the seller, service bureau or customer service number that will be answered during normal business hours. You must also include the name of the seller or service bureau wherever technology is available. And under no circumstance are you to block transmission of caller identification.
Section 310.4(a)(7) p. 251.
 

Step 6: Learn the new requirements for abandoned calls – those calls that are not immediately transferred to live representatives.

Effective October 1, 2003, you must connect all calls to live representatives within 2 seconds of the consumer’s completed greeting. If you do not do so
then the call is considered abandoned and is a violation of the TSR. Even those calls that are answered by a live representative after 2 seconds of the
consumer’s completed greeting would still be considered an abandoned call and a violation of the Rule.
Section 310.4 (b)(iv) p. 252.
 

    The Rule does provide a “safe harbor” for abandoned calls that occur as a result of using technology such as predictive dialers. Section 310.4(b)(4) pp. 253-254. To meet the safe harbor requirements you must:
    Effective October 1, 2003:

  • Allow 15 seconds or 4 rings before disconnecting the unanswered call,
  • Play a pre-recorded message that includes your company name and phone number,
  • Set abandoned rates not to exceed 3% per day per calling campaign, and
  • Retain appropriate records.

Calling Consumers

Step 7: For each telemarketing transaction, you must provide promptly to the consumer:
  • Identity of the seller,
  • That the purpose of the call is to sell goods or services, and
  • The nature of the goods or services that you are selling.
    Section 310.4 (4)(d) p. 254.

If at this point, or at any other time during the call, the consumer asks to be placed on your company’s DNC list then you should honor the consumer’s request. You should add the consumer to your company’s DNC list, refrain from calling the consumer during any future marketing campaign, and promptly and politely end the call.
 

Step 8: Determine which disclosures, authorizations or taping requirements you need under the following circumstances. All of the following requirements are effective March 31, 2003:
  • A. Novel payments: Do you accept novel payments – those payments other than by credit or debit card such as checks or money orders? If so, in order to accept a novel payment from a consumer then you must receive the customer’s verifiable authorization by either:
    • Getting the customer’s written signed permission,
    • Tape recording the customer’s authorization, or
    • Providing written confirmation of the transaction to the customer prior to receiving payment.
      Section 310.3(a)(3) pp. 247-248.
  • B. Negative option plans: Are you engaged in any type of negative option, continuity or advanced consent marketing plan? If so, then you are required to notify customers:
      • That their accounts will be charged unless they take affirmative action to avoid the charge,
      • The date the charge will be submitted for payment, and
      • The specific steps they can take to avoid the charge.
        Section 310.3 (a)(vii) p. 246.

    In addition you must meet the following requirements if you incorporate any of these elements into your negative option, continuity or advanced consent marketing plans.

    • If you use pre-acquired account information and do not offer a free-to-pay conversion program, you must:
      • Identify with specificity the customer account that will be charged, and
      • Obtain the consent from the consumer to charge such account.
        Section 310.4(a)6(ii)(A-B) p. 251.
    • If you use pre-acquired account information and do offer a free to-pay conversion program, you must:
      • Obtain from the customer the last 4 digits of the account that will be charged,
      • Obtain consent from the consumer to charge such account, and
      • Record the entire transaction.
        Section 310.4(a)(6)(I)(A-C) pp. 250-251.

      The FTC discusses in its commentary on the Rule that it is not merely the material terms that are provided to the consumer, but also the context and manner in which the offer is presented that is vital to determining the consumer’s consent to the transaction. Therefore, you should record the entire transaction. It would not be sufficient to just tape the closing sale confirmation. (p.115.)

  • C. Use of pre-acquired account information but no negative option plan: If you do not engage in a negative option plan but use pre-acquired account information:
    • You must identify with specificity the account that will be charged, and
    • Obtain consent from the consumer to charge such account.
      Section 310.4(a)(6)(ii)(A-B) p. 251.
  • D. None of the above: If you do not engage in a negative option plan, free-to pay program, and/or use pre-acquired account information then for all other telemarketing transactions:
    • You must obtain from the consumer informed consent in order to charge the consumer for any goods or services.
      Section 310.4(a)(6) p. 250.
    • The FTC discusses in its commentary on the Rule that consumers must affirmatively and unambiguously articulate their consent to be charged for a product or service. The best way to achieve this result is for consumers to state that they agree to the purchase and to provide part or all of the account they wish the charge to be made. However, the FTC leaves it up to you to decide the best way to achieve this result. (p. 111.)

 

Step 9: Learn the new requirements for upsells.

Effective March 31, 2003, if you solicit for the purchase of goods or services following an initial transaction that occurs during a single telephone call then
under the Rule, you must meet new disclosure requirements. It does not matter if the upsell occurs during an inbound or outbound call, the same rules apply. The FTC treats each upsell as a separate telemarketing transaction, and creates 2 separate categories – internal and external upsells.

Internal upsell occurs when the customer is offered another product or service from or on behalf of the seller from the initial transaction. It does not matter if the initial or subsequent transaction is made by the same telemarketer. Under an internal upsell, you must provide any new disclosures not provided during the initial transaction.

External upsell occurs when the customer is offered a product or service from someone other than the seller from the initial transaction. It does not matter if the initial or subsequent transaction is made by the same telemarketer. Under an external upsell, you must provide:

  • Identity of the seller,
  • That the purpose of the call is to sell goods or services, and
  • The nature of the goods or services that you are selling.
    Section 310.4 (4)(d) p. 254.

If novel payments, negative option, preacquired account information, and/or free-to-pay conversion plans are used then all previous relevant disclosures must be repeated for each upsell.
 

Step 10: After charging the customer’s account, retain appropriate records for 24 months.

Each telemarketer should retain the following records for 2 years from the date the record was produced:

  • Different brochures, telemarketing scripts, promotional material,
  • Name, address, prize award for each prize recipient,
  • Name, address, product/service information for each customer,
  • Telemarketing employee information, and
  • All verifiable authorizations or records of express informed consent that are required by the Rule.
  • Records can be maintained in any format.
    Section 310.5 pp. 255-256.

The FTC’s New Telemarketing Sales Rule Q & A’s
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