The Telemarketing
Sales Rule, which has been in effect since December 31, 1995, enforces
a law Congress passed to fight
fraudulent activities
carried out by telephone. Companies that violate the Rule may be subject
to fines of $10,000 per
violation, if
the FTC takes action against them. The FTC defines telemarketing as any
plan, program or campaign to sell
goods or services
over the telephone. The FTC's Telemarketing Sales Rule prohibits misrepresentations
and requires
telemarketers
to give you certain disclosures. It also gives you the power to stop unwanted
telemarketing calls. (There is
some overlap
with this Rule and the FCC's rules, described later.)
The Rule
requires specific disclosures. For outbound calls, the following prompt
(before any sales pitch is given) clear and
conspicuous
oral disclosures:
The seller's identity;
That the purpose of the call is to sell;
The nature of the goods or services offered;
That no payment or purchase is necessary to win if a prize promotion is offered.
For all transactions,
whether they involve inbound or outbound calls, the following clear and
conspicuous written or oral
disclosures:
The cost and quantity of the goods or services offered;
Any material restrictions, limitations, or conditions;
Any "no-refund"
policy; if a refund policy is mentioned, the material terms and conditions
of the refund policy must be
disclosed;
Prize promotion
disclosures: the odds of winning, or if the odds can't be calculated, the
factors that determine the odds; that
no purchase/no
payment is necessary to win; a statement of no purchase/no payment method
of entry; and any material
restrictions
or limitations on any offered prize.
Call again
once you've asked them not to;
Call you before 8:00 A.M. or after 9:00 P.M.;
Withdraw money from your checking account without your express, verifiable authorization;
Misrepresent
the offer or the goods or services offered or make any false statement
to get you to pay, no matter what
method of payment
you use;
Seek payment
for credit repair, recovery room or advance fee loan/credit services until
these services have been delivered.
The Rule
does not cover the following situations:
- Calls placed
by consumers in response to general media advertising if the advertising
does not relate to: investment
opportunities;
credit repair services; recovery services; or loans or other extensions
of credit, the granting of which is
represented
to be guaranteed or highly likely;
- Calls placed
by consumers in response to direct mail advertising if the advertising
discloses all the material information
required by
the Rule; Catalog sales; Calls initiated by the consumer that are not made
in response to any solicitation; Calls
involving sales
that are not completed, and payment (or authorization of payment) is not
required, until after a face-to-face
sales presentation;
Calls seeking charitable donations but not soliciting a purchase of goods
or services; Business-to-business
calls (unless
nondurable office or cleaning supplies are being offered); Sales of pay-per-call
services and sales of franchises.
Q. Who must comply with the federal telemarketing
sales rule?
A. The Telemarketing Sales Rule covers telemarketing
- any plan, program, or campaign to sell goods or services through interstate
telephone calls. With some important exceptions
explained below, any persons or companies that take part in any plan, program,
or campaign to sell goods or services through
interstate telephone calls must comply with the Rule. This is true whether,
as
"telemarketers," they initiate or receive
telephone calls to or from consumers, or whether, as "sellers," they provide,
offer to
provide, or arrange to provide goods or services
to consumers in exchange for payment. Certain sections of the Rule also
apply to
persons or companies other than sellers or
telemarketers if such persons or companies provide substantial assistance
or support to
sellers or telemarketers. The Rule also applies
to persons or companies that provide telemarketers.
Q. Who is not covered by the federal telemarketing sales rule?
A. Some types of businesses are not covered
by the Rule even though they may use interstate telephone calls to sell
goods or
services. The following four types of entities
are not subject to the FTC's jurisdiction and therefore not covered by
the Rule:
Banks, federal credit unions, and federal savings and loans;
Common carriers, such as long-distance telephone companies and airlines;
Non-profit organizations
(entities that are not organized to carry on business for their own profit
or that of their members);
and
Insurance companies, to the extent that their business is regulated by state law.
The four listed types of entities are not covered
by the Rule only because they are specifically exempted from the FTC's
jurisdiction; however, any other individual
or company that contracts with one of these four types of entities to provide
telemarketing services must comply with the
Rule. For example, although banks are not covered by the Rule, a nonbank
company
that contracts with a bank to provide telemarketing
services on behalf of the bank is covered. Similarly, a non-airline company
that
contracts with an airline to provide telemarketing
services on behalf of the airline is covered by the Rule, and a company
that is
acting for profit may be covered by the Rule
if it sells goods or services of more than nominal value on behalf of a
nonprofit
corporation (See explanation).
In addition, under the provisions of the Telemarketing
and Consumer Fraud and Abuse Prevention Act, a number of entities and
individuals associated with them that sell
investments and are subject to the jurisdiction of the Securities and Exchange
Commission
or the Commodity Futures Trading Commission
are not covered by the Rule, even if they engage in a plan, program, or
campaign
to sell through interstate telephone calls.1
Q. What types of calls are not covered by the rule?
A. Some types of calls also are not covered
by the Rule, regardless of whether the business or individual making the
call is
covered. Here is a brief summary of the types
of calls not covered, followed by a discussion of each in greater detail.
Calls placed by consumers in response to a catalog;
900-number calls;
Calls related to the sale of franchises or certain business opportunities;
Unsolicited calls from consumers;
Calls that are part of a transaction that involves a face-to-face sales presentation;
Business-to-business calls that do not involve retail sales of nondurable office or cleaning supplies;
Calls made in response to general media advertising (with some important exceptions); and
Calls made in response to direct mail advertising (with some important exceptions).
Most calls made
in response to a catalog are exempt. Generally, the Rule does not apply
to calls placed by consumers in
response to
a catalog, so long as:
The catalog contains a written description or illustration of the goods or services offered for sale;
The catalog includes the business address of the seller;
The catalog includes multiple pages of written material or illustrations;
The catalog has been issued not less frequently than once a year; and
The catalog seller does not solicit consumers by telephone but only receives calls
Initiated by
consumers in response to the catalog, and during those calls from consumers
takes orders only without further
solicitation.
The catalog seller may, however, provide the consumer with information
about - or attempt to sell the consumer
- other items
included in the same catalog which prompted the consumer's call or in a
substantially similar catalog.
If, during a
telephone call, a telemarketer offers goods or services that are not included
either in the catalog that prompted
the consumer
to call, or in a substantially similar catalog, then the sales transaction
is covered by the Rule. Catalog
merchandise
sales also are covered by the FTC's Mail or Telephone Order Merchandise
Rule.
The Rule does not apply to 900-Number pay-per-call
telephone calls. However, providers of pay-per-call services must comply
with the FTC's 900-Number Rule.
The Rule
does not apply to calls relating to sales of franchises or business opportunities
that are covered by the FTC's
Franchise Rule.
However, the Rule does apply to the telemarketing of business ventures
not covered by the FTC's Franchise
Rule.
Calls from
consumers that are not the result of any solicitation by a seller or telemarketer
are not covered by the Rule
because they
are not considered to be part of a telemarketing plan, program, or campaign
to sell goods or services. These
calls include,
but are not limited to, incidental uses of the telephone by consumers such
as making hotel, airline, car rental, or
similar reservations,
placing carry-out or restaurant delivery orders, calling a department store
or other retailer without
prompting from
an advertisement or solicitation, or obtaining information or customer
technical support.
The Rule
does not cover telephone transactions that are not completed until after
a face-to-face sales presentation by the
seller. and
the consumer is not required to pay or authorize payment until after such
a presentation. This exemption is for
both transactions
that begin with a face-to-face sales presentation and are later completed
in a telephone call, and
transactions
that begin with a telephone call, but are not completed until a later face-to-face
sales presentation. The emphasis
in this exemption
is on the face-to-face contact between the buyer and seller.
The goal of the
Rule is to protect consumers against deceptive or abusive practices that
can arise in situations where the
consumer has
no direct contact - other than the telephone sales call itself - with an
invisible and anonymous seller. A
face-to-face
meeting provides the consumer with more information about, and direct contact
with, the seller, and helps to
limit potential
problems the Rule is designed to remedy. (However, if the sale is made
at the consumer's home or away from
the seller's
place of business, the seller must comply with the FTC's Cooling Off Rule.)
Although sellers
and telemarketers involved in telemarketing sales to businesses of nondurable
office or cleaning supplies
must comply
with the Rule's requirements and prohibitions, the Rule specifically exempts
them from the recordkeeping
requirements.
Thus, these sellers and telemarketers need not create or keep any particular
records in order to comply with
the Rule.
The Rule
generally does not apply to consumer calls made in response to general
media advertising, such as television
commercials,
infomercials, home shopping programs, magazine and newspaper advertisements,
Yellow Pages or similar
general directory
listings, and other forms of mass media advertising and solicitations.
This exempts essentially all forms of
advertising
except direct mail (which is covered in another limited exemption, explained
below). However, the Rule does
cover calls
from consumers in response to general media advertisements relating to
credit repair, recovery services,
advance-fee
loans, or investment opportunities. An investment opportunity is anything
that is offered, offered for sale, sold,
or traded based
on representations about past, present, or future income, profit, or appreciation.
Examples of investment
opportunities
include art, rare coins. oil and gas leases, precious or strategic metals,
gemstones, or FCC lottery schemes. In
addition, business
ventures that are not covered by the FTC's Franchise Rule are investment
opportunities.
Direct mail
advertising includes any material - postcards, flyers, door hangers, brochures,
"certificates," or letters - sent to a
person urging
that person to call a specified telephone number regarding an offer of
some sort. Direct mail usually employs
the U.S. Postal
Service, but may use a private courier or package delivery services.
Calls in response
to a certain limited class of mail solicitations are exempt from Rule coverage:
calls prompted by a direct
mail solicitation
that clearly, conspicuously, and truthfully makes certain disclosures required
by the Rule. These disclosures
are: cost and
quantity; material restrictions, limitations or conditions; and any "no-refund"
policy. Only calls elicited by this
narrow class
of direct mail solicitations enjoy this limited exemption. Thus, if you
are a seller or telemarketer that uses direct
mail, this exemption
is available to you if and only if your direct mail solicitations clearly,
conspicuously, and truthfully make
all the disclosures
required by the Rule.
There is no exemption
for calls elicited by direct mail advertising that does not truthfully
provide a consumer with the specific
information
required under the Rule. Moreover, there is no exemption for calls responding
to any direct mail advertising that
relates to credit
repair, recovery services, advance-fee loans, investment opportunities,
or prize promotions, regardless of
whether the
advertisement makes all the disclosures required by the Rule.
The Telephone
Consumer Protection Act (TCPA), a federal law, imposes restrictions on
the use of automatic telephone
dialing systems
(also called autodialers), artificial or prerecorded voice messages, and
fax machines to send unsolicited
advertisements.
The FCC adopted rules and regulations, effective December 20, 1992, implementing
the TCPA. Different
rules and regulations
apply to calls placed to homes and calls placed to businesses. The rules
do not apply to messages sent
via e-mail or
the Internet. The rules include a prohibition against calling a consumer
at home who has asked not to be called
again. (As noted
earlier, there is some overlap between the "do not call" provisions of
the FCC's rules and the FTC's
Telemarketing
Sales Rule.)
An autodialer
is equipment that stores and dials numbers in sequential order or at random.
You have an established
/business relationship with a person or entity if you have made an inquiry,
application, purchase or
transaction
regarding products or services offered by that party. You may end this
relationship by telling the company that
you do not want
them to place any more solicitation calls to your home.
A telephone solicitation
is a telephone call or message made for the purpose of encouraging the
purchase or rental of, or
investment in,
property, goods or services. The term does not include a call or message
made with your prior permission; a
call from a
company with which you have an established business relationship; or a
call by or on behalf of a tax-exempt
nonprofit organization.
During a
"live" call placed to your home, a telemarketer must tell you:
· The name of the individual caller.
· The name of the company on whose behalf the call is being made.
· A telephone number or address at which the company can be contacted.
A telemarketer cannot:
· Call again once you've asked them not to.
· Call you before 8:00 A.M. or after 9:00 PM.
The FCC's Do-Not-Call
Rules require companies to keep a record of your request not to receive
future sales calls for ten
years.
To
stop future "live" calls to your home, tell the caller that you do not
want to receive any more solicitation calls from them
and to add you to their do-not-call list. This request should stop all
calls from the caller for ten years. It should also stop calls
from affiliated entities where, due to the identification of the caller
and the product being advertised, you would reasonably
expect that the request applies to affiliated entities. Each time you receive
a call from a different company whose calls you do
not wish to receive you must request that they don't call you again.
Tax-exempt
nonprofit organizations are not required to keep do-not-call lists. The
do-not-call rules do not apply to calls
placed to your
business telephone number. However, your state may have laws that apply
to business telephone numbers.
Artificial
(computerized) or prerecorded voice calls cannot be placed to your home,
except for the following:
· Emergency calls.
· When you have given prior consent to such calls.
· Non-commercial calls (for example, calls from charities, polling organizations, political or government agencies).
· Calls by or on behalf of tax-exempt nonprofit organizations.
· Calls which don't have unsolicited advertisements.
· Calls from companies with which you have an established business relationship.
Prerecorded calls
to business numbers are not prohibited but two or more lines of multi-line
businesses cannot be tied up at
the same time.
Information that must be provided for those computerized or prerecorded calls that are not prohibited:
· The
company using the autodialer must clearly state its identity at the beginning
of the message, and its telephone number or
address during
or after the message.
· The
telephone number provided cannot be the number of the autodialer that placed
the call, and cannot be a 900 number
or any other
number where you'd have to pay a charge higher than local or long distance
telephone charges.
The FCC's
rules prohibit the use of autodialers, artificial or prerecorded voice
messages to call numbers assigned to:
· Any
emergency telephone line, including any 911 line and any emergency line
of a hospital, medical physician or service
office, health
care facility, poison control center, or fire protection or law enforcement
agency.
· The telephone line of any guest or patient room of a hospital, health care facility, elderly home or similar establishment
· Any telephone number assigned to a paging service, cellular telephone service or other radio common carrier services: or
· Services for which you-as the person being called-would be charged for the call.
These prohibitions do not apply in the following situations:
· Emergency calls.
· When you have given prior consent to such calls.
· Prerecorded
messages sent by cellular service providers to their subscribers-for example,
to "roamers" leaving the service
area-if subscribers
are not charged for the call.
Rules applying
to unsolicited fax advertisements sent to your home and business fax machines:
· Advertisements
for any goods or services cannot be sent to your fax machine without your
prior express permission or
invitation.
· Permission
to send unsolicited faxes is presumed to exist if you have an established
business relationship with whomever is
sending the
message. You can end this relationship by telling the company that you
do not want to receive any more faxes
from them.
Information that must be placed either on the first page or on each page of a fax:
· The date and time the transmission is sent.
· The identity of the business, other entity, or individual sending the message.
· The
telephone number of the sender or of the sending fax machine. The telephone
number provided may not be a 900
number or any
other number for which charges exceed local or long distance telephone
charges.
Actions you
can take: Ask the solicitor to stop calling your telephone number or sending
unsolicited ads to your fax machine.
Contact your
local or state consumer protection of office to find out if your state
permits you to file suit to stop solicitation
calls or faxes
and/or to file suit for actual monetary loss. The penalty for violations
is generally $500 in damages or actual
monetary losses,
whichever is greater. Send a letter to the FCC at the following address:
Federal Communications
Commission,
Common Carrier Bureau, Consumer Complaints, Mail Stop Code 1600A2, Washington,
D.C. 20554
Your letter should
include: Your name, address and daytime telephone number. The action you
are requesting, such as
asking a person
or business to: stop calling your home telephone number; add your name
to their do not-call list; or stop
sending unsolicited
ads to your fax machine. The number the solicitor called. The name, address
and telephone number of
the organization
making the calls. The date you asked to be added to the do-not-call list,
and the name of the person you
spoke with.
The dates and times of the calls or faxes. The fax number receiving the
unsolicited ads, and copies of the ads.
Whether you
have filed suit in state court, and if so, in what state.
Enforced
by the FTC, this Rule covers merchandise you order by mail, telephone,
computer and fax machine, and requires
companies to
have a reasonable basis for claiming they can ship an order within a certain
period of time. The Rule was first
enacted in October
1975 and amended as of March 1, 1994.
By law, a
company should ship your order within the time stated in its advertisement.
If no ship date is promised, the
company should
ship your order within 30 days.
The 30-day "clock"
begins when the company receives a "properly completed order" which includes
your name, address
and payment
(check, money order or authorization to charge an existing credit account-whether
or not the account is
debited at that
time).
If the company
doesn't promise a shipping time and you are applying for credit to pay
for your purchase, the company has
an additional
20 days (50 days total) to establish the account and ship the merchandise.
If the company
is unable to ship within the promised time, it must notify you by mail
or telephone, give a revised shipping
date and give
you the option to cancel for a full refund. The company also must give
you some prepaid means to exercise the
cancellation
option, for example, a prepaid reply card or a toll-free 800 telephone
number to call.
If you ignore
the option notice, and the delay is 30 days or less, it's assumed that
you accept the delay and are willing to wait
for the merchandise.
If you do not
respond-and the delay is more than 30 days-the order must be canceled by
the 30th day of the delay period
and a refund
issued.
If the company
finds it cannot meet the revised l shipping date, it must then again notify
you by mail or telephone and give
you a new shipping
date or cancel your order and give you a refund.
The order will
be canceled and a refund issued promptly unless you indicate by the revised
shipping date that you are willing
to wait.
If you do not
respond at all to the second notice, it's assumed that you are not willing
to wait, and a refund should be issued
promptly.
If payment
is made by check or money order, the company must issue you a refund within
seven business days.
If you authorized
a charge to a credit card account, the company must credit the account
within one billing cycle-not give
credit toward
a future purchase.
This Rule
was implemented by the FTC to fight abuses regarding the advertising and
use of 900 numbers by services selling
information
or entertainment programs delivered over the phone, and billed to the caller's
phone bill. Effective since
November 1,
1993, it applies to interstate calls to such services. Companies that violate
this Rule may be subject to fines of
$10,000 per
violation, if the FTC takes action against them.
The phone
company cannot disconnect your regular or long distance service if you
don't pay a 900-number charge.
However, you
could be blocked from making future calls to 900 numbers if you don't pay
legitimate 900-number charges.
Blocking is
available from the phone company if you want to make sure no one using
your phone can call a 900-number
service-charges
for which would appear on your phone bill.
900-Number Advertisements. All print, radio, and television ads for 900-number services must include:
The total cost of the call if there is a flat fee;
The per-minute
rate if the call is charged by the minute, as well as any minimum charge;
if the length of the program is known
in advance,
the ad must also state the total cost of the complete program;
The range of
fees if there are different rates for different options; the ad must also
state the initial cost of the call and any
minimum charges;
The cost of any other 900 number to which the caller may be transferred; and
Any other fees that the service might charge.
This information
cannot be hidden in small print: The cost of the call must be next to the
900 number and printed in a size
that's at least
half the size of the 900 number. In a television ad, an audio cost disclosure
also must be made.
The Preamble.
When you dial a 900 number that costs more than $2 per call, before the
information or entertainment
program begins,
you should hear an introductory message or "preamble." You can't be charged
for this message. It must:
· briefly describe the information or entertainment service that is about to begin;
· give the name of the company providing the service;
· state the cost of the call; and
· state that anyone younger than 18 needs parental permission to complete the call.
Once this information
is provided, you must be given three seconds to hang up without incurring
a charge.
The 900-Number
Rule doesn't apply to calls you make to information and entertainment services
over the phone if:
you have a pre-existing
contractual agreement with the information or entertainment service you
are calling. (Entering into
such an arrangement
means that this Rule and its protections will not apply); or
you authorize
charges to your credit card for calls to an information or entertainment
service. (As with any other credit card
purchase, bills
for these calls would be covered by the dispute resolution procedures of
the FTC's Fair Credit Billing Act,
discussed later.)
The Rule
also covers 900-number services that promote sweepstakes. For example,
some services offer the chance to win a
prize by dialing
a 900 number and, in some cases, entering a code. The Rule requires ads
for sweepstakes to state the odds
of winning or
how the odds will be calculated. In addition, the ad or preamble must tell
you there's a free way to enter the
sweepstakes,
how to enter, or how to get that information. You must not be required
to call-and incur a charge-to enter.
This provision
doesn't apply to contests where you have to demonstrate a skill, such as
answer a question correctly. Think
twice before
calling a 900 number for a "free" gift-the cost of your call may exceed
the value of the free gift. And you will
incur charges
just by completing the call and staying on the line after the preamble.
The 900-Number
Rule generally prohibits:
· using
800, 888 or other toll-free numbers for pay per-call services, unless either
the information or entertainment service
has a pre-existing
agreement with you, or you pay for the service by credit card;
· connecting
you directly to a 900 number from an 800, 888 or other toll-free number;
and calling you back collect if you've
dialed an 800,
888 or other toll-free number.
Be aware that
not all numbers beginning with "8" are toll-free. For example, the area
code "809" serves parts of the
Caribbean. If
you dial this area code, you'll be charged international long-distance
rates.
The 900-Number
Rule has procedures for resolving billing disputes. Always check your telephone
bill for 900 number or
other pay-per-call
charges. They must be listed separately on your phone bill. For each pay-per-call,
your bill should include
the date, time,
and length of the call (if charged per minute).
Your billing
statement must include a local or toll-free number you can call for answers
to questions about charges to
900-number services.
If you find an error on your bill, follow the instructions on your statement
as to whom to contact to
dispute the
charge. In most cases, it will be your local or long distance telephone
company. You must notify the company
listed on your
bill within 60 days from the date the first statement containing the error
was sent. The company must
acknowledge
your notice in writing within 40 days unless it has resolved the dispute
by that time. Within two billing cycles,
but no longer
than 90 days, the company must:
· correct the billing error and notify you of the correction; or
· investigate the matter and either correct the error or explain the reason for not doing so.
Take the following precautions when you buy or contribute by phone:
Don't ever divulge your credit card number or your checking account number for any reason other than to make a purchase.
Know whom you're
dealing with. If you have doubts about a company, check with your state
or local consumer protection
office or the
Better Business Bureau where the company is located before you do business
with them.
Keep a record
of the companies you deal with over the phone. Include their names, addresses,
telephone numbers and any
payments made,
including credit card information given.
Ask whether there
are additional fees for shipping and handling, state sales tax, insurance
or restocking, and if so, the
amounts.
Ask about refund and exchange policies.
Know the total cost of the merchandise and any material restrictions on obtaining or using it.
Ask for and wait
until you get written material about an offer or charity you're not familiar
with or have doubts about before
sending money
or making a donation.
Refuse prize offers where you have to pay or make a purchase in order to be eligible for a prize. That's illegal.
Don't be pressured or act on impulse. Take the time to understand an offer and talk it over with someone you trust.
Use common sense.
If an offer sounds too good to be true, it probably is.
You are protected
by the FTC's Fair Credit Billing Act from billing errors when you use your
credit card to pay for
purchases. If
you find an error on your credit or charge card statement, you may dispute
the charge and withhold payment
on the disputed
amount while the charge is in dispute. The error might be a charge for
the wrong amount, for something you
did not accept,
or for an item that was not delivered as agreed. Of course, you still must
pay any part of the bill that is not in
dispute, including
finance charges on the undisputed amount.
If you decide to dispute a charge:
Write to the
creditor at the address indicated on the monthly billing statement for
"billing inquiries." Include your name,
address, credit
card number, and a description of the billing errors.
Send your letter soon. It must reach the creditor within 60 days after the first bill containing the error was mailed to you.
The creditor
must acknowledge your complaint in writing within 30 days after receiving
it, unless the problem has been
resolved. The
creditor must resolve the dispute within two billing cycles (but not more
than 90 days) after getting your letter.