FTC: Hate Telemarketers? FTC Proposes to Help
The Federal Trade Commission has proposed changes to its Telemarketing Sales Rule ("TSR") and asked for public comment. One of the changes is triggered by provisions in the Patriot Act. Others are designed to make the telemarketing rule more effective for consumers.
The telemarketing rule applies to calls made to sell goods or services. It does not apply to charitable solicitations. The Patriot Act tried to change that, directing the FTC to expand the rule to apply to charitable contributions. Because the FTC does not have jurisdiction over charitable organizations, the Commission believes the proposed rule would apply only to private for-profit companies conducting solicitations for charitable contributions but would not apply to the charities.
"Do Not Call" Registry
The most dramatic element of the proposal would create a central database that would be a "do not call" registry. With one call to the FTC, a consumer could stop all telemarketers. Imagine eating dinner without a single unwanted call!
If the FTC were to adopt this rule as proposed, it would be illegal for a telemarketer to call a consumer who had placed his or her name on the registry. Should this proposal be defeated, consumers could still contact the three primary credit reporting agencies and request that their name and information not be provided to marketers.
Another provision in the proposal would prevent telemarketers from blocking their identity when making calls. Such a rule would breathe new life into the power of caller ID and enable the targeted consumers to identify the caller before accepting the call.
Several other provisions in the proposal could have a significant impact on financial institutions.
First, the proposal would require telemarketers to compile express verifiable authorization for all transactions in which the payment method lacks dispute resolution protection. This provision would not apply to credit card sales over the phone. However, it would require the marketer to maintain documentation for any transaction in which the marketer generates a check based on account information from the consumer. The required documentation could make it easier for financial institutions to protect themselves and their customers from fraud because of unauthorized checks. Institutions would have a tool to require the marketer to support their authority for issuing the check.
Second, telemarketers would be required to disclose the legal limits on cardholder liability for unauthorized charges when selling credit card protection. This would prohibit the unfair or deceptive practice of selling "protection" to the consumer that regulations, such as Z and E, already provide.
The proposal would also prohibit misrepresenting that a consumer needs to make purchases of specific goods or services - including insurance - in order to get protections from liability that are already provided by Truth in Lending.
Finally, the proposal includes a rule that ties in to the privacy regulations already in place. Telemarketers would be prohibited from receiving any consumer's billing information from any third party, such as a bank or credit union, for use in telemarketing. If it wasn't clear that this was prohibited by Privacy, this rule, if adopted, should put a stop to the requests that financial institutions receive.
Comments are due to the FTC by March 29, 2002. The FTC asks that commenters submit six paper copies of their comments. If possible, they ask that commenters also provide a disc with the electronic version of their comments. The disc should be labeled with the commenter's name and the name and version of the word processing program used to create the document. It is worth noting that even if you do not comply with this request, which is for the Commission's convenience, the Administrative Procedures Act requires the Commission to consider your comments.
- Talk with your marketers and discuss whether and how any telephone marketing is done. Make sure it complies with the FTC rule.
- Consider using a statement stuffer to explain what customers should do to prevent identity theft and how to contact the FTC if their identity is stolen.
- Consider using a statement stuffer to explain how consumers can use the "Do Not Call" rule to stop telemarketer calls.
- Review any practices in your institution for selling credit insurance or credit card protection. Measure the practice against the proposed rule.
- Send comments to the FTC to support the documentation proposal.
Copyright © 2002 Compliance Action. Originally appeared in Compliance Action, Vol. 7, No. 1, 2/02
First published on 02/01/2002