FTC’s Telemarketing Sales Rule Compliance

FTC's Telemarketing Sales Rule Compliance

The Telemarketing Sales Rule (TSR) prohibits deceptive telemarketing acts or practices. 16 CRF 310. “Telemarketing,” as defined by the TSR, is “a plan, program, or campaign … to include the purchase of goods or services or a charitable contribution” involving more than one interstate telephone call. 16 CFR 310.2(gg).

Who must comply with the Telemarketing Sales Rule?

Any businesses or individuals who take part in “telemarketing” as defined by the code must comply with the TSR. There are only a few exceptions to this.

Some types of business not covered by the TSR include:

  • Banks, federal credit unions, and federal savings and loans.
  • Common carriers, such as long-distance telephone companies and airlines, when they are engaging in common carrier activity.

These business fall outside the scope of the FTC’s jurisdiction, and are therefore not subject to the TSR.

Non-profit organizations who conduct their own telemarketing campaigns are not covered by the TSR; however, non-profits must comply with the TSR pursuant to the USA PATRIOT Act, which brought charitable solicitations by non-profit telemarketers within the scope of the TSR.

Any company that contracts with these types of business to provide telemarketing services must comply with the TSR. Therefore, any company engaged in the business of providing telemarketing services to third parties must comply with the TSR.

How do I ensure my telemarketing business is compliant with the Telemarketing Sales Rule?

There are a number of requirements telemarketers much comply with that are set forth in the TSR. The TSR requirements include, but are not limited to:

  • Telemarketers must disclose material information before the consumer pays for the goods or services that are the subject of the sales offer.
    • Material information is information a consumer needs to make an informed decision about whether to buy the goods or service.
    • Failure to provide any of the required information truthfully and in a clear manner, before the consumer pays for the goods or services offered, is a deceptive telemarketing act or practice that violates the TSR.
    • The penalty for failure to disclose material information: a civil penalty of $40,654 for each violation.
  • Telemarketers must provider certain other information to consumers, including:
    • Cost and quantity of the goods or services.
    • Material restrictions, limitations, or conditions.
    • If there is a no-refund policy.
    • Details on prize promotions, such as odds of winning and costs to redeem the prize.
    • Disclosure of “negative option features,” such as the requirement to cancel a membership prior to the expiration of a free trial period.
  • Telemarketers are prohibited from making any express or implied misrepresentations.

The above are just a few of the rules and requirements of the TSR. If you are engaged in the business of telemarketing, we invite you to work with us to ensure that your business is operating in compliance with the TSR. The penalties for not complying can be steep. For example, after seven years of litigation, satellite TV provider Dish Network was recently ordered to pay $280 million for violations of the Telemarketing Sales Rule, the Do Not Call Registry, the Telephone Consumer Protection Act, and multiple state laws.

Telemarketers and Businesses Who Utilize Telemarketing Services

Telemarketing firms and businesses who use their services must take care to comply with federal and state telemarketing laws. The truth is, the FTC’s Telemarketing Sales Rule is broad. As are many of the other federal and state laws pertaining to telemarketing.

If you or your telemarketing firm are under investigation for violating federal or state telemarketing laws, you need a criminal defense lawyer who knows how to defend a complex telemarketing case.

Here at Ashley D. Adams, PLC we zealously defend all types of telemarketing crimes, including telemarketing fraud cases. We have the experience and skill to aggressively and effectively represent your legal rights. Contact us or call now (480) 219-1366 to schedule a case evaluation.

 

The attorneys at Ashley D. Adams, PLC handle federal criminal cases throughout the United States, including Arizona, Oklahoma, Utah, and California.