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Legal Review: Robocall, DNC Violations May Annoy FTC More Than the Average Consumer

1 Jan, 2013 By: Jeffrey Knowles, Jonathan L. Pompan Response


Jeffrey D. Knowles and Jonathan L. PompanIn December, the Federal Trade Commission (FTC) announced its 100th “Do Not Call” enforcement action since the creation of the National Do Not Call Registry in 2003. If activity in 2012 is any indication, marketers should expect the FTC’s interest in Do Not Call matters generally — and robocalls specifically — to continue growing in 2013.

The year just passed is likely to be remembered as one when the FTC declared war on commercial robocalls, which are telephone calls that deliver a recorded sales message to consumers. Under the FTC’s Telemarketing Sales Rule (TSR), almost all commercial robocalls are illegal unless the caller has advance written permission from the consumer to receive such calls. The agency is also steadfast in its belief that most robocalls are unwanted and frequently are deceptive.

Last year was awash in FTC action related to robocalling. Not only were there a number of enforcement actions, but the FTC also put a public bounty on the practice’s head during its “Robocall Summit” in October, when it announced a $50,000 prize for the best technical solution to intercept robocalls before they reach consumers.

If the line on robocall compliance is reasonably clear, ensuring that live telemarketing calls comply with Do Not Call regulations can be less so. This is partly because marketers frequently misunderstand the narrow “existing business relationship” exception to Federal Communications Commission (FCC) and FTC Do Not Call regulations. Another cause is that marketers sometimes fail to scrub phone numbers purchased from lead generators against the Do Not Call Registry before calling them.

Provisions within the TSR and similar FCC regulations provide a narrow exemption through which companies that have an “established business relationship” (EBR) with a consumer may call a consumer whose telephone number is listed on the Do Not Call Registry.

An EBR exists when: “(i) the consumer’s purchase, rental, or lease of the seller’s goods or services, or a financial transaction between the consumer and seller, within the 18 months immediately preceding the date of a telemarketing call; or (ii) a consumer’s inquiry or application regarding a product or service offered by the seller within the three months immediately preceding the date of a telemarketing call.”

In the past, the FTC has readily admitted there is significant confusion among consumers and marketers about the EBR exception. Many consumers do not know that the exemption exists and are surprised to receive calls from marketers after adding their phone number to the Do Not Call Registry. Other times, it can be unclear whether a bona fide relationship exists because the call may be coming from an affiliate of a company with which the consumer has done business.

The FTC and FCC have held that a consumer’s EBR with a particular business does not extend to affiliates or subsidiaries unless the consumer would reasonably expect those organizations to be included in its relationship with the original company. By that logic, the phone numbers provided to marketers by some lead generators clearly do not fall under the exception because — although the consumers may have an EBR with the lead generator — they do not have one with the marketer who has purchased the leads. However, the FTC also has taken into account the consumer’s expectations of receiving the call when evaluating whether the EBR exemption applies.

Because of this, marketers intending to place calls to numbers acquired from lead generators must ensure that the leads have been generated in a way that created an EBR between the marketer and the consumer and expectation that the seller will call. If that is not the case, the marketer must check those numbers against the Do Not Call Registry before making call the calls.

Failing to take these steps can generate thousands of illegal calls and, almost certainly, complaints to the FTC. Of course, underlying advertising claims made by the lead generator, if any, and marketers need to be truthful and accurate.

Lead generators can help marketers by clearly and conspicuously disclosing — before the consumer divulges a telephone number — that by providing their phone number, a consumer may receive telemarketing calls. It is also helpful to inform the consumer of the maximum number of entities that may call and, if possible, provide the identities of telemarketers that may call. ■


About the Author: Jeffrey Knowles


About the Author: Jonathan L. Pompan


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