Victory for consumers; defeat for robo-calls

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An exemption in federal telemarketing rules allowed millions of people on the Do Not Call Registry to get sales pitches. Getty Images stock
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Don’t you just hate it? You’re at the dinner table, watching TV or just relaxing, when the telephone rings. You stop what you’re doing, grab the phone, and it’s a sales call! What could be more annoying? How about a sales call that’s a recorded message?

As you hang up the phone you say to yourself, “But I’m on the Do Not Call list. Why did this happen?”

It turns out there was a little exemption in federal telemarketing rules that allowed millions of people on the Do Not Call Registry to get recorded sales pitches. If you had a “business relationship” with a company, they were allowed to send you automated calls.

The Federal Trade Commission just changed the rules to close that loophole. By next year at this time, the chances of getting these unwanted robo-calls should drop dramatically.

By December, all recorded sales calls must have a simple interactive way for you to let the company know you do not want any more of them. It could be via the keypad (“push 1 to avoid future messages like this”) or by saying something into the phone.

As of September 1, 2009, companies can only make recorded sales calls to people who have agreed in writing to receive them. Digital signatures via e-mail are acceptable.

The rules say if the telemarketer does not have the technology to determine if the automated call is going to an answering machine or voicemail, the message must include a toll-free opt-out number.

Consumer groups are delighted with the new rule. “It’s a big step forward,” says Susan Grant, director of consumer protection at the Consumer Federation of America. “The FTC’s action will bring some relief to consumers whose phones are being tied up and answering machines are being filled up with prerecorded sales calls.”

The telemarketing industry isn’t happy with the new rules, but it appears ready to accept them without a legal challenge. According to Tim Searcy, CEO of the American Teleservices Association, telemarketers now have “a greater understanding of how frustrated consumers are with the use of prerecorded messages.”

Searcy tells me recorded messages are not as effective as live operators, but many companies use them because they are substantially cheaper.  “It’s probably in the neighborhood of a dollar a minute for a person to be involved and it’s pennies a minute for a prerecorded message,” he says.

Why was this new rule needed?
Two federal agencies, the Federal Communications Commission and the Federal Trade Commission, both regulate telemarketing calls. The FCC has a rule that allows companies to send recorded sales messages to anyone with an “established business relationship,” even if their home phone number is on the Do Not Call Registry.

If you bought or rented something from that company within the last 18 months, or simply inquired about a product or service within the last 3 months, you’ve established a business relationship.

“Theoretically, you could go into a store and buy a pack of chewing gum and create an established business relationship with that store,” says Allen Hire with the Federal Trade Commission.

About four years ago, the telemarketing industry asked the FTC to bring its rules into agreement with the FCC’s rules – to allow recorded sales calls to established customers, even if their phone number was on the Do Not Call Registry.

But when the Federal Trade Commission announced it might do that, it got an earful from nearly 14,000 people who opposed the idea.

David Brick of California wrote, “Because of the absence of a live human being, prerecorded calls are particularly noxious.”

“Please help get rid of these useless waste-of-time phone calls,” said Winnie Williams, 89, of Washington.

Peggy Sanders of Louisiana put it this way. “If I want to buy something I'll contact them. They have no respect for people's privacy. If you’re not at home they fill up your answering machine. Please stop this aggravation!”

Some recorded messages are exempt
Under the new rules, recorded calls that are “informational” and do not try to sell you something will be allowed without prior consent or written permission. Here are a few examples:

  • An airline wants to notify you of a flight delay or cancellation.
  • A doctor’s office or repair service calls to confirm an appointment.
  • A company issues a recall of a product you purchased from them.

Political calls are already exempt from the Do Not Call Registry and recorded political messages will be exempt from the new rules. The same goes for any charity soliciting via the phone.

But there is one important change. Starting in December, if the charity hires a commercial telemarketer to raise money and that company uses a recorded message to contact previous donors, it must provide a way to opt out of future recorded calls.

My two cents
Once again, the FTC has listened to consumers and put their privacy ahead of commerce. As someone with two phone lines in the house, I am grateful to the commission for its action.

Still, you need to be on guard. Watch out for companies that try to get permission to pitch you via recorded messages. Look carefully at anything you sign (whether physically or electronically) to make sure you are not agreeing to receive unwanted recorded sales calls.

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