QUESTION
We are a large mortgage banker with several origination platforms, a
servicing entity, and a few affiliates. Recently, we were cited for a violation
of the Telemarketing Sales Rule as a result of not complying with the Do Not
Call rules. How do these rules apply across our origination platforms?
ANSWER
Financial institutions with multiple origination platforms, including
their servicing units, are particularly vulnerable to Do Not Call violations.
Years ago, in 1995, the original Telemarketing Sales Rule (“TSR”) contained a provision that
prohibited calls to any consumer who previously asked not to get calls from or
on behalf of a particular seller. Amendments to the TSR since then retain that
provision, but now also prohibit calls to any numbers consumers have placed on
the National Do Not Call Registry maintained by the Federal Trade Commission (FTC).
The FTC amended the TSR in 2003, 2008, 2010 and 2015. Like the original
TSR issued in 1995, the amended Rule gives effect to the Telemarketing and
Consumer Fraud and Abuse Prevention Act (TCFPA).
The multiplatform vulnerability to TSR violations often occurs due to
violations of the so-called “Entity-Specific Do Not Call Provision.” According
to this provision, it is a TSR violation to call any consumer who has asked not to
be called again. This means that a telemarketer may not call a consumer who
previously has asked not to receive any more calls from or on behalf of a
particular seller (or charitable organization). It also is a TSR violation for
a seller that has been asked by a consumer not to call again to cause a
telemarketer to call that consumer.
Sellers and telemarketers are responsible for maintaining their own individual
Do Not Call lists of consumers who have asked not to receive calls placed by,
or on behalf of, a particular seller. Calling a consumer who has asked not to
be called potentially exposes a seller and telemarketer to a civil penalty of
$40,000 for each violation.
But what if a consumer asks a specific division of a corporation not to
call?
Does a call from a different division violate the TSR?
Distinct corporate divisions generally are considered separate sellers
under the TSR. Factors relevant to determining whether distinct divisions of a
single corporation are treated as separate sellers include, but are not limited
to, whether there is substantial diversity between the operational structure of
the divisions and whether the goods or services sold by the divisions are
substantially different from each other.
If a consumer tells one division of a company not to call again, a
distinct corporate division of the same company may make another telemarketing
call to that consumer. Nevertheless, a single seller without distinct corporate
divisions may not call again, even if the seller is offering a different good
or service for sale. For a multiplatform institution, it is necessary to have
clear, distinct, and separate demarcations between its corporate divisions, units
and affiliates in order to avoid violations of the TSR.
Jonathan Foxx
Managing Director
Lenders Compliance Group
