FTC Revises Proposed Rules For Telemarketing p. 76

By: Debra Gersh Hernandez

Eliminates or alters many of the issues that
could have been troubling for newspapers sp.

THE FEDERAL TRADE Commission has substantially revised its proposed rules for telemarketing, eliminating or revising many of the issues that could have been trouble for newspapers.
The original proposals from the FTC, intended to combat telemarketing fraud, would have spawned a regulatory and logistical quagmire for the newspaper business and other legitimate entities that use telemarketing (E&P, May 6, P. 26).
But after receiving more than 300 comments from interested parties ? including more than 50 from large and small newspapers, newspaper groups, and industry and state press associations ? the FTC revised its proposed rules.
"The commission's revised approach addresses many commenters' concerns that the initially proposed rule cast too broad a net and imposed unnecessary burdens on the legitimate telemarketing industry without adequately focusing on deceptive and abusive telemarketing practices," the FTC's revised notice of proposed rulemaking stated.
Among the changes is a limit on the definition of telemarketing to telephone calls. The original proposal included other "telephonic mediums," but the FTC agreed with commenters that "it does not have the necessary information available to it to support coverage of online services under the rule."
The FTC also changed its proposal regarding inbound calls.
Originally, calls by the customer in response to advertising would have fallen under the telemarketing regulations. Now, the proposed rule exempts "telephone calls initiated by a customer in response to an advertisement through any media, other than direct mail solicitations."
It does not, however, exempt responses to ads concerning investment opportunities, certain goods or services, or ads dealing with credit extensions if a fee is required in advance.
In addition, the FTC originally proposed strict disclosures to be made orally before payment was requested, but the revised rules call for these disclosures to be made orally or in writing before payment is made.
A rule that would have banned courier pickups of payment from customers contacted through telemarketing was another issue of great concern to the newspaper industry, whose carriers often make door-to-door collections on their routes.
The FTC, noting that law enforcement officials applauded this provision, nevertheless agreed "that a ban on the use of courier pickups of consumer payments is unworkable.
"There is nothing inherently deceptive or abusive about the use of couriers by legitimate businesses, and the comments show that many legitimate businesses use them," the FTC stated, adding that the ban was "unnecessary, and it has been deleted from the revised proposed rule."
A provision regarding reloading ? offering to sell additional goods or services to a previous customer before the original contract has expired ? "elicited nearly unanimous negative comments from industry representatives," according to the FTC.
"Commenters noted that the section, as proposed, would preclude a seller or telemarketer from calling customers to renew subscriptions, warranties, service contracts and a host of other ongoing services prior to their expiration," the FTC stated.
The FTC added that, "Given the fact there is nothing about this practice, in and of itself, that is inherently injurious to consumers, and given the widespread use of this practice by legitimate telemarketers, the commission has dropped . . . any attempt to restrict this practice."
In dropping the provision, the FTC noted that, "Reloading is a problem when there is deception in the sales offer," and such deception is covered by other sections of the rules, making a separate reloading regulation unnecessary.
The FTC also deleted a proposal that would have prohibited telemarketers from calling a customer more than once every three months.
Again, recognizing that this is not, in and of itself, injurious to consumers, and finding that they are adequately protected by "do not call" requirements, the FTC found the rule unnecessary.
It did, however, replace it with a rule prohibiting a telemarketer "to cause any telephone to ring, or engage any person in telephone conversation, repeatedly or continuously with intent to annoy, abuse or harass any person at the called number."
A rule that would have required telemarketers to disclose their true first and last names at the start of a call ? which was vehemently opposed for personal safety issues, among other reasons ? was reconsidered by the FTC and now only calls for the iden-
tity of the seller (e.g., the newspaper).
Further, disclosures about the seller and purpose of the call now only would need to be made promptly, rather than at the start of the call, to "permit some flexibility in the seller's telemarketing presentation."
Duplicate verification disclosure rules also were deemed unnecessary and burdensome by the FTC and were deleted.