We received today a notice from the FTC that says we are in violation of the Telemarketing Sales Rule. They cite us for not complying with the Do Not Call requirements. We do most of our loan originations online, and we use telemarketers to create business leads for us.
One glaring problem is that we did not maintain a Do Not Call list. But there are other issues, too.
Now we have 30 days to respond to the FTC or face penalties. We’re now scrambling to show that our telemarketing complies with the FTC’s guidelines.
I know you get a lot of mail, but time is running out. We need your help.
What should we be doing to comply with the Do Not Call requirement?
Should we be monitoring the Do Not Call Registry?
What happens if we have telemarketing procedures but still make a mistake by calling somebody on the Do Not Call list?
ANSWER
I have prioritized your question. Although we do receive a great deal of mail, some questions are more time-sensitive than others, and yours needs an immediate response.
ANSWER
I have prioritized your question. Although we do receive a great deal of mail, some questions are more time-sensitive than others, and yours needs an immediate response.
I urge you to contact my firm to do a Telemarketing Tune-up soon, so that (1) you get a due diligence review with a risk rating, showing strengths and weaknesses in your telemarketing program, and (2) you can show your regulator that you are taking affirmative steps toward conducting an independent review.
The Telemarketing Sales Rule (“TSR”) has a Do Not Call Safe Harbor. However, to use it, you need to comply with a set of guidelines. If you or your telemarketer can establish that, as part of its routine business practice, you meet certain requirements, you will not be subject to civil penalties or sanctions for erroneously calling a consumer who has asked not to be called, or for calling a number on the National Registry.
The following is a list of those requirements.
-You or the telemarketer has established and implemented written procedures to honor consumers’ requests that they not be called.
-You or the telemarketer has trained its personnel, and any entity assisting in its compliance, in these procedures.
-You, the telemarketer, or someone else acting on your behalf (or a charitable organization) has maintained and recorded an entity-specific Do Not Call list.
-You or the telemarketer uses and maintains records documenting a process to prevent calls to any telephone number on an entity-specific Do Not Call list or the National Do Not Call Registry, provided that the process involves using a version of the National Registry downloaded no more than 31 days before the date any call is made.
-You, the telemarketer, or someone else acting on your behalf (or a charitable organization) monitors and enforces compliance with the entity’s written Do Not Call procedures.
-The call is a result of an error. (For the meaning of “error,” see below.)
You should continually monitor the Do Not Call Registry! You should not call consumers if, among other things, they have placed their number on the National Registry, or not given written and signed permission to call, or you have no established business relationship with the consumers, or if they have asked to get no more calls from you or the telemarketer contacting them on your behalf.
If you don’t constantly monitor and comply with the National Registry, you and the telemarketer may be liable for a TSR violation. If an investigation reveals that neither you nor the telemarketer had written Do Not Call procedures in place, both of you will be liable for the TSR violation. If you had written Do Not Call procedures, but the telemarketer ignored them, the telemarketer will be liable for the TSR violation. Still, you also might be liable, unless you could demonstrate that you actively monitored and enforced Do Not Call compliance and otherwise implemented your written procedures. Ultimately, you are responsible for keeping a current entity-specific Do Not Call list, either through a telemarketing service you hire or your own efforts.
With respect to your question about what would happen if you have procedures but still make a mistake by calling somebody on the Do Not Call list, the Federal Trade Commission might view it as an “error,” if and only if you or the telemarketer has and implements written Do Not Call procedures. Generally, this action will not be liable for a TSR violation if a subsequent call is the result of an error.
But – and this is important – you may be subject to an enforcement investigation, which would focus on the effectiveness of the procedures in place, how they are implemented, and if all personnel are trained in Do Not Call procedures. If there is a high incidence of “errors,” it may be determined that the procedures are inadequate to comply with the TSR’s Do Not Call requirements, the Safe Harbor is not fulfilled, and the calls violate the TSR. On the other hand, if there is a low incidence of “errors,” there may not be a TSR violation. The determination of whether an excusable “error” occurs is based on the facts of each case.
Here’s a rule of thumb: to ensure that adequate Do Not Call procedures are implemented, test periodically for quality control and effectiveness.
Your situation is not unique. Many financial institutions regularly face the prospect of telemarketing violations. Indeed, any company that engages in telemarketing or uses a telemarketer should get the Telemarketing Tune-up done as soon as possible.
The Telemarketing Sales Rule (“TSR”) has a Do Not Call Safe Harbor. However, to use it, you need to comply with a set of guidelines. If you or your telemarketer can establish that, as part of its routine business practice, you meet certain requirements, you will not be subject to civil penalties or sanctions for erroneously calling a consumer who has asked not to be called, or for calling a number on the National Registry.
The following is a list of those requirements.
-You or the telemarketer has established and implemented written procedures to honor consumers’ requests that they not be called.
-You or the telemarketer has trained its personnel, and any entity assisting in its compliance, in these procedures.
-You, the telemarketer, or someone else acting on your behalf (or a charitable organization) has maintained and recorded an entity-specific Do Not Call list.
-You or the telemarketer uses and maintains records documenting a process to prevent calls to any telephone number on an entity-specific Do Not Call list or the National Do Not Call Registry, provided that the process involves using a version of the National Registry downloaded no more than 31 days before the date any call is made.
-You, the telemarketer, or someone else acting on your behalf (or a charitable organization) monitors and enforces compliance with the entity’s written Do Not Call procedures.
-The call is a result of an error. (For the meaning of “error,” see below.)
You should continually monitor the Do Not Call Registry! You should not call consumers if, among other things, they have placed their number on the National Registry, or not given written and signed permission to call, or you have no established business relationship with the consumers, or if they have asked to get no more calls from you or the telemarketer contacting them on your behalf.
If you don’t constantly monitor and comply with the National Registry, you and the telemarketer may be liable for a TSR violation. If an investigation reveals that neither you nor the telemarketer had written Do Not Call procedures in place, both of you will be liable for the TSR violation. If you had written Do Not Call procedures, but the telemarketer ignored them, the telemarketer will be liable for the TSR violation. Still, you also might be liable, unless you could demonstrate that you actively monitored and enforced Do Not Call compliance and otherwise implemented your written procedures. Ultimately, you are responsible for keeping a current entity-specific Do Not Call list, either through a telemarketing service you hire or your own efforts.
With respect to your question about what would happen if you have procedures but still make a mistake by calling somebody on the Do Not Call list, the Federal Trade Commission might view it as an “error,” if and only if you or the telemarketer has and implements written Do Not Call procedures. Generally, this action will not be liable for a TSR violation if a subsequent call is the result of an error.
But – and this is important – you may be subject to an enforcement investigation, which would focus on the effectiveness of the procedures in place, how they are implemented, and if all personnel are trained in Do Not Call procedures. If there is a high incidence of “errors,” it may be determined that the procedures are inadequate to comply with the TSR’s Do Not Call requirements, the Safe Harbor is not fulfilled, and the calls violate the TSR. On the other hand, if there is a low incidence of “errors,” there may not be a TSR violation. The determination of whether an excusable “error” occurs is based on the facts of each case.
Here’s a rule of thumb: to ensure that adequate Do Not Call procedures are implemented, test periodically for quality control and effectiveness.
Your situation is not unique. Many financial institutions regularly face the prospect of telemarketing violations. Indeed, any company that engages in telemarketing or uses a telemarketer should get the Telemarketing Tune-up done as soon as possible.
You might also want to require your telemarketer to do the Telemarketing Tune-up as a condition for doing business with you.
Jonathan Foxx, Ph.D., MBA
Chairman & Managing Director
Lenders Compliance Group
