On September 1, 2009, a new US Federal Trade Commission (FTC) rule took effect that prohibits prerecorded telemarketing calls, or “robocalls”, unless the seller has obtained a consumer’s express, written consent to receive such calls (the “Rule”).1  The prerecorded messages prohibition applies regardless of whether a consumer’s number is on the National Do Not Call Registry, the seller has an “established business relationship” with the consumer2, or the call is answered by a person or by an answering machine or voicemail service.  Telemarketers that violate the Rule could be subject to penalties of up to $16,000 per call.

Exemptions from the Prerecorded Message Requirements

The prohibition on prerecorded messages does not apply to health care-related calls subject to the Health Insurance Portability and Accountability Act of 1996 (HIPAA).  In addition, telemarketing calls from entities such as banks, telephone carriers and charities that make the calls themselves are exempt.  Third-party telemarketers calling on behalf of banks or telephone carriers, however, must comply with the restrictions on prerecorded messages.  For-profit telemarketers calling on behalf of a charity can use prerecorded calls to reach the charity’s members, volunteers or prior donors, provided the messages include an interactive, automated keypress or voice-activated opt-out mechanism.  Calls to anyone other than the charity’s members, volunteers or prior donors, however, require written consent to receive prerecorded messages.

Purely “informational” prerecorded messages that are not intended to induce the purchase of any goods or services also are exempt from the prerecorded message ban.  Examples of purely informational messages include: (i) appointment reminders previously scheduled at the call recipient’s request; (ii) flight cancellation notifications; and (iii) updates on a prior sales transaction (e.g., notification of order status, shipping information, or delivery dates and times).   

Written Consent and Other Requirements

The Rule permits prerecorded messages only when the seller has a signed, written agreement from the recipient to receive such calls.  As noted above, written consent is required regardless of whether the number is on the National Do Not Call Registry, the seller has an “established business relationship” with the recipient, or the prerecorded message is answered by a person, an answering machine, or a voicemail service.  The written agreement must contain (i) a “clear and conspicuous” disclosure that the purpose of the agreement is to authorize prerecorded calls; (ii) identification of the company that is requesting permission to deliver the prerecorded messages; (iii) the telephone number to which such messages may be delivered; and (iv) the recipient’s “signature”, such as through e-mail, a Web site form, a telephone keypress, or a voice recording.

In addition to written consent, prerecorded messages must:       

1. Begin within two (2) seconds of a call recipient’s greeting.

2. Provide an automated, interactive voice and/or keypress-activated opt-out mechanism that is immediately disclosed and made available for the call recipient to use throughout the message.  If activated, this opt-out mechanism must add automatically the number called to the seller’s Do Not Call list and, once added, immediately disconnect the call.  If the call is answered by an answering machine or voicemail service, the message must disclose at the outset a toll-free number that connects the caller directly to an automated voice and/or keypress-activated opt-out mechanism that will add the number to the seller’s Do Not Call list. 

3. Allow the phone to ring for at least fifteen (15) seconds or four (4) rings before disconnecting an unanswered call.

The prohibition on prerecorded calls is just one of a series of FTC measures intended to rein in telemarketers.  As discussed above, failure to comply with the Rule could subject a company to penalties of up to $16,000 per call.  Companies that utilize telemarketers should seek legal counsel before engaging in any telemarketing activity.

For questions on the Rule or the telemarketing sales requirements in general, please contact:

Anthony V. Lupo
lupo.anthony@arentfox.com
202.857.6353

Amy S. Colvin
colvin.amy@arentfox.com
202.857.6338

1 FTC adopted the Rule in August 2008 as part of several amendments to its Telemarketing Sales Rule.

2 An “established business relationship” means a relationship between a seller and a consumer based upon (i) the consumer’s purchase, rental, or lease of the seller’s goods or services or a financial transaction between the consumer and seller, within eighteen (18) months preceding the date of a telemarketing call; or (ii) the consumer’s inquiry or application regarding a product or service offered by the seller within three (3) months immediately preceding the date of a telemarketing call.  21 C.F.R. § 310.2(n).