Thursday, September 17, 2020

Essentials of Telemarketing Policy

You recently answered a question about a company not having a Do Not Call list. The answer you gave became the basis of a meeting about how to manage our telemarketing procedures. We have updated our policies and procedures and commenced the training of our internal sales force and external telemarketing firm. I can’t thank you enough for your timely advice.

But a subject came up in our meeting that I would like to discuss. In updating our policies and procedures, we could not find a list of chapter and section titles. We want to list them and then provide our requirements in the procedures. So, we decided to send this question to you with the hope that you will provide some of the elements needed in policy and procedures on telemarketing.

Our question is, then, what are some essential elements of the telemarketing policy and procedures?

I wrote about telemarketing violations last week in connection with the Do Not Call Registry and procedures as these relate to the Telemarketing Sales Rule. Given that you are currently following up on your telemarketing strategies and updating your policy document, I will offer some elements that should go into it.

You should contact us for a Telemarketing Tune-up, because a policy approach is only a foundational framework. Our audit is quick and cost-effective. It provides findings, recommendations, and a risk rating. Your telemarketing procedures should be evaluated for regulatory compliance. That is what the Telemarketing Tune-up does. If you are actively involved in telemarketing initiatives, you should get this audit done as soon as possible.

With respect to essential elements of a telemarketing policy, I would recommend that you have chapters and sections for the following subjects. My suggestions are not comprehensive because telemarketing strategies vary, and your policy should adequately reflect the variance. However, as a serviceable set of guidelines, I think you should consider these outlined elements fundamental to a solid telemarketing policy.

Permissible Hours
You should not be making telephone calls to consumers before 8 A.M. or after 9 P.M. local time at the call’s destination, unless the person being called has specifically agreed to let you call at another time.

Do Not Call Lists
This section would require on-going training and monitoring. For instance, among other things, you need to maintain a list of consumers who ask not to receive telemarketing solicitations, consumers whose names appear on the national Do Not Call list, tracking for honoring the requests of consumers who ask not to receive telemarketing solicitations, implementing a process to prevent telephone solicitations to any telephone number on your Do Not Call list or the national Do Not Call list, training, and keeping a version of the national Do Not Call Registry, obtained from the Registry no more than three months prior to the date any call is made, and maintain records documenting this process. Furthermore, you should be auditing contact with consumers to ensure you do not sell, rent, lease, purchase, or use the national Do Not Call database, or any part of it, for any purpose except compliance with the rules and to prevent telephone solicitations to telephone numbers registered on the national database.

Oral disclosures for Outbound Telephone Calls
Make it a requirement to disclose the following information truthfully, promptly, and in a clear and conspicuous manner, in any outbound telephone call to a potential new customer: your institution’s identity, the purpose of the call (viz., to originate mortgage loans), and that you originate mortgage loans. I suggest you contact us for compliance support in this area, as we are one of the few compliance firms in the country that provides Call Calibration, which is a methodology to audit and report on calls between a financial institution and consumers.

Artificial or Prerecorded Voice Calls
Be very careful in using this telemarketing strategy! You should not use artificial or prerecorded voice calls to a consumers’ homes (or business) unless you already have a business relationship with the persons being called. Be sure that any artificial or prerecorded voice message releases the line of the person being called within five seconds of notice that the called party has hung up. Your call should have a call identifier. Also, the beginning of any prerecorded message must clearly state your identity, and during or after any prerecorded message, you must state your telephone number.

Call Abandonment
You should not abandon more than 3 percent of calls answered by a person. Additionally, you must deliver a prerecorded identification message when abandoning a call.

Caller Identification
Always transmit caller identification (i.e., caller ID) information, when available, and do not block this information ever.

Facsimile Machines
Do not send unsolicited advertisements to facsimile machines. If you do send any fax, be sure to identify your institution as the sender.

Disclosures for Telephone and Direct Mail Solicitations
Yet another area that calls for Call Calibration! This is an area fraught with litigious minefields. Be sure to disclose the following information, orally or in writing, before a customer pays for any services offered in a telephone or direct mail solicitation: the total costs to receive the services offered; all conditions that must be satisfied to receive the services offered; if you have a policy of not making refunds, provide a statement of your policy; if you mention a refund policy, provide a statement of the key terms and conditions of the policy.

You should not misrepresent, directly or by implication, many forms of information, such as the total costs to receive any services offered; all conditions that must be satisfied to receive the services being offered; any features of your services; and any aspect of your refund policies. Steer away from ever saying that you are affiliated with, or endorsed by, any government or other organization. Be careful, too, about misrepresenting prize promotions, such as not disclosing any aspect of a prize promotion, not including (among other things) the odds of being able to receive a prize, misleading about the nature or value of the prize, or misstating that a purchase or payment is required to win a prize or to participate in a prize promotion. Consider Call Calibration when conducting telemarketing campaigns involved prize promotions.

Verifiable Authorization
You should obtain express verifiable authorization before submitting a check, draft, or other form of payment from a person’s account as the result of your telemarketing efforts in one of three ways: in writing; by tape-recording an oral authorization that contains references to the date of the draft or other form of payment, its amount, your name, your telephone number for consumer inquiries, and the date of the authorization; and by providing written confirmation of the transaction, including the date of the draft or other form of payment, its amount, your institution’s name and telephone number for consumer inquiries, and the date of the customer’s oral authorization

False or Misleading Statements
I would insert a separate section for this policy element, even though it includes aspects of the section on Misrepresentation outlined above. Use this section to set forth definitions of false and misleading statements and provide examples of each.

Assisting in Violations
Include a section that states how your institution will not assist anyone else in deceptive or abusive telemarketing acts or practices when you know or should know the other person is violating the FTC or FCC rules. Such an affirmation is important, and will be looked upon favorably by regulators during an audit.

Abusive Acts or Practices
This is a thorny area filled with problematic pitfalls and potential litigation. Threats, intimidation, or the use of profane or obscene language is only the start. It may seem obvious that you should not request or receive payment of any fee before a loan is originated if you have guaranteed or represented a high likelihood of success in obtaining the loan. But there is far more involved in these telemarketing hurdles. For instance, you should not initiate a telephone call, other than a call for emergency purposes or with the prior express consent of the called party, using an automatic dialing system or an artificial or recorded voice, to emergency lines, health care facilities, radio common carriers, or any number for which the called party is charged for the call. Expanding abusive acts further, you should not (1) use an automatic dialing system to make calls that simultaneously engage two or more lines of a multi-line business; (2) disconnect an unanswered telemarketing call prior to at least 15 seconds or four rings; (3) guarantee or assure customers regarding the likelihood of loan approval; (4) cause any telephone to ring or engage any person in telephone conversation repeatedly or continuously with the intent to annoy, abuse, or harass; and (5) initiate an outbound telephone call to a person when that person previously has stated he or she does not wish to receive an outbound telephone call from your institution. Use Call Calibration to monitor for abusive acts or practices.

Recordkeeping (24 Months)
Be sure to include a section on recordkeeping. All substantially different advertising materials must be kept for 24 months. Keep the name and last known address of each customer, the loan made, the date the loan was closed, and the amount paid by the customer in connection with the loan. Keep also the name, any fictitious name used, the last known home address and telephone number, and the job title(s) for all current and former employees directly involved in telephone sales. If you permit employees to use fictitious names, you must be able to trace each fictitious name to only one employee. And, maintain all verifiable authorizations required under the rules. With respect to prize offers, keep the name and last known address of each prize recipient and the prize awarded for prizes having a value of $25 or more.

Recordkeeping (60 Months)
Keep all Do Not Call requests for 60 months, including any consumer requests to not receive solicitations.

Jonathan Foxx, Ph.D., MBA
Chairman & Managing Director
Lenders Compliance Group