America’s federal equivalent to Europe’s statutory systems for allowing individuals to opt-out of receiving cold calls looks set to arrive soon (ish). But the new rules have more to say about telephone marketing practices.
Topic: Telephone marketing ("Telemarketing")
Who: The US Federal Trade Commission
Where: January 2003
Following the publication of final amendments to the Federal Trade Commission's "Telemarketing Sales Rule", Spring 2003 looks to be the most likely "in force date" for a range of new rules controlling America's telephone marketing industry. Whether these rules will be underpinned by the much-vaunted Federal "Do not call list", now seems to be in doubt, however, at least so far as early 2003 is concerned.
The new Rule requires "express verifiable authorisation" from a consumer in order for a telemarketer to collect a payment, except where the payment method is by credit or debit card. In other words, if the payment method is by way of a customer's telephone, mortgage or utility bill, then the "express verifiable authorisation" rule would apply before payment is extracted from the consumer in this way.
In cases where "pre-acquired account information" is used to bill a consumer, other new rules will apply. This could be in cases where the consumer has already divulged his or her credit card details to the telemarketer for the purposes of a previous purchase and a telemarketer is either seeking to make an "up sale" (making another sale in the course of a telephone conversation that has been initiated in connection with a different transaction or matter) or in seeking to encourage the consumer to participate in a "free to pay conversion transaction". Here we are talking about situations where, for example, a free two month subscription to a magazine is offered, after which a consumer will automatically start to pay at the full subscription rate unless they opt out of receiving further issues.
In both these cases, "express informed consent" will be required. In a "free to pay conversion transaction" situation this will mean obtaining the last four digits of the consumer's account number, also obtaining the consumer's express agreement to be charged and recording all of the relevant telephone conversation. In any other transaction, the telemarketer must identify the account to be charged with sufficient clarity and also obtain the consumer's express agreement to be charged.
Another "up sale" telephone call rule will require the prompt disclosure of the identity of the seller, the fact that the purpose of the call is to sell goods or services and the nature of those goods or services, while other rules will put a strict limit on abandoned calls by automatic diallers.
Why this matters:
With 23 US states already operating their own "Do not call lists", the possible delay in the introduction of a Federal "Do not call list" due to discussions over how the system will be funded, is not necessarily the big event that it has been cracked up to be by some. However, do these developments represent any threat to UK telephone marketers?
Currently, here in the UK the only specific rules expressly relating to telemarketing are contained in the 1999 Telecommunications (Data Protection and Privacy) Regulations and the 2000 Consumer Protection (Distance Selling) Regulations. The latter require that telephone marketers promptly and at the beginning of the conversation make it clear who they are and what the purpose of their call is, whilst the former introduce a statutory "Telephone Preference Services" (a "Do not call list" by another name) which has been up and running now for nearly 4 years. To this extent, therefore, the UK is already well ahead of the US in terms of countrywide mechanisms in this area, but could UK telemarketers face the prospect of much more detailed and intrusive controls of the kind fore-shadowed in the FTC's new Rule, for instance, in the context of "up sales" and deduction of payments from pre-notified credit card accounts?
The short answer is that marketinglaw has not as yet detected any ground-swell of consumer concern in this area which might persuade the legislators that more detailed controls are required. Just as America has found that their politicians find proposing such measures good vote catchers, however, British and other European politicians may soon latch onto this issue unless the industry ensures that the medium is not abused in the way that clearly has been occurring on the other side of the Atlantic.