FTC Rejects Pre-Recorded EBR Calls, Seeks Comment on Call Abandonment Rate Changes
The Federal Trade Commission rejected a proposal which would have allowed telemarketers that have established business relationships (EBRs) with consumers to use prerecorded messages. Separately, the FTC requested feedback regarding an amendment to the Telemarketing Sales Rule. The change would reconfigure how call abandonment rates are calculated.
Because EBR proposal was rejected, the Commission is now free to take enforcement action against sellers who use prerecorded messages. The FTC is allowing telemarketers until January 2, 2007 to change their practices and discontinue prerecorded calls to consumers with whom the seller has an established business relationship.
According to the FTC, of the 13,600 comments it received regarding the proposal, more than 13,000 opposed it. The Commission cited widespread consumer opposition was one of the reasons it rejected the proposal.
The FTC indicated that proposed safeguards that would allow consumers to make a company-specific do-not-call request were not as easy to facilitate as when consumer receive calls from an in-person sales representative.
The Commission also claimed, if the proposal were approved, the use of low-cost pre-recorded message telemarketing coupled with the use of such technologies as Voice over Internet Protocol likely would spur an upsurge in prerecorded calls. The dramatically lower cost of telemarketing in this way could make it much more economically feasible for sellers to call consumers with whom they have an EBR, according to the FTC.
As a result, consumers who have entered their phone numbers in the National Do Not Call Registry would likely experience many more “established business relationship” telemarketing calls than they currently receive, according to the FTC.
Separately, the FTC is seeking comment on a Direct Marketing Association proposal that would alter the “safe harbor” call abandonment provision. Currently, telemarketers may play a prerecorded message when a consumer answers, but only in a maximum of three percent of calls answered by consumers in person (rather than an answering machine).
The DMA’s proposal would change the method for measuring the maximum allowable call abandonment rate in the call abandonment safe harbor provision from “3% per day per calling campaign” to “3% per 30-day period per calling campaign.” This allows telemarketers the opportunity to absorb a particularly bad day or two of abandonment, as long as they remain within the 3% limit for the longer term.
Call abandonment happens when telemarketers use predictive dialers, which in some cases will get a consumer on the line before the marketer can provide a sales representative quickly enough to handle the call. When this happens, the dialer either hangs up or holds the line open until a sales representative is available. To remedy these types of calls, which were viewed as nuisances by consumers, the FTC amended the TSR to prohibit call abandonment, but included the call abandonment safe harbor provision.
“We are pleased that FTC has taken this step to provide clarity and certainty for marketers,” said Jerry Cerasale, the DMA’s senior vice president for Government Affairs, in a statement. “Our members want to follow the rules, and this change would not only make things clearer, it would make it much easier for organizations with small, focused campaigns to remain in compliance.”
