Telemarketing and the Telephone Consumer Protection Act (TCPA)
- EPIC Urges the FCC To Take Steps To Eliminate Robocalls: In comments to the FCC, EPIC has proposed that telephone service providers take steps to block unlawful robocalls. The FCC is considering a new rule that would allow phone companies to block calls from numbers they know are invalid, such as numbers that have not been assigned to a subscriber. Illegal robocalls cause substantial harm to consumers and often result in identity theft and financial fraud. EPIC supports robust telephone privacy protections and recently filed an amicus brief in support of the FCC's 2015 order that strengthened consumer protections under the TCPA. (Jun. 30, 2017)
- EPIC Tells House Committee to Ensure Telemarketing Rules Protect Consumers: EPIC has sent a statement to the House Judiciary Committee in advance of the hearing on "Lawsuit Abuse and the Telephone Consumer Protection Act." The telemarketing law bars telemarketers and robocallers from contacting consumers by phone fax, or text without prior consent. EPIC acknowledged that class action settlements often fail to provide direct financial benefits to consumers, but explained that "TCPA cases are among the most effective privacy class actions because they typically require companies to change their business practices to comply with the law." Last year, EPIC filed an amicus brief in support of TCPA protections for consumers. EPIC has also testified before Congress about the telemarketing law and submitted many comments concerning its implementation. (Jun. 12, 2017) More top news »
Telemarketing is a practice where a business initiates a phone call in order to propose a commercial transaction. Millions of telemarketing calls are made to individuals every year. Telemarketing is highly unpopular among Americans; public opinion on telemarketing routinely shows that the vast majority of Americans object to unsolicited sales calls.
Business to consumer telemarketing takes place in two different ways: first, inbound telemarketing is the business use of a telephone to accept consumer calls regarding a product. Inbound telemarketing usually occurs where a consumer responds to direct mail or a television advertisement. Second, outbound telemarketing is the practice of placing calls to consumers for sales purposes. Outbound telemarketing may take place in a "boiler room," a makeshift office that houses persons on an hourly rate to make sales calls. These employees may not be familiar with federal and state telemarketing rules, as there is a 60-70% turnover rate in the industry.
Telemarketing is popular because it is an inexpensive way to market products. Costs are low for the telemarketer, but high on the individual who may be annoyed, inconvenienced, or even psychologically harmed by numerous hang-up calls during the day. In weighing the costs of phone sales, telemarketers and telemarketing industry groups do not consider the costs that are imposed on telephone subscribers, such as the expense incurred from lost time, the monthly cost of caller ID or privacy manager services, the purchase of answering machines to screen calls, and the monthly cost of maintaining an unlisted phone number.
Numerous companies offer advice to individuals who wish to start their own telemarketing venture. For instance, Businesstown.com advises sales callers that they should attempt to gain individuals' trust before reading from the telemarketing script:
"When you are making outbound calls, you must attract the customer's interest in the first ten to fifteen seconds of the phone call. Engage the customer in a friendly conversation so that you can build trust and establish polite inquiry as to the person's state of mind. Open with something casual like "How are you today?" Do not attempt to launch into the sales pitch until you get the customer talking and feeling positive about your intentions."
"...As early as possible, you want to smoothly qualify this individual as a prospect without causing him or her to hang up. You must remember that the prospect is thinking "I don't want this" and your job is to reverse this thinking."
Telemarketing is governed primarily by two statutes.
First is the Telephone Consumer Protection Act of 1991 (TCPA), 47 U.S.C. § 227. The Federal Communications Commission (FCC) has authority to collect complaints and institute enforcement actions against violators of the TCPA. In simple terms, the TCPA and its progeny bar most autodialed or prerecorded calls, texts, or faxes unless made with prior express consent. For telephonic communications, the TCPA and the FCC’s implementing regulations distinguish between calls to residential numbers and calls and texts to wireless numbers. The FCC’s implementing regulations have also narrowed the categories of communications subject to TCPA liability.
The TCPA grants consumers a private right of action to enforce the Act against telemarketers and robocallers. Callers can face a penalty of up to $500 or the actual monetary loss in damages per violation, whichever is greater, and treble damages for each willful or knowing violation.
The TCPA bars all non-emergency calls using an artificial or prerecorded voice without prior express consent of the called party, unless the call is made solely to collect a debt owed to or guaranteed by the United States. The TCPA also allows the FCC at its discretion to exempt certain calls pursuant to its authority under 47 U.S.C. § 227(b)(2). Section 227(b)(2)(B) empowers the FCC to issue rules exempting calls to residential numbers that are not made for commercial purposes or that are made for commercial purposes but do not adversely affect privacy rights and do not include unsolicited advertisements.
The FCC’s regulations further require that the prior express consent must be written. Under the FCC’s regulations, no consent if any kind is required if the call:
- Is made for emergency purposes;
- Is not made for commercial purposes;
- Is made for commercial purposes but does not include or introduce an advertisement or constitute telemarking;
- Is made by or on behalf of a tax-exempt nonprofit; or
- Delivers a health care message as defined under HIPAA.
The TCPA bars all non-emergency communications using an ATDS/autodialer or an artificial or prerecorded voice without prior express consent, unless the call is made solely to collect a debt owed to or guaranteed by the United States. The TCPA also allows the FCC at its discretion to exempt certain calls pursuant to its authority under 47 U.S.C. § 227(b)(2). Section 227(b)(2)(C) empowers the FCC to issue rules exempting calls to wireless numbers that “are not charged to the called party, subject to such conditions as the Commission may prescribe as necessary in the interest of the privacy rights this section is intended to protect.”
Under the FCC's regulations, the form of consent depends on the content of the communication:
- Prior express written consent of the called party if the call introduces an advertisement or constitutes telemarketing;
- Prior express written or oral consent of the called party if the call:
- Does not include or introduces an advertisement or constitutes telemarketing;
- Introduces an advertisement or constitutes telemarketing made by or on behalf of a tax-exempt nonprofit; or
- Delivers a health care message as defined under HIPAA.
Second, the Telemarketing and Consumer Fraud Abuse Prevention Act, addresses specific aspects of telemarketing, and empowers the Federal Trade Commission (FTC) to issue the Telemarketing Sales Rule (TSR), 16 C.F.R. Part 310. Currently, the TSR restrictions on telemarketers include:
- Telemarketers must make certain disclosures at the outset of the sales call. These disclosures include the name of the seller and that the call is being made for sales purposes. In case of a purchase, the telemarketer must disclose the total charge of the sale, whether there are restrictions on the sale, and whether there is a refund policy.
- Sweepstakes telemarketing involve special disclosures as well. The telemarketer must inform the call recipient that no purchase is necessary in order to participate, the odds for winning, and whether there is a cost associated with participation.
- Calls cannot be initiated before 8 AM or after 9 PM in the recipient's timezone.
- Telemarketers must obtain "express verifiable authorization" before engaging in certain transactions, such as making a draft directly from a bank account.
- Telemarketers must maintain records, including records of advertisements, sales records, and employee records.
It is important to note that the TSR does not apply to certain forms of telemarketing, including most business-to-business sales calls, telemarketing by banks, federal financial institutions, common carriers (phone companies and airlines), insurance companies, and non-profit organizations.
Two other rules provide additional protections to consumers: the Mail and Telephone Order Rulegoverns representations regarding the delivery of products purchased through telemarketing. The Telephone Disclosure and Dispute Resolution Act (1992) required federal agencies to develop the 900 Number Rule. The 900 Number rule governs disclosures and procedures associated with pay-per-call services. Both of these rules primarily address consumer protection issues outside the scope of privacy protection.
Unsolicited Commercial Faxes or "Junk Faxes"
The TCPA of 1991 specifically prohibited the sending of unsolicited chimerical fax messages ("junk faxes") to someone without first obtaining their consent. Additionally, all commercial fax messages sent must include accurate information on the time and date they were sent, and the phone number of the sending fax machine.
Unsolicited junk faxes are illegal because they are "cost-shifted" advertising messages. That is, commercial entities can send thousands of solicitations to individuals, and the recipient bears the burden of paying for the fax toner and paper.
The California Public Utilities Commission issued a report in 1991 showing that junk faxes cost California consumers $17 million a year. The Commission has issued a study to update this figure.
In other states, individuals have joined class action lawsuits to limit junk faxes. In 1995, an Augusta, Georgia man brought a large class action against the "Hooters" restaurant chain. In 2001, a Federal Court awarded the class a $12 million verdict against Hooters.
The Federal Communications Commission also pursues junk faxers. In 2001, the FCC fined 21st Century Fax $1 million for sending unsolicited fax messages.
Junk faxes are often sent on behalf of a company by a blast fax centers, such as Fax.com. Fax.com and other junk faxers have been cited many times by the FCC.
Despite these different approaches to enforcement, junk faxes continue to be sent. Junk fax businesses openly sell fax numbers, software, and complete junk faxing packages on the Internet. For instance, Dialcentric markets fax broadcasting systems via E-mail and web sites:
"THE COMPLETE FAX MARKETING SYSTEM!
1 Million Fax Leads & Fax Broadcasting Software Only $149!
Fax broadcasting is the hot new way to market your product or service. You can not beat fax broadcasting for cost effectiveness and reliability. Get your information out to the masses for the lowest price.
People are 4 times more likely to read a fax than junk mail!
List includes fax numbers from every area code in the United States.
List includes business name, fax number, phone number, SIC code, & business description.
All fax numbers were verified 90 days ago.
Fax lists are constantly updated and cleaned.
The list comes on a CD and all fax numbers are fully exportable into most software."
Telemarketing and Fraud
Thousands of telemarketing sales calls are made to defraud consumers. Unscrupulous telemarketers even maintain "mooch" lists, databases of people who are most likely to be victimized by fraudulent sales calls.
State Attorneys General have initiated a number of cases to address fraudulent telemarketing. In 1999, Minnesota Attorney General Mike Hatch brought suit against US Bancorp for selling customer account information to MemberWorks, a telemarketing company. The Attorney General alleged that in addition to selling customer contact information, US Bancorp sold credit card numbers, checking account numbers, Social Security numbers, and account balance information. US Bancorp received $4 million and 22% commission on all sales that were completed using the information. US Bancorp settled the case, agreed to pay a $3 million fine, and agreed to end the practice of selling customer information to telemarketers.
Other prominent banks have sold individuals' personal information to telemarketers as well. Capital One, Chase Manhattan, Citibank, First U.S.A., Fleet Mortgage, GE Capital, and MBNA America all have provided their customers' personal and confidential information to fraudulent telemarketers. The financial institutions provided the telemarketers with the names, telephone numbers and other information about their customers. They also gave them the ability to charge customers' accounts without having to ask consumers to provide an account number. In one case, during a thirteen month period a national bank processed 95,573 cancellations of membership clubs and other products that were billed by preacquired account telemarketers without customers' authorization.
In addition to selling fraudulent products and services, "slamming" is a practice often conducted through telemarketing. Slamming is the practice of switching an individual's long distance company without consent.
Telemarketers use special telephone tools to maximize the number of outgoing calls that the company can make. One of the more obnoxious tools is the "predictive dialer." Predictive dialers make many calls at the same time, and connect the telemarketer to the first person who answers the phone. Call recipients who pick up the phone after the first recipient hear "dead air," or a telephone call with no one on the other end, and are disconnected. In the telemarketing industry, the call recipients who hear dead air are termed "abandoned calls."
Some predictive dialers attempt to delay the recipient from hanging up the phone by sending a ring signal to the phone. Many people will remain on the line after hearing the ringing tone, increasing the likelihood that the next available telemarketer will capture the "abandoned call." If the predictive dialer calls a busy line or a line with an answering machine, it automatically schedules the line to be called again later.
The telemarketing industry is aware that predictive dialers cause frustration and the 2002 proposed changes to the TSR would prohibit the use of predictive dialers where they produce "dead air."
Phone Companies Profiteer from Telemarketing Sales and Avoidance of Telemarketing
Phone companies sell both the tools that enable telemarketing and products to help individuals avoid sales calls. To enable telemarketing, phone companies sell dialing equipment, the lines and infrastructure that enable calling multiple persons at one time, and lists of new customers. To help individuals avoid telemarketing, the phone companies sell unlisted numbers, caller ID, and systems such as Privacy Manager.
There are commercial products that may reduce the number of telemarketing calls received.
These devices work in different ways. Some send a signal over the line when the phone rings. The signal indicates that the line is disconnected to telemarketers using predictive dialers. This type of product only works against telemarketers who use predictive dialers. Smaller telemarketing companies may not possess predictive dialers, and would evade the device.
Other devices play a prerecorded message for the telemarketer requesting that the call recipient be placed on a do-not-call list. There are also services offered by some phone companies that will automatically screen calls that are sent without caller id (CID) information.
Telephone companies themselves offer some services that can help individuals avoid telemarketing calls. These services include Caller ID, anonymous call rejection, and phone services that require the caller to give identification before the recipient's phone line will ring.
Telemarketing and Workplace Privacy
Individuals who work in telemarketing call centers experience invasive monitoring. The telemarketing business is privacy invasive both to its workers and to its customers. Callers are regularly monitored for speed in making calls and the number of times they use the customer's name. For more on this issue, please visit the EPIC Workplace Privacy Page.
Individuals are at a disadvantage when trying to eliminate or reduce the number of telemarketing calls received. There are many call centers in the United States that make tens of thousands of calls per day.
In order to reduce the number of telemarketing calls receive, we suggest these tactics:
- Sign up for the National Do Not Call Registry. The Registry is maintained by the FTC. If a telemarketer contacts you after you've added yourself to the list, you can file a complaint with the FTC.
- When possible, minimize the amount of personal data that you share with the government and businesses. For instance, if a retail store requests your phone number, do not share it with the store unless it is necessary to complete a transaction. Additionally, do not place your phone number on product surveys or warranty cards. Surveys and warranty cards are used to profileand target individuals for more advertising.
- Opt-out of telemarketing, credit reporting agency, and CPNI databases.
- The Direct Marketing Association offers an opt-out system called the " Telephone Preference Service." You can opt-out online via the TPS for a $5 fee, or send the DMA a letter to opt out at no charge.
- Several phone companies have announced that they will sell Customer Proprietary Network Information (CPNI) unless individuals opt-out. CPNI includes detailed account information about individuals who have a telephone line. To learn about CPNI and how to opt-out, see the EPIC CPNI Page.
- A 1999 federal law, the Gramm-Leach-Bliley Act, allows individuals to opt-out of information sharing done by banks, insurance companies, and brokerage houses. Be sure to call your financial institutions and request to opt-out from information sharing. Chances are, your bank or credit card company either sells your personal information to telemarketers or operates a telemarketing business with your personal information through an affiliate. You can learn more about Gramm-Leach-Bliley and financial privacy at Privacy Rights Now!.
- Tell telemarketers to put you on the "DO-NOT-CALL list." to assist individuals communicate the correct message. You'll be placed on a "skip" list. That is, the telemarketer will likely keep your phone number but program their equipment to not call your phone number again. Even if you do request this, if the caller is from a data center, they may be able to call you again on behalf of a different client. To avoid this, be sure to say that you do not want any calls from affiliated businesses as well.
- Under the law, you have the legal right to request the telemarketer's do not call policy. Consider asking telemarketers who call you to send the list to you by certified mail. If they fail to do so, you may have a right of action against them for $500 minimum damages.
- File a complaint with the Federal Communications Commission (FCC) if you believe that you are the victim of illegal telemarketing.
- Your state may provide protections that are broader than federal law. For a summary of state protections, see "State Action to Address Telemarketing" above.
- Notify your attorney general if you believe that you are the victim of illegal telemarketing. For a listing of all attorney generals, see the National Association of Attorneys General Website.
- EPIC: Preemption of state telemarketing law (archive)
- EPIC: History of litigation challenging the Do-Not-Call telemarketing registry (archive).
- Your Money Is Safer Than Your Privacy, Washington Post, July 22, 1999.
- Patrick E. Michela, "You May Have Already Won . . . " Telemarketing Fraud and the Need for a Federal Legislative Solution, 21 Pepperdine Law Review 553 (1994).
- Fact Sheet 19: Caller ID and My Privacy, Privacy Rights Clearinghouse.
- Junkfaxes.org. Junkfaxes is an excellent resource for those interested in reducing unsolicited commercial fax messages. This web site has information on the TCPA, a listserver on junk faxes, a list of state laws addressing junk faxes, and news on junk fax prosecutions.
- TCPALaw.com. This site is an excellent resource for individuals wishing to learn more about litigating under the TCPA.
- Junkfax.org. A site dedicated to "helping stop junk faxes"
- JunkFAX-L. This listserv is a resource for those who litigate under the TCPA.
- FCC Unsolicited Fax Enforcement Actions Page.
- Lawsuits Seek $2.2 Trillion Over Junk Faxes, New York Times (Reuters), August 22, 2002.
- Lieff Cabraser Announces $2.2 Trillion Class Action Lawsuit Filed to Stop Junk Faxes, Plaintiff Press Release, August 22, 2002.
- Dispute Over Ads Draws Wide Scrutiny After Award, New York Times, July 22, 2001 (registration required).
- In the Matter of 21st Century Fax, Junkfaxes (FCC), January 9, 2001
- EPIC: ACA International v. FCC (2015 TCPA Order Litigation)
- EPIC Comments on the Telemarketing Sales Rule, April 10, 2002.
- Fact Sheet 5: Telemarketing, Privacy Rights Clearinghouse.
- Private Citizen. Private Citizen offers a number of services to reduce telephone and mail marketing.
- Ian Ayres & Matthew Funk,
- How to Make a Telemarketer Cry.
- Michael Shannon, Combating Unsolicited Sales Calls: The 'Do-Not-Call' Approach to Solving the Telemarketing Problem, 27 J. Legis. 381 (2001).
- Joseph Cox, Telemarketing, the First Amendment, and Privacy: Expanding Telemarketing Regulations Without Violating the Constitution, 17 Hamline J. Pub. L. & Pol'y 403 (1996).
- Mark S. Nadel, Rings of Privacy: Unsolicited Telephone Calls and the Right of Privacy, 4 Yale J. on Regulation 99 (1986).
- Zen and the Art of Small Claims, an informal guide to litigating claims against telemarketers in small claims courts.
- Oscar Gandy, The Panoptic Sort: A Political Economy of Personal Information,1993.
- Robert Ellis Smith, Ben Franklin's Web Site: Privacy and Curiosity From Plymouth Rock To the Internet, 2000.
- Californians Against Telephone Solicitation.
- The Privacy.net 'Opt-Out' Information Page, Privacy.net.
- Junk Mail and Telemarketing, Google Web Directory.
- Ameridial. "Ameridial's trained agents make about 70 million outbound calls per year, specializing in building custom databases and delivering pre-qualified leads. Ameridial maintains 300+ automated stations with predictive & preview dialing capabilities."
- Dunhill International List Company. Sells lists of personal information for telemarketing including the "New Baby Database," "Subprime Auto Loan Applicants," "Affluent America," and many other lists.
- American Teleservices Association. A telemarketing industry group.
- Direct Marketing Association. A marketing industry group.
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by Ryan Calo, A. Michael Froomkin,