FTC “Do Not Call” Proposal Aims To Increase Telemarketing Restrictions

The Federal Trade Commission would create a centralized national "Do Not Call" registry, which would place greater limitations on telemarketers under proposed amendments to the agency's Telemarketing Sales Rule (TSR).

The proposal would allow consumers to eliminate most telemarketing calls by placing their names on a national registry, making it illegal for telemarketers to contact them. FTC published the ^{1 1} notice of proposed rulemaking in the Federal Register Jan. 22.

If approved, the amendment would act as a supplement to the existing company-specific "Do Not Call" registry. The reg would include a provision allowing consumers who do place their names on the registry to receive calls from certain companies if they choose.

FTC will accept comments on the rule until March 29. A public forum will be held in Washington, D.C. June 5-7 to allow interested parties to discuss issues raised during the comment period.

The national "Do Not Call" registry is one of several provisions included in the proposal.

Other items include prohibiting the practice of receiving billing information from third parties for use in tele-marketing, blocking the transmission of name and/or telephone numbers for caller ID purposes and requiring "verifiable authorizations for all transactions in which the payment method lacks dispute resolution protection."

Additional proposed changes relating to solicitation of charitable contributions were included largely in response to the recently enacted USA Patriot Act, which was prompted by the events of Sept. 11. Although non-profit charitable organizations are exempt from FTC jurisdiction, changes to the existing TSR would allow the agency to act against for-profit companies that act in a fraudulent manner.

"Since the rule was promulgated, the marketplace for telemarketing has changed in significant ways that impact the effectiveness of the TSR," FTC states. "The proposed amendments to the TSR, therefore, attempt to respond to and reflect these changes in the marketplace."

Enhancements in data collection and target marketing techniques are among some of the changes that have prompted FTC to initiate the proposed amendments, the agency says.

"These developments offer the obvious benefit of making telemarketing more effective and efficient for sellers," FTC says. "However, enhanced data collection and target marketing also have led to increasing public concern about what is perceived to be increasing encroachment on consumers' privacy."

"Consumers have demanded more power to determine who will have access to their time and attention while they are in their homes," FTC adds.

In addition, as new payment forms become available, consumers are guaranteed less protection, as only credit cards provide limited liability for unauthorized charges, the proposed rule notes.

Lastly, the practice of pre-acquired account telemarketing, "where a telemarketer acquires the customer's billing information prior to initiating a telemarketing call or transaction," has increased over the past five years, the agency maintains.

The commission's decision to amend the TSR stems largely from public comments the agency received during a review required no later than five years after the implementation date of the original rule.

In two forums, held on Jan. 11, 2000 and July 27-28, 2000, commenters praised the rule as helping to curb fraudulent telemarketing practices. However, despite its success, "complaints about deceptive and abusive telemarketing practices continue to flow into the offices of consumer groups and law enforcement agencies," FTC notes.

Industry, however, generally supports the existing company-specific "Do Not Call" registry, claiming "it provides consumer choice and satisfies the consumer protection mandate of the Telemarketing Act while not imposing an undue burden on industry," FTC says.

In addition to the company-specific "Do Not Call" registry, the existing TSR, adopted in 1995 as part of the Telemarketing Act, limits the hours during which telemarketers can phone consumers, prohibits specific deceptive or abusive telemarketing practices and requires telemarketers to make specific disclosures of material information.

Since being introduced, the rule has led to judgements resulting in more than $152 mil. in consumer redress and $500,000 in civil penalties, according to FTC.