April 2008

DNC.com Monthly Compliance Update

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Table of Contents

 

Featured Article

Telemarketing Compliance Redux: The View from the General Counsel's Office

by Joseph Sanscrainte

Joseph Sanscrainte is an attorney with Bryan Cave, LLP, specializing in telemarketing law.

Visit us at DNC.com for information on contacting Joseph Sanscrainte.

"This multimillion dollar penalty drives home a simple point: Sellers are on the hook for calls placed on their behalf. The Do Not Call Rule applies to all players in the marketing chain, including retailers and their telemarketers."

So opined Federal Trade Commission (FTC) Chairman Deborah Platt Majoras in December of 2005 upon the announcement of a $5.3 million penalty against DirecTV for violations of the national Do Not Call (DNC) registry and other FTC telemarketing rules. The DirecTV settlement, the largest civil penalty in a consumer protection matter ever levied by the FTC, will long be remembered as the DNC enforcement heard ?round the world. DirecTV provided a much needed wake-up call to general counsels across the country who were working under the mistaken impression that telemarketing compliance could be outsourced in much the same manner, and just as easily, as the telemarketing programs themselves.

The background and underlying facts that led to the penalty against DirecTV provide a cautionary tale for any general counsel whose task it is to manage the many risks associated with telemarketing in the United States. The bad news? The complexity of the state and federal rules, combined with the increasing practice of outsourcing domestically and overseas, create a telemarketing compliance minefield that is not easily navigated. The good news? The DirecTV enforcement, along with certain other instructive enforcement actions like the recent ADT action and the FCC's enforcement in the Primus Communications case, together provide much of the guidance that is needed to deploy a consistent and effective telemarketing compliance program.

Putting It All Together

The FTC and FCC have clearly signaled the critical importance of extensive and accurate recordkeeping, training, compliance auditing and monitoring, and failsafe Do Not Call mechanisms. Any company telemarketing in (or into) the United States has to accept these guidelines as simply part of the cost of doing business. Additional quality control measures, aimed at maximizing the experience of each and every person contacted, are essential as well. The effectiveness of compliance procedures, along with heightened quality control standards, provide the means by which outsourced telemarketers can distinguish themselves from their competition, both domestic and offshore.

Taken together, the DirecTV, ADT, and Primus cases provide an excellent roadmap for any entity seeking direction for its telemarketing compliance practices. With the stakes of non-compliance rising ever higher, understanding exactly what is required is of course of critical importance. These federal cases, along with applicable state telemarketing rules, produce a template for compliance that all companies need to follow if they wish to continue flying off the enforcer's radar.

Specifically, every seller company that outsources must have in place a program to collect and maintain the following information:

1. Basic information regarding the outside telemarketing company, including name, date of hire, a signed contract containing provisions requiring compliance by the company, information regarding which states will be called, and information regarding the campaign(s) being run.

2. Proof of commercial registration. Over thirty (30) states require telemarketers to submit a registration and very often a bond before making telemarketing calls into the state. Prior to any calls being made, the seller/outsourcer must receive proof from the telemarketer that all such registrations, as required, are in place and up-to-date. In addition, should a telemarketer claim it is exempt from one or more of such commercial registration requirements, information regarding this exemption must be submitted.

3. State Do Not Call. There are seventeen (17) states that still operate DNC list programs. Proof of registration by the outside vendor with all such programs, as required, is essential.

4. Training on DNC Policies and Procedures. All employees of the seller involved in telemarketing, as well as all outside vendors hired by the seller, must acknowledge in writing that they have read and understand the seller's Telemarketing Compliance Manual. In addition, training sessions must be conducted, and attendance of employees at these sessions must be tracked.

5. Predictive Dialer "Safe Harbor" Reports. On at least a monthly basis, all outside vendors must report the following with regard to their use of predictive dialers: proof that the abandonment rate was kept to 3% or below on a per day per calling campaign basis; proof that for all outbound calls, the phone was allowed to ring for 15 seconds or four full rings; proof that for all "abandoned" calls a recorded message was played within two seconds of the called person's completed greeting, and that no solicitation was made during this recorded message; an acknowledgment that no calls were made to: 1) area codes/exchanges set aside for wireless numbers; 2) newly "ported" wireless numbers (in addition, acknowledgment that the ported wireless number list was deployed within 15 days, as per FCC rules.)

6. Complaints regarding DNC compliance. A system must be created to ensure that outside telemarketers can file reports regarding complaints made by consumers to the effect that the consumer received a telemarketing call despite being on a state, national, and/or in-house DNC list. In addition, the system to manage and track the escalation plan associated with investigating and resolving all such complaints must be created.

7. National Registry Requirements. If one or more outside telemarketer(s) is downloading national registry information on behalf of a seller, proof must be submitted by each such outside telemarketer to the effect that it has properly downloaded the registry information. In addition, on a regular basis, the outside telemarketer should provide acknowledgment that it did not make any calls to area codes outside of those to which the seller company was registered. In the event that any such call is completed and the outside telemarketer becomes aware of this violation, information regarding this event must be transmitted immediately to the seller.

8. Caller ID. The outside vendor must acknowledge, on a regular basis, that all of its outbound calls are transmitting a Caller ID signal, in accordance with applicable instructions from the seller.

9. Proof of DNC compliance. All outside telemarketers must provide acknowledgment that they have implemented and regularly administer and monitor an effective DNC compliance program, which can include call blocking, database scrubbing, or a combination of both. A statement to the effect that a "failsafe" system to account for the potential for human error is also required.

The above steps will enable any company to address the liability issues raised in DirecTV, ADT, and Primus. For companies that outsource some or all of their telemarketing operations, and for companies that have multiple offices across the country that make outbound calls, generating and maintaining the records that meet the expectations of the state and federal enforcement agencies is of critical importance.

Compliance Tools

QUESTIONS ABOUT DO NOT CALL REGULATIONS?

DNC.com is now offering a complimentary audio CD filled with 13 tracks of commentary from a panel of leading industry experts. Get detailed information on scrub lists, safe harbor provisions, exemptions, enforcement actions and more! To get your free CD visit DNC.com.

 

State Holiday Alerts

Alabama, Louisiana, Rhode Island and Utah all restrict outbound calling to consumers during their respective state recognized holidays. The following holidays have been verified for the months of April and May:

Outbound calling is prohibited in Alabama on April 28, 2008 in observance of Confederate Memorial Day.

Outbound calling is prohibited in Alabama, Louisiana, Rhode Island and Utah on May 26, 2008 in observance of National Memorial Day.

Win a Free iPhone

Visit us at DNC.com and take a free test drive of our award winning compliance solution, DNCScrub, or visit us at any of our compliance seminars held across the nation, through-out the year, for your chance at winning a free iPhone!

Meet us in Las Vegas at The Venetian Resort, Booth 430 at the 2008 ARDA Convention April 6-10, or in Washington D.C. at the ATA conference from April 27-30. Call us at 1-866-362-5478 or visit DNC.com for more information.

Regulation Alerts

 

FCC FINES MORTGAGE COMPANY $10,000 FOR FAILURE TO RESPOND TO A 2007 CITATION

AZ Prime One Mortgage Corporation was fined $10,000 by the Federal Communications Commission for failing to respond to a citation issued by the FCC in 2007 for an alleged violation of the national Do Not Call list.

 

NEW JERSEY CONSIDERING TWO NEW BILLS REGARDING DO NOT CALL REGULATIONS

A New Jersey State Senate bill (SB 243) under consideration would make calls containing prerecorded messages prohibited to any New Jersey telephone number that is registered on the federal Do Not Call list. A second bill before the New Jersey General Assembly (AB 1225) would add political calls to the type of telemarketing calls restricted by the No Call list Act.

 

WISCONSIN CONSIDERS BILLS THAT WOULD ALTER ITS STATE DO NOT CALL LIST

The Wisconsin General Assembly is considering a new bill (AB843)that would alter state Do Not Calls law to remove the two year registration period and instead make removal of consumer names dependent on specific consumer request.

 

MISSOURI TO COLLECT $152,000 FROM SAN FRANCISCO COMPANY VIOLATING STATE DNC LIST

Alleged to have use prerecorded messages to sell credit card consolidation and credit counseling services a company based in San Francisco agreed to pay the state of Missouri $152,000 in fines and to no longer call consumers who are registered with the state's Do Not Call list.

Contact Center Compliance Corporation
350 E Street, Suite 300A
Santa Rosa, CA 95404
866-DNC-LIST (866-362-5478)
www.DNC.com

All information contained in this newsletter has been researched to ensure accuracy. However, Contact Center Compliance will not be held legally responsible for the accuracy of this information and is not a substitution for legal counsel.

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