Understanding Telemarketing Law

Understanding Telemarketing Law

What is Telemarketing Law?

Understanding the complexities of telemarketing law is challenging. Under federal law, telemarketing is defined as “the initiation of a telephone call or message for the purpose of encouraging the purchase or rental of, or investment in, property, goods, or services, which is transmitted to any person.” 47 C.F.R. § 64.1200(f)(12). The Federal Communications Commission (“FCC”) has deemed informational calls and messages, as well as calls and messages for non-commercial purposes, exempt from most telemarketing regulations. Complying with state and federal telemarketing law requires constant attention to the evolving regulatory and litigation landscape.

Important United States Telemarketing Laws

The Telephone Consumer Protection Act (“TCPA”) was passed into law in 1991. Under the TCPA, individuals are empowered to file lawsuits and collect damages for receiving unsolicited telemarketing calls, faxes, pre-recorded calls and auto-dialed calls. Over the years, the TCPA has been revised to prohibit unsolicited commercial voice messages and short message service (“SMS”) text messages sent by telemarketers to cell phones. Sellers and telemarketers must comply with the TCPA, along with other applicable state and federal laws, or face significant monetary penalties. The TCPA allows individuals to sue for damages ranging from $500 to $1,500 per telephone call or text message that is sent in violation of the statute. For companies that run SMS marketing campaigns, many of which often involve thousands of text messages, potential damages can escalate quickly.

Telemarketing practices in the United States are also governed by the Telemarketing Sales Rule (“TSR”). The TSR requires material information about a seller’s or telemarketer’s goods or services to be disclosed to consumers during marketing calls. Telemarketers face civil penalties of up to $16,000 per TSR violation if material information is not disclosed before the consumer pays for goods or services. The Telemarketing Sales Rule also sets various limitations on the way calls can be sent; for example, by limiting the days and times calls are placed, as well as imposing recording and call conduct restrictions. Pursuant the TSR, the National Do Not Call registry was established in 2003. The Do Not Call Registry allows consumers to place their phone numbers on a list to stop most unsolicited calls. However, some calls placed by sellers and telemarketers are exempt. 

Due to the speed of technological advancement, the TCPA, the Telemarketing Sales Rule, and applicable state and federal laws are in a constant state of flux. As such, a careful review of all telemarketing laws included above, and state laws not mentioned in this blog, should be regularly conducted to assess risk and protect sellers and telemarketers alike. 

Telemarketing Law and your Business

Businesses working in the telemarketing space, as well as those utilizing third-party marketers, are also frequently the subject of state Attorney General inquiries and lawsuits. Telemarketers may first hear from the Attorney General by letter, phone or by service of a Civil Investigative Demand (“CID”) requesting information about their business practices or those of a third party.  Sometimes, a business may not hear from the Attorney General at all until after a lawsuit is filed. It is critical that telemarketers never respond to the Attorney General – its attorneys should. Telemarketers should refrain from destroying documents, discussing specifics with anyone (including staff) and avoid drawing attention to their regulatory issue(s) through press releases or responses. Experienced counsel can be proactive, which may help prevent an investigation from turning into a lawsuit.  If a lawsuit has been initiated, the goal is to resolve it as quickly and as cost-effectively as possible.

Complying with Telemarketing Law

The Federal Trade Commission (“FTC”) has identified countless federal telemarketing law violations in recent years. These violations pose a legal threat to telemarketers who try to avoid various marketing rules and regulations or who choose to remain uninformed. Traditional telemarketing campaigns often involve a high volume of calls/messages and, if done incorrectly, expose sellers to considerable liability. Lawsuits filed by the FTC, state Attorneys General and private litigants usually seek significant monetary relief from companies and their owners. To minimize potential risks, telemarketers should retain knowledgeable counsel in order to ensure compliance with applicable federal and state laws.

The best way to save businesses and their principals substantial time and money is to retain counsel that is knowledgeable and experienced in telemarketing law long before receiving a complaint. Counsel should know the ins and outs of telemarketing regulation and understand the nuances that each complaint or lawsuit may bring. Because every legal investigation and proceeding is different, each requires specialized attention.

Please note that this is only a brief overview of some of the legal issues surrounding telemarketing law. If you are interested in learning more about this topic or commencing a telemarketing campaign, please email us at info@kleinmoynihan.com, or call us at (212) 246-0900. 

Attorney Advertising

The material contained herein is provided for informational purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney.  Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.

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David Klein

David Klein is one of the most recognized attorneys in the technology, Internet marketing, sweepstakes, and telecommunications fields. Skilled at counseling clients on a broad range of technology-related matters, David Klein has substantial experience in negotiating and drafting complex licensing, marketing and Internet agreements.

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