April 19, 2012
Thousand of people receive calls from telemarketers selling debt reduction services or credit cards with promised lower interest rates; selling extended auto service contracts after telling them their warranties were about to expire; or telling consumers that they have won or are specially selected to receive a vacation package.
Many of these worthless or dubious deals are offered by companies operating “autodialing” businesses, which deliver prerecorded messages that allow clients to deliver large numbers of prerecorded phone calls, or “robocalls.” The prerecorded messages would last just a few seconds. If a call recipient who received a prerecorded message pressed “1” during the message, the recipient would be transferred to a live operator who would attempt to sell the product or service.
In 2003, the Federal Trade Commission promulgated the Telemarketing Sales Rule (TSR), which implements the “Telemarketing and Consumer Fraud and Abuse Prevention Act,” 15 U.S.C. 6101, 6108, as amended. The TSR covers telemarketing – any plan, program, or campaign to sell goods or services through interstate telephone calls. The TSR requires telemarketers to make certain disclosures and prohibits misrepresentations. It gives state law enforcement officers the authority to prosecute fraudulent telemarketers who operate across state lines. And it gives consumers instructions on how to stop unwanted calls.
In 2009, the TSR was amended to specifically address robocalls. An FTC Business Alert “Reining in Robocalls” discusses the amendment.
However, companies such as banks, telephone companies, and airlines, which are exempt from FTC regulation, will now need to comply with the requirements as adopted by the Federal Communications Commission (FCC). The FCC rules on calls to wireless phones apply to both voice calls and text messages.
California also prohibits any robocall unless there is an existing relationship. The California Public Utilities Code §§ 2871 et seq. holds political campaigns to the same rules as other organizations or businesses using robocalls (i.e., calls made by an automatic dialing–announcing device or ADAD). The guidelines are: (1) a “live” person must come on the line before recording to identify the nature of the call and the organization behind it; (2) the recipient of the call must consent to allowing the recording to be played; and (3) the call must be disconnected from the telephone line as soon as the message is over or the recipient hangs up, whichever comes first.
In 2003, Congress gave the FTC authority to establish and enforce the “National Do Not Call Registry.” The Do Not Call Registry is a list of phone numbers from consumers who want to limit the telemarketing calls they receive. The Registry is managed and enforced by the FTC, the FCC, and state officials. Most telemarketers should not call your number(s) once it has been on the registry for 31 days. If they do, consumers can file a complaint at the Do Not Call Registry website. Consumers are advised to place their telephone number(s) on the Do Not Call Registry.
This year, under a settlement in FTC V. Asia Pacific Telecom, Inc. d/b/a SBN Peripherals, Inc., et al., SBN Peripherals, Inc., a robocall operation based in Los Angeles, was put out of the telemarketing business. This case is an excellent example of how a robocall company operates and the magnitude of the problem. This company bombarded consumers with more than two billion calls pitching a variety of products and services, including worthless extended auto warranties and credit card interest rate-reduction programs. The order bans the defendants from telemarketing and requires them to give up roughly $3 million in assets.
The FTC’s complaint alleges that the defendants delivered illegal prerecorded phone calls falsely claiming the caller had urgent information about the consumer’s auto warranty or credit card interest rate. Consumers who pressed “1” for more information were transferred to telemarketers who used fraudulent practices to sell inferior extended auto service contracts or worthless debt-reduction services. According to court papers filed by the court-appointed receiver, from January 2008 through August 2009, the defendants completed approximately 2.6 billion outbound robocalls that were answered by approximately 1.6 billion consumers, approximately 12.8 million of whom were connected to a sales agent.
Of course, the plethora of laws will slow down, but not stop telemarketing abuses. Crooks don’t always obey the law. What is also needed is alert, careful consumers. What do you do if you receive a robocall?
- Never give personal information, including Social Security, bank or credit card numbers, over the telephone to an unknown caller.
- Research the company with the Better Business Bureau or online. If you cannot find any information about the company, that should raise a red flag. When considering any company offering any type of financial assistance, insist on getting a contract in which all terms and conditions are clearly explained before signing up or providing credit card or other payment information.
- Place your home telephone number(s) on the Do Not Call Registry.
If your telephone numbers are already on the Registry but telemarketing calls persist, you can file a complaint on the Do Not Call Registry website.