Posted on Thu, Apr 19, 2012 @ 02:01 PM
By: Norm D'Amours, CIPP, CIPP/C
Yesterday the Securities and Exchange Commission (SEC) adopted new definitions to support a new regulatory regime for security-based swaps promulgated pursuant to the Dodd-Frank Act. The new SEC rules were written jointly with the Commodities Futures Trading Commission (CFTC) and closely follow publication of the CFTC’s new Swap Dealer and Major Swap Participant Recordkeeping, Reporting and Duties Rules on April 3, 2012.
Included within these new rules is a requirement that firms maintain telephone recordings of all pre-execution trade information and daily trading records for related cash and forward transactions. Specifically, 17 C.F.R. 23.202(a)(1) and (b)(1) require swap dealers and major swap participants to maintain daily trading records for swaps, including oral (landline and mobile), voicemail and email communications. Call recordings must be maintained in searchable format for a period of one year.
These new CRTC call recording rules represent a significant advance in the steady extension of call recording recordkeeping requirements to the financial services industry. On November 14, 2011, new UK Financial Service Authority (FSA) call recording rules took effect extending landline call recording rules for conversations relating to equities, bond, derivatives and financial commodity transactions to mobile devices. The new FSA rules only affect approximately 16,000 financial employees in theUK. PreexistingUScall recording rules also exist, including the Financial Industry Regulatory Authority (FINRA ) “Taping Rule” for disciplined firms
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Posted on Tue, Apr 03, 2012 @ 03:42 PM
By: Melissa J. Fitzgerald, CIPP
This week the Federal Trade Commission released the final version of its original 2010 report, titled, “Protecting Consumer Privacy in an Era of Rapid Change: Recommendations for Businesses and Policymakers.” The FTC Privacy Report calls on companies to implement best practices to protect consumers’ private information and asks Congress to enact baseline privacy and data security legislation with civil penalties. The FTC retained the basic principles originally presented in an earlier version of the report including Privacy by Design (incorporate privacy protections into products as they are developed), simplified choice, support for Do Not Track, and improved transparency, but perhaps the most significant outcome of the report for marketers is the FTC’s insistence that the “unfair” prong, rather than the “deceptive” prong, of the Commission’s Section 5 consumer protection statute should govern information gathering practices.
Section 5 of the Federal Trade Commission’s Act is the go-to consumer protection law, regulating “unfair and deceptive” trade acts. Previously the FTC mostly enforced those trade acts that were inherently deceptive. We saw many deceptive cases brought over the past decade—the recent case of the telemarketer who promised cash grants that didn’t exist comes to mind—and it was clear that the FTC was pursuing the obvious villain who was out to deceive helpless senior citizens and naïve consumers. Deceptive is concrete concept—you must make good on your promise or you have lied. In regard to data collection, if you make a promise in a privacy statement (“We will not share your personal information with any third parties.”) and knowingly or unknowingly break that promise (your company sells email addresses to a third party), you have deceived. However, the concept of “unfair” is an “elastic and elusive concept.” What is unfair to one may not be unfair to another. If a marketer is silent as to the purpose for collecting personal information, have they have ‘unfairly’ shared the personal information to an outsourced email vendor? Or to a corporate affiliate for analytics? A class action suit was filed last month in Texas federal court against Apple and Android app makers including Apple, Twitter, Facebook, Foursquare, and LinkedIn for the collection of personal address data without the knowledge of the app downloader. What is obviously deceptive if the privacy statements stated clearly and conspicuously that they would not collect such data is not as clear when examined for unfairness.
The concept of fairness and consumer protection brings consumer preference management to the forefront of every marketer’s business model. Consumer preference management is allowing a prospect or a customer decide how a marketer may communicate with them; including the channel, the content, and frequency. Under the deceptive doctrine, collecting such data and not adhering to the consumer’s wishes would be an obvious deceptive act; however, if there is no clear statement as to the purpose of the collection of the data and no informed choice by the consumer, you may be in violation of the unfair doctrine. Additionally providing the consumer a voice in how the business interacts with them builds stronger relationships and loyalty. In light of the FTC Privacy Report, marketers that once thought about preference management need to realize that transparency and informed choices are now the industry standard. As consumers become more educated about their privacy rights and more accustomed to marketers who build a 1:1 relationship, preference management will become a mainstay in all marketing campaigns. Long gone will be the days of blast marketing campaigns and in will come the management of consumer preferences through notice, informed choices, and transparency.
As the FTC Chairman Jon Leibowitz said in his Washington Post opt-ed piece yesterday, companies that adhere to the privacy principles laid out in the report “understand that giving consumers choice begets trust, and trust begets commerce.”
Posted on Thu, Mar 29, 2012 @ 02:21 PM
Yesterday the Federal Trade Commission (FTC) reached a settlement with two telemarketing companies that illegally made approximately 2.6 billion calls to consumers with illegal telemarketing messages about debt reduction services and auto warranties. The settlement includes a $5.3 million fine that will be suspended when assets valued at $3 million are turned in. Those assets include more than $1 million from a bank account in Hong Kong, a $375,000 lien on a home, a 50% interest in an office building in Saipan, three cards, and a recreational vehicle. Also part of the settlement, the defendants are banned from the industry. The FTC filed suit in 2010 against Asia Pacific Telecom, Inc. and SBN Peripherals, Repo B.V. for placing prerecorded calls or using the calls to sell their products and for violations of the National Do Not Call Registry. Under the FTC Telemarketing Sales Rule regulations, telemarketers must obtain express written permission from consumers before making prerecorded calls to their phones. Prerecorded calls placed without express consent are illegal and violators face fines of up to $16,000 per call. Just last month the Federal Communications Commission (FCC) revised its TCPA rules to harmonize its regulations surrounding the use of prerecorded calls with the already restrictive FTC’s rules.
Posted on Thu, Feb 23, 2012 @ 02:36 PM
By: Melissa J. Fitzgerald, CIPP
As we posted last week, the FCC released a report and order that revises its TCPA rules governing prerecorded calls. The updated rule eliminates the established business relationship (EBR) exemption that currently permits prerecorded telemarketing calls to landlines. The new FCC prerecorded telemarketing call rules mirror those the FTC adopted in 2008, and have been in effect for several years now so if your business falls under the FTC’s jurisdiction, the updated FCC rules should have no impact on your existing telemarketing policies. That said, some business entities fall outside the FTC’s jurisdiction, including common carriers, banks, and insurance companies, and now, they must commence complying with the new prerecorded call rules. Additionally the FCC’s rulemaking also confirms that soliciting text messages fall within and must comply with express written consent requirements.
Below is a brief summary of the new FCC TCPA rules. The FCC’s Release and Order intends to:
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Revise its rules to require prior express written, signed consent for all prerecorded telemarketing calls to wireless numbers and residential lines. The consent must specify the phone number to which it applies, be signed (satisfying the E-SIGN Act), and reflect explicit consent to receive prerecorded calls in a clear and conspicuous way. The FCC clarified that the consent cannot be required as a condition for purchasing any good or service.
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Adopt rules applicable to all prerecorded telemarketing calls that allow consumers to opt out of future automated/prerecorded calls during the call. This requires offering an automated interactive keypress or voice-activated opt-out mechanism that permits the called party to make a company-specific do-not-call request.
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Revise the rules to limit permissible abandoned calls (live-agent auto- or predictive-dialed telemarketing calls) that when answered by the consumer do not connect to a live agent within 2 seconds by requiring calculating the 3% of such calls that are permissible on a per-campaign basis (rather than across all the telemarketer’s campaigns, as previously allowed). This computation falls in line with how the FTC requires abandonment rates to be calculated.
Entities that that are covered by the new FCC rules that are not currently complying with the FTC’s rules should note that the FCC adopted a phase-in approach for compliance:
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Express written permission obligation for prerecorded calls is required 12 months from the date the new rules appear in the Federal Register, February 15, 2013.
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Automated opt-out requirements must occur by 90 days after publication, May 14, 2012.
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Revised call calculation rule must be in place 30 days after publication, March 16, 2012.
Posted on Wed, Feb 15, 2012 @ 03:30 PM
The Federal Communications Commission (FCC) is expected to approve revisions to its Telephone Consumer Protection Act (TCPA) shortly. Many news reports have misstated the effect of the pending revisions, most of which are aimed at harmonizing FCC rules with existing Federal Trade Commission (FTC) Telephone Sales Rule (TSR) requirements. The revisions include:
- Prohibiting calls to wireless numbers made via automated dialing equipment without the consumer’s express written permission. Existing FCC rules require prior consent for such calls but do not prescribe how consent must be obtained.
- Prohibiting prerecorded and automated voice calls without express written permission. While FTC rules already require express written permission, current FCC rules could be interpreted to permit prerecorded messages to consumers with whom a seller has an established business relationship.
- Requiring prerecorded and automated voice calls to include an interactive opt-out mechanism similar to existing FTC rules.
- Exempting certain healthcare-related calls, such as prescription refill reminders, from the general prohibition on prerecorded telemarketing calls.
- Adopting a “per campaign” standard for measuring the call abandonment rate similar to existing FTC rules. The FCC currently calculates call abandonment rates based on a 30 day window.
News broke this morning with headlines like “FCC Makes it Harder for Marketers to Use Robocalls,” and “FCC to get tougher on Robocalls.” While true that the new FCC rules will further restrict prerecorded calls, automated dialers are still permitted to dial wireline phone numbers without written consent. Additionally, existing FTC rules already prohibit prerecorded calls with written consent. The intent of the new FCC rules is to bring entities outside of the FTC’s jurisdiction, such as telephone companies, banks, and insurance companies, in line with the FTC’s TCPA rules. While headlines caused marketers to frantically reevaluate their marketing policies, those already in compliance with the FTC’s rules have nothing to fear. The FCC’s new rules finally clarify the rules surrounding prerecorded calls and create a universal rule for calculating abandonment rates.
Posted on Fri, Feb 10, 2012 @ 03:42 PM
By: Melissa J. Fitzgerald, CIPP
As marketers invest in new channels to attract prospects such as social media and text message marketing, many still attract new customers and retain existing relationships through telephone solicitations. Telemarketing has proven to be among the most successful methods of soliciting and retaining customers, even in light of companies like LinkedIn and Facebook building enhanced marketing solutions for businesses to reach a network of consumers with a relevant message. However, long gone are the days of blast telemarketing calls. Federal and state regulators have restricted the use of telemarketing practices in an effort to protect consumers from abusive telephone technology. In addition to the National Do Not Call Registry, maintaining a business-specific do-not-call list, and adhering to federal call curfews, federal regulations prohibit the use of prerecorded or automated voice messages and restrict the use of robo or autodialer systems and telemarketing calls to cell phones.
Last month the US Supreme Court ruled in Mims v. Arrow Financial Services, that private actions brought by consumers seeking redress for violations of The Federal Communications Commission (FCC) Telephone Consumer Protection Act (TCPA) may be brought in federal district court as well as state court. Resolving a major split among the various US Circuit Courts of Appeal, reversing the US Court of Appeals for the 11th Circuit and a Florida district court, the Court held that because a federal statute creates the right of action and federal law, “furnishes the substantive rules of decision," and the TCPA claim arises under the laws of the US for "federal question" jurisdiction to exist. Admittedly the TCPA’s language is “state-court oriented” and even provides a permissive grant of jurisdiction to state courts, it does not create exclusive state-court jurisdiction; therefore, the Court held that this does not deny US district courts of federal jurisdiction over private TCPA suits. It is likely that this decision will encourage the filing of more TCPA claims by plaintiffs in the federal courts now that the requirements of federal law may be more easily identified and enforced—rather than in state court now that the threat of dismissal for lack of federal question jurisdiction is no longer present.
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Posted on Thu, Feb 02, 2012 @ 01:35 PM
By: Melissa J. Fitzgerald, CIPP
As Facebook files for an unprecedented IPO of $5 billion this week, the marketing industry is reminded of the enormous value of relevant marketing data. FB’s prospectus states its valuation at close to $100 billion because they “allow advertisers to select relevant and appropriate audiences for their ads.” Put simply, consumers respond better to marketing that interests them. Consumers don’t mind advertisements and pushy sales tactics when it is regarding something that they want to buy; hence, marketers are willing to pay big bucks for targeted data. Businesses spend billions of dollars each year paying for this type of demographic marketing data—lists of consumers that may be interested in purchasing their goods or services. But this data may or may not be worth the price tag because it is often based on conjecture calculated in the aggregate. Marketers pay an exorbitant fee for marketing data, blast out marketing campaigns, and see a small percent of return on a massive number of contact points. The old adage “throw it against the wall and see what sticks” comes to mind.
More and more marketers are realizing that the consumer’s voice is a fool-proof way to market to an individual consumer. Engaging a one-to-one relationship with the consumer gives the consumer the opportunity to communicate what they want to be solicited about and when. Eliminating the guesswork involved with analyzing aggregated data, consumer preference management not only ensures a higher rate of return on a single campaign but it creates more brand loyalty. Consumers given the chance to communicate their preferences, likes/dislikes, favorable contact point, and frequency of marketing are happier customers.
Last week the European Commission proposed a new data protection framework to replace the 17 year old EU’s Data Protection Directive. While much of the proposed rules deal with the common data protection tenants—breach notification, children online protection, and consumer control over personal identifiable information—the potential impact on the marketing industry is widespread. The potential new EU rules far exceed anything imposed by any other jurisdiction today. Most notably, the new rules require that wherever consent is required for data to be processed, consent must be given explicitly rather than assumed. In essence, this will create an explicit consent (opt-in) requirement for all EU marketing. It is important to note that the EU rules will apply to personal data handled abroad by companies in the EU market or offer services to EU citizens. In other words even if your business is physically located in North America, if you offer your services/products to EU citizens through a website, the new EU Data Protection rules would apply to your business. Similarly, Canada enacted the Canadian Anti-Spam Law (CASL) in late 2010 that requires opt-ins (implicit is permissible) for all commercial electronic messages. Canada’s “opt-in” proposed regulations have yet to be finalized but it is expected that the consent requirements will come into effect sometime in 2012.
Marketers that are already creating a dialogue with consumers and soliciting consumer preferences are well ahead of the curve. Not only will they have a higher rate of return on their outbound marketing efforts and create brand loyalty among their customers, they will be prepared for compliance with the soon to be effective Canadian Anti-Spam Law, and the sweeping EU rules that will likely come into effect in 2 years.
Posted on Fri, Jan 06, 2012 @ 03:39 PM
by Melissa J. Fitzgerald, Esq., CIPP
The Federal Trade Commission issued its biennial report for 2010 and 2011 last week to Congress on the National Do Not Call Registry and while the report confirmed what we already know, it did reaffirm the FTC’s commitment to the hugely successful consumer program and its commitment to enforce against violating marketers. Not only have the registrants increased from 200 million to almost 210 million in just 2 years but the number of consumer complaints regarding unwanted telemarketing calls have increased from to 2.2 million in 2011, up from 1.6 million in 2010.
The Commission’s report reaffirmed its reasoning as to why registrants will not expire from the National DNC Registry despite the 5 year duration that was created when the Telemarketing Sales Rule was originally enacted. However, the FTC has taken a more proactive stance on removing disconnected and reassigned phone numbers, particularly mobile phone numbers, from the National DNC Registry, allowing marketers to market to telephone numbers on the National DNC Registry when they have been reassigned. As more and more consumers become dependent on mobile phones the FTC has seen an immense increase in the number of cell phones registered on the National DNC Registry. The subcontractor that oversees the process for removing numbers from the Registry utilizes directory assistance databases to determine whether the number has been reassigned; however, unlike landline service providers, FCC rules do not require wireless service providers to provide directory assistance data. The FTC confirmed that it will be working with its contractor to push wireless service providers individually to compile disconnect and reassign wireless data so they may be properly removed from the Registry.
Businesses that market to former or existing customers or those consumers with an inquiry should take note that the FTC reaffirmed its stance on the sharing of the established business relationship (EBR) exemptions. Many businesses rely on this exemption to conduct marketing campaigns aimed at existing or former customers, or consumers who have previously expressed interest in good/services. However, consumers often are unaware of the relationship because the seller identified in the telemarketing call and the seller with whom the consumer has a relationship may be part of the same corporation, but are perceived by the consumers to be different because they market under a different names or are selling different products. Consumer expectation is that the marketers are violating their registration on the National DNC Registry. The issue of whether calls by or on behalf of sellers are affiliates and subsidiaries of an entity with which a consumer has an established business relationship fall within the exemption depends on consumer expectations. When determining whether your business may share its EBRs among affiliates, divisions, and subsidiaries, you must ask: would consumers likely be surprised by that call and find it inconsistent with having placed their telephone numbers on the National DNC Registry? Are the goods/services being solicited similar to the seller’s with whom the consumer has a relationship? The greater the similarity between the goods/service sold by the seller and its affiliates and the greater the similarity of their identities the more likely the call will fall within the established business relationship exemption.
The FTC also clarified that telemarketers that utilize lead generators generally do not fall within the established business relationship exemption. The consumer may have an EBR with the lead generator but not with the seller who has purchased the leads. The lead generator must disclose at the time the consumer’s information is collected that the consumer should expect telemarketing calls from the eventual seller as a result of his/her relationship with the lead generator. Again the FTC reiterates the standard that whether a seller may use an EBR created by a lead generator is determined by consumer expectation-would a consumer expect to receive a telemarketing call from the seller as a result of engaging a lead generator? With the appropriate use of notice, a seller should be able to use a lead generator to create an established business relationship exemptions but it is not guaranteed without clear, conspicuous disclosures.
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Posted on Mon, Dec 19, 2011 @ 03:41 PM
By Melissa Fitzgerald
The Federal Trade Commission’s recent actions against telemarketers reaffirms that the Commission considers the National Do Not Call Registry as a viable, successful consumer protection program. Marketers that thought enforcement was a thing of the past are in for a rude awakening—the FTC will not only fine call centers but those institutions for whom they are calling. Marketers and sales teams, even those that only occasionally use the phone channel for soliciting, have the clear responsibility to ensure that not only their agents are in compliance but their third party vendors as well. The FTC has been very clear that anyone on the “marketing chain” is liable for a Do Not Call violation, including non-captive, independent agents as well as corporations responsible for the actions of their outsourced call centers.
Last week the FTC settled with an Illinois-based telemarketing firm, Americall Group, Inc. for violations of the FTC’s Telemarketing Sales Rule (TSR), requiring the firm to pay a $500,000 civil penalty. Americall is a third party call center with clients in a host of industries, including insurance, investment brokers, credit card issuers, retail, and medical facilities. Failing to adhere to consumers’ requests to be added to the company-specific do not call list, the FTC investigated and discovered that Americall had trained its agents to ignore consumer requests to opt-out of future telephone calls. Additionally Americall transmitted false Caller ID information that was intended to mislead call recipients.
Last month the FTC brought suit against a telemarketing service company, Sonkei Communications for allegedly providing substantial support to telemarketers who they knew or consciously avoided knowing were violating the TSR. Among the allegations, the telemarketers were using the defendants’ services to violate the TSR by transmitting inaccurate caller names and dialing numbers on the National DNC Registry. The FTC is pursuing $16,000 per violation that occurred after the violation increase on February 9, 2009, and $11,000 per violation that occurred prior to February 9, 2009.
Just this morning the FTC charged telemarketer Roy M. Cox, Jr. and several of his companies for allegedly violating the National DNC Registry, disguising caller ID, and for illegal robocalling consumers without written permission. It is alleged that the defendents sought to hide their identity by using generic, inaccurate names such as “Card Services,” “Credit Services,” or “Private Office.”
With the enactment of more consumer protection laws at both the federal and state level combined with recent enforcement actions, consumers have become more aware of their rights to express their preferences about who markets to them and when. Adhering to consumer preferences is not only a better way to do business, it is the law with serious PR and financial consequences for noncompliance.
Posted on Wed, Nov 16, 2011 @ 07:46 AM
By Bill McCarthy
The trend to watch for in marketing for 2012 is consumer preference marketing. On a daily basis consumers are bombarded with hundreds of messages through various communication channels. With each year consumers are able to find more ways of opting out of future messages.. Marketers are becoming more aware of the need for new marketing techniques. In an economy suffering from recession, a newfound respect for consumer preference is vital to keep the consumer happy and continuing their relationship with the marketer.
The Customer Experience
Undoubtedly the importance of the customer experience will become more important in 2012. While the customer has so many options in today’s market they have also become more cautious thanks to the recession period. Marketers in 2012 will face the task of taking the customer experience and setting and meeting their expectations. Marketers will first have to ensure that it is okay to contact the consumer then respect the consumer preference for frequency, channel, and marketing content. Marketers will also have to ensure they comply with consumer opt-outs. Marketers must understand what creates customer loyalty and why customers leave.
Social Media
The use of social media in consumer preference marketing will only grow in 2012 even though it is already the norm and in the mainstream. There are more social media platforms that also allow company and brand pages. For example: Google+ launched brand pages in November of 2011. Optimizing consumer preference techniques through social media will only work to benefit the marketer/company.
Cordarounds is a perfect example of social media working for a company. They credit the web with their success. Using social media such as Facebook and Twitter they heavily advertise to their customers. They launch new products on social media first to give their loyal customers a chance to buy the new product first. This in turn allows the company to know who are their loyal customers.
Multiple Channels to Reach Out
Being able to offer multiple channels to reach out to customers based on their permission will become a growing trend. At one time the only way to market to consumers was through direct mail, television advertising, and telemarketing. Now there is Internet advertising, e-mail marketing, and social media marketing. Also with the invention of smart-phones and the use of SMS messaging, the idea of mobile marketing has also become a growing trend in consumer preference marketing. Allowing a consumer to decide what channel they would like to be reached through will allow the consumer to feel more in control and keep their loyalty when they opt-in.
Data Analysis
The use of consumer data and data analysis in consumer preference marketing will also be a growing trend in 2012. As companies and marketers begin focusing more on consumer preference it will become absolutely vital for companies to compile data and evaluate that data to find new trends with their customer base and to improve targeting.
Summary
No matter what techniques marketers use, the growing use of consumer preference marketing cannot be ignored. Consumer preference marketing will only grow more popular in 2012 and the coming years as more and more consumers grow more vigilant to have their preferences respected. The most undeniable trend in 2012 will be letting the consumer have a voice by letting the consumer dictate how and when they be contacted via what marketing channel about the products/services they are interested in. Adhering to those consumer preferences will not only keep marketers compliant but create stronger, loyal customer relationships.
* Source: “Social Media Marketing Best Practices”, crmtrends, http://www.crmtrends.com/socialmedia.html Source: “CRM”, http://www.crmtrends.com/crm.html
