The Telemarketing Tightrope: What’s Legal, What’s Not
Posted by business on December 11, 2012 in Telemarketing [ 2 Comments ]
Telemarketing laws that apply to your business depend on:
- Your business location(s)
- Products and services offered
- States you call
- Whether numbers are dialed manually, automatically, or predictively
- Types of leads you call
- Whether your business qualifies for certain exemptions
Generally, national telemarketing campaigns are subject to more regulation than campaigns in one or a few states. More laws apply to businesses using an autodialer than to those that dial manually. Telemarketing is subject to both state and federal laws in the U.S. If a federal rule and a state rule on telemarketing differ, you or your telemarketing company must follow whichever rule is more restrictive.
States That Require Telemarketers Be Licensed
More than half of states require telemarketers to have a license to operate, though in many cases, certain types of calls or businesses are exempt from licensing rules. License fees in different states vary in cost from free to several thousand dollars per year. The following states require telemarketers to be licensed:
- New Jersey
- New York
- North Carolina
- South Dakota
- West Virginia
Federal Agencies that Regulate Telemarketing
At the federal level, activities of telemarketing companies are regulated by the Federal Communications Commission (FCC) and the Federal Trade Commission (FTC). The FCC’s regulatory authority is based on the Telephone Consumer Protection Act of 1991 and includes regulation of intrastate and interstate calls. The FTC’s regulatory authority is based on the federal Telemarketing Sales Rule, or TSR.
Legal Definitions of “Telemarketing”
For legal purposes under the TSR, telemarketing is defined as “a plan, program, or campaign … to induce the purchase of goods and services or a charitable contribution” and involving more than one interstate telephone call. Individuals or businesses that engage in telemarketing must (with few exceptions) comply with the TSR, whether they initiate calls to or receive calls from consumers, or whether they provide or offer to provide goods or services to consumers for payment.
Legally speaking, telemarketers are subject to the TSR whether they use old, low-tech phones or the latest dialers and automated equipment. Calls made from outside the U.S. to consumers inside the U.S. are subject to the TSR as well unless they are otherwise exempt.
Exceptions to the Telemarketing Sales Rule
The following types of calls are not covered under the TSR:
- Calls by consumers to numbers in general media advertising, except calls about investment opportunities, business opportunities, credit repair, credit card loss protection, prizes, advance-fee loans, or upselling
- Calls by consumers to numbers obtained in direct mail advertising, with the same exceptions noted above
- Catalog sales
- Consumer calls not in response to solicitation
- Calls where sales are not completed until there is an in-person sales presentation
- Business-to-business calls, except for those offering non-durable office supplies or cleaning supplies
- Sales of franchises or pay-per-call services (which are covered under other FTC rules)
In June 2012, the FCC published final revised rules that require prior express written consent for all autodialed or pre-recorded telemarketing calls to wireless phones and for pre-recorded telemarketing calls to residential landlines. The written consent requirement includes marketing-oriented text messages as well.
The revised rules also state that companies cannot use the “established business relationship” exemption to make “robocalls” to consumers without prior express written consent from consumers. Pre-recorded telemarketing calls must contain an automated “opt-out” selection.
Should You Outsource Your Telemarketing?
If your business plans a telemarketing campaign, it can be difficult knowing which specific laws and regulations apply. Many businesses choose to outsource telemarketing campaigns for this reason. Not only can outsourced telemarketing services free up time for your regular employees, professional telemarketing services have to be up to speed on all telemarketing regulations or risk going out of business.
With the regulatory environment seemingly becoming more complex with every year, increasing numbers of businesses are choosing to outsource telemarketing campaigns to increase sales without the risk of running afoul of federal or state laws.
Photo Credit: Ivan Prole