Telemarketing Rules, Enforcement, Issues, and Taxes

By Brendan B. Read
Senior Contributing Editor, Customer Interaction Solutions

On most desks there are usually several items that merit attention, and The Compliance Desk is no different. Here are those matters that are on the top for this issue:

September 1, 2009: What’s Your Gameplan?

Last year the Federal Trade Commission (FTC) adopted amendments to the Telemarketing Sales Rule that rolls out a series of restrictions to pre-recorded sales calls. As of December 1, 2008, prerecorded sales calls must provide an easy opt-out feature. More significantly, beginning September 1, 2009, automated sales communications can be delivered only to those recipients who have provided their “express written consent” to receive them; having an existing business relationship (EBR) will no longer suffice.

Mark Friedman, chief marketing and business development officer at SoundBite Communications, has looked at this issue. He offers advice on how organizations can prepare for the next phase and act quickly to maximize the percentage of consumers that they will be able to cost-effectively reach via automated calls to sell their goods and services:

The FTC Telemarketing amendment is a unique opportunity for organizations because it combines both critical and strategic issues: the urgency of a time deadline (i.e. they must obtain permission by September 1, 2009) and a strategic opportunity that can impact long term success by enabling more targeted, effective marketing. The FTC’s amended TSR rule is a game changer. Organizations need to act quickly to maximize the percentage of consumers that they will be able to cost-effectively reach via automated calls to sell their goods and services.

Customer Communications and Brand Loyalty
Companies establish a brand impression with their customers – the better and stronger the brand impression, generally the more profitable the relationship for the organization. Customer communications plays a major role in forming that brand impression. Yet how many organizations really know how each of its customers prefers to be communicated with? And under what circumstances?

For example, if you are running a special sale on an item they might be interested in purchasing – would they prefer to find out via an email? Voice message? Text message? Direct mail? Some combination? What if you wanted to make a special offer to members of your loyalty/reward program – how would your customers want to hear about this offer?

Each consumer has his/her own communication preferences. Some want to receive e-mails, others voice messages, others text messages, and others would prefer to be called on their cell phones. And many would prefer to receive communications through a combination of channels. It is important to ask consumers directly how they want to be communicated with so that you can develop a communication strategy that encompasses their preferences.

Communications are all about getting consumers to act. And here’s the point: if you know in advance what their preferences are, you will be in a much better position to have your communications “breakthrough” and be acted upon. This will mean more market share, more revenue, more profit.

As an organization determines the individual communication preferences of its consumers, it can then secure express written consent from these consumers (i.e. their permission.) As a result, organizations will be well positioned to deliver relevant information to consumers who have expressed an interest in their goods or services.

The Opportunity Is Now
Seize this opportunity and create a formal Consumer Communication Preference and Opt-in Program. The requirement to gain permission by September 1, 2009 creates an urgency to do so. The value of understanding consumer preferences should create a strategic drive to do so.

Here are some questions organizations should be asking:

• Do you have contact information for your customers and prospects?

• Is this contact information complete and updated – for mobile phones? E-mails? Landlines?

• How do you keep contact information updated?

• Do you understand your consumers’ communications preferences?

• Text Messages? E-mail? Voice Messages? Direct Mail? Live Agents?

• Do your consumers’ communications preferences vary by the situation? Service Reminder vs. Special Sale Offering vs. Loyalty Program Update vs. Fraud Notification?

• How do you track and update your consumers’ evolving communications preferences?

• Can your entire organization access your consumers’ communications preferences?

• What’s your organization’s plan to handle the September 1, 2009 Telemarketing rule changes?

Those that act swiftly and with purpose in creating a formal Customer Communication Preference and Opt-In Program will have a head start in building a targeted, qualified list of customers who want to hear from you and will welcome your communications. After all, it’s all about customer choice, so why not deliver your communications to those who want to receive them- how they want to receive them.

Do Not Call: U.S. Cracks Down on Violators, Canada’s Registry Abused by Fraudsters

The U.S. and Canada have had a slew of positive and negative experiences recently in their Do Not Call (DNC) registries.

• The FTC forced two groups of vacations and timeshare companies to pay fines of almost $1.2 million for violating the DNC rule

Court orders entered by a federal district court settled the FTC’s charges against the defendants. They are Central Florida Investments, Inc., Westgate Resorts, Ltd., and CFI Sales & Marketing, LLC (collectively, the Westgate defendants); and against All In One Vacation Club, LLC, Accumen Management Services, Inc., and their principals (collectively, the All In One Vacation Club defendants).

The cases, filed by the Department of Justice on behalf of the FTC, alleged that these firms called consumers whose phone numbers were on the federal DNC registry without having obtained their express written agreement or having an “established business relationship” with them. One group’s telemarketers also allegedly abandoned many calls, by failing to connect the calls to a sales representative within two seconds after consumers answered, as required by law.

The FTC contends that, in both the Westgate and All In One Vacation Club cases, consumers did not reach out to the defendants seeking information about their products or services before receiving a telemarketing call. Thus, the companies did not have an ‘established business relationship’ with the consumers. Moreover, consumers had not given the defendants permission to call.

• In Canada, the country’s new DNC registry appears to be open to similar abuses, and may very well be headed to some changes The Globe and Mail newspaper reported that the Consumers' Association of Canada says it has been inundated with complaints from people who have been called by scam artists after placing their phone numbers on the registry. The Canadian Radio-television and Telecommunications Commission (CRTC), the country’s communications regulator, sells the list online for a fee to marketers to scrub those numbers off their databases.

The CAC says people didn't understand what they were getting into when they signed onto the DNC and gave out their phone numbers. These are now in the hands of all sorts of what it calls ‘pirates’ that consumers never knew existed.

“‘You can buy any list you want of people who subscribe to the do-not-call registry online, ‘“CAC president Bruce Cran told the newspaper. “’The whole of Toronto costs you 50 bucks for 600,000 names. That's just perfect for any telemarketer, because these are good names which they would otherwise have to pay money for to verify. In addition to that, there's no index list of cell phone numbers that you can get. However, people were encouraged to put their cell phone numbers on there as well.’”

Penalties for list misuse run as high as $15,000 for a corporation or $1,500 for an individual. Yet enforcement is challenging because the paper says it is difficult to fine fraudsters based in or outside of Canada.

The issue prompted the opposition New Democratic Party Member of Parliament (MP) critic for consumer affairs, Glenn Thibault, to ask the federal Privacy Commissioner Jennifer Stoddart if making the phone numbers on the registry available is a violation of the country’s privacy laws.

“’We have received a copy of [Mr. Thibault's] letter and we are just gathering information at this stage,’” the commissioner’s spokesperson, Valerie Lawton, told the newspaper. “’But we were aware of this issue before and we have discussed it with the CRTC. We have been in contact with them and understand that they are looking at it. They are taking it seriously.’” The CRTC is investigating the issue but it could not give any timelines.

“’We are aware of the situation and we are trying to assess how to respond,’” said commission spokesperson Denis Carmel. The MP said he has received numerous calls from people who believe they have been called by telemarketers who obtained their phone numbers from the do-not-call registry.

“’We've all heard these stories where someone gets taken advantage of,’” said Thibault. “’And if this does happen because we've forgotten to cross an 'i' or dot a 't' then shame on us. We’re putting this in place to help, not to make it worse.’”

ATA Washington Summit
To get the inside track on government legislation and regulations consider attending the American Teleservices Association’s Washington Summit, subheaded ‘Regulation is a Reality’ which will be held April 26-29 2009.

This may be one of the most critical meetings to attend, what with the new Administration and Congress. There have already been moves to enact protectionist and more restrictive legislation amidst efforts to kickstart the economy with stimulus packages.

The ATA identified several issues on the horizon such as crippling wage escalations, workforce unionization, demise of upsell/cross-sell, mandatory opt-out legislation, and penalties for offshoring.

The Summit highlights include expert presenters who will give perspectives on the 2009 economic and political landscape, federal and state regulatory updates, luncheon roundtables, more on the ATA’s Self-Regulatory Organization, and the ATA-PAC fundraiser.

“The contact center industry is facing imminent threat with the new agenda in Washington DC, and we understand what must be done to survive the potential downfall of one of the most valuable sectors of our economy,” says the ATA. “This is the year you must listen up, get our answers, and make sure your voice is heard.”

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