Robocall, DNC Violations
May Annoy FTC More Than
the Average Consumer
By Jeffrey D. Knowles and
Jonathan L. Pompan
In December, the Federal Trade Commission (FTC) announced its 100th “Do Not Call” enforcement ac- tion 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
at
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d
Jeffrey D. Knowles is a partner at
Venable LLP and chair of the ;rm’s
Advertising, Marketing and New Media
Group. Jonathan L. Pompan is partner
at Venable LLP. They can be reached at
(202) 344-4000.
18 months immediately
preceding the date of a
telemarketing call; or (ii) a consumer’s inquiry or applica-
tion 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. ;
