Gryphon Insight

What the FTC's '10-'11 Report Teaches Us about Do Not Call Compliance

  

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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from the National DNC Registry despite the 5 year duration that was created when the Telemarketing Sales Rule was originally enacted.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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