Telemarketing Amendment FAQs for Contractors

In One Sentence – What Does The New Rule Say?
Telemarketing calls or text messages made to cell phones – if the contractor is using a prerecorded message or an automatic telephone dialing system – now require (as of October 16, 2013) special written consent from the consumer before you can make the call or text the message.

Let’s consider the analysis we have to undertake:

STEP ONE: Is The Call Telemarketing or Informational?
The first question is if the telephone call or text message can be considered to be “telemarketing”. Essentially, if the call or text is being made to encourage the purchase or rental of property, goods, or services, then it is telemarketing. If the call or text is informational only (such as confirming an appointment), then it is an informational call or text. If the call starts out as informational, and then moves into encouraging or soliciting the possible purchase of goods or services, then the entire call or text becomes telemarketing. We will discuss this a bit more further on.

STEP TWO: Is There A Prerecorded Message?
A prerecorded message or “robomessage” is a recording that automatically plays when the consumer answers his telephone (or in the case of a text, the text message automatically appears when the consumer answers his telephone). Prerecorded messages are often used with automatic dialers, or so-called “lead generators”, where the dialing system calls a list of telephone numbers and, when a live voice answers, the recorded message is delivered.

STEP THREE: Are We Using an Automatic Telephone Dialing System?
In the telemarketing world, an automatic telephone dialing system, also referred to as an ATDS or an “autodialer”, is generally considered to be a computerized system that has the capacity to generate telephone numbers randomly or in a certain sequence, and those numbers can then be called by the merchant.

One common form of ATDS is a so-called “predictive dialer”, which is a telephone dialing system that automatically calls a list of telephone numbers in sequence, screening out no-answers, busy signals, answering machines and disconnected numbers while predicting at what point the telemarketer will be able to pick up the next call that connects to a live consumer. Predictive dialers can also measure the number of available telemarketers, available lines, average handle time and other factors and then adjust outbound calls accordingly. This measurement delivers a high level of mathematical efficiency to use in call centers.

However, the Federal Communications Commission (“FCC”) currently considers an ATDS to be any telephone dialing system that can operate without human intervention. As if this weren’t vague enough, the courts have made matters worse by concluding that any device that has even the capacity to dial numbers generated randomly or in sequence would be considered an ATDS, even when the merchant is not using the system in that manner to place telephone calls or text messages. The FCC’s failure (be it intentional or not) to clearly define when a contractor is or is not using an automatic telephone dialing system for a specific call has caused considerable problems for merchants, and efforts to persuade the FCC to address this confusion have so far been unsuccessful.

So, what is a reasonable real-world interpretation of how this will be enforced? At this early juncture it is hard to say. However, it appears that if there is significant human interaction involved in the origination, dialing or selection of the telephone call or text message to a cell phone, then the call would not be considered as being made via an ATDS for purposes of this analysis. Put another way, if the telephone number to be called is hand-selected or hand-dialed, even if the call is made through an ATDS, the call is not likely to trigger liability under this rule. Of course, this is a very fact and circumstance-specific analysis, so we strongly advise each calling structure be considered in turn.

Let’s assume we are making telemarketing calls or texts, using a prerecorded message or an ATDS. Now, let’s consider the rule we would need to comply with:

RULE ONE: If we are placing telemarketing telephone calls or telemarketing texts to a cell phone using an automatic telephone dialing system OR using a prerecorded message, we must first have express written consent from the consumer.

What Is Express Written Consent?
How do we obtain express written consent? Well, the consent must (i) be signed; (ii) list the telephone number that the consumer will be contacted at; (iii) identify the contractor on whose behalf the call or texts will be made; and (iv) provide a clear and conspicuous disclosure as to what the consumer will be receiving. For example, that the consumer will be called and/or texted using an autodialing system, or that the consumer will be receiving prerecorded messages.

The written consent has to be voluntary – it can’t be buried in or required as part of a purchase agreement or work order. The following is an example of acceptable language:

I’m fine receiving autodialed and/or pre-recorded calls or text messages from or on behalf of XYZ Remodeling to tell me about new products, sales or other events I may be interested in, and you can use any of the telephone numbers I have provided above. I understand my approval to receive these calls is not required for me make a purchase. ___________________ (Signature)

This written consent may also be obtained electronically, in any manner that satisfies the federal Electronic Signatures Act, but that would be the subject of another discussion.

What if we are only placing informational calls (no telemarketing calls)?

RULE TWO. If we are placing informational telephone calls or informational texts to a cell phone using an automatic telephone dialing system OR using a prerecorded message, we must first have either express written or express oral consent from the consumer.

Rule Two gives a contractor the option of placing informational calls or texts to cell phones using an ATDS or a prerecorded message without the need for the written consent. Instead, we can rely on simple oral consent. However, the oral consent still must be clear and knowing – meaning that the customer must understand that they will be receiving calls on their cell phone from XYZ contractor. Still, the threshold is much lower. For example, if a customer provides their cell phone number to a contractor when filing out a work order, it is presumed that the customer is agreeing to be called at that cell phone number – at least for the purpose of that transaction.

Caution is advised here. Consider the 2012 case of Chesbro v. Best Buy Stores, LP, 697 F. 3d 1230 (9th Cir. 2012). Having bought a computer from Best Buy, the plaintiff in Chesbro began receiving prerecorded phone messages for the Best Buy’s rewards program. The plaintiff complained and was eventually placed on Best Buy’s internal Do Not Call (DNC) registry. Several months later, however, the plaintiff received another prerecorded phone message from Best Buy about its rewards program. So, the plaintiff filed a class action complaint in Washington State against the company alleging violation of the TCPA’s ban on prerecorded messages. The district court granted summary judgment in Best Buy’s favor, finding that the calls were purely informational courtesy calls about its rewards program. However, on appeal, the Ninth Circuit determined that because the calls encouraged the plaintiff to redeem rewards points, the calls were telephone solicitations, which required going to a Best Buy store and making further purchases of Best Buy’s. The court stated that there was an implication of solicitation, so these were really telemarketing calls.

What Does All This Mean?
If we are not using an automatic telephone dialing system or prerecorded messages, then there is nothing to do in regard to these new rules. Otherwise, we need to take steps to ensure we have written or oral express consent from the consumer before we utilize either method in our communications to a consumer’s cell phone. Written consent, of course, is the higher threshold to shoot for if we ever want to engage in telemarketing.

According to a recent Centers for Disease Control and Prevention Semi-Annual National Health Interview Survey, nearly 36% of American households used only cell phones and nearly 16% received all or nearly all of their calls on cell phones even if they also used landline telephones. Accordingly, in many instances the telephone numbers being listed by a customer on a work order or on a lead slip may be their cell phone number, even though they are not specifically indicating that.

As such, we advise clients that are engaged in telemarketing using an automatic telephone dialing system or prerecorded messages to modify their lead slips, home show cards, internet pages, sweepstake entries and contracts or work orders to include a voluntary authorization similar to what we suggest above.

If a dispute concerning consent arises, the contractor bears the burden of proof to demonstrate that a clear disclosure was provided and that the consumer unambiguously consented to receive telemarketing calls to the number he/she specifically provided. It is a best practice for contractors to maintain each consumer’s written consent for five (5) years. Evidence of Internet-provided written consent includes, but is not limited to, website pages that contain consumer consent language and fields, an associated screenshot of the consent webpage as seen by the consumer where the phone number was inputted, and a complete data record submitted by the consumer (with time and date stamp), together with the consumer’s computer IP address.

What Does This Have to Do with the Do Not Call List?
Nothing. This has nothing to do with Do Not Call (“DNC”) listings. Cell phones can be registered on DNC registries, and have been listed on DNC registries for many years. If a cell phone number is listed on a DNC registry, then you should not be calling that number without an approved business exception or the consumer’s permission. Those are distinct issues from this new rule. For purposes of this memo, it is assumed any cell phone numbers called or texted to have been scrubbed against any applicable DNC registries, or we have a business exception allowing us to otherwise call the number. Of course, the authorization suggested above would override any DNC registry anyway (other than perhaps Indiana’s restrictions, which we can discuss). In other words, with the type of authorization discussed above, you could call a cell phone listed on the DNC, even if you were not using an ATDS or a prerecorded message. The inverse is not true – regardless if a cell phone is listed on the DNC or not, without specific authorization, you can not call a cell phone using an ATDS or a prerecorded message.

Does Outsourced Telemarketing Provide a Safety Net?
It does not. The contractor on whose behalf the telemarketing calls are being made is the party ultimately responsible for violations of the law. If you have a strong written agreement in place with the outsourced call center operation – and they have insurance or a bond hopefully backing that up –then you could go after them for their violations of telemarketing law that you get hit with, but that is, of course, a secondary measure.

What Are My Liability Concerns?
The Telephone Consumer Protection Act or TCPA allows private actions and provides for between $500 and $1,500 in statutory damages for each violation, with treble damages available for willful or knowing violations, as well as injunctive relief. In addition to private rights of action, the TCPA is enforced by the FCC and state attorneys general, with allowable fines that can reach $16,000 per violation.

By various accounts, TCPA filings are up 40-60% in 2013, when compared to the same period in 2012. For instance, Steve Madden, Ltd., an international shoe retailer, was accused of sending more than 200,000 text messages to consumers, but claimed that consumers had consented to receive the messages by providing their cell phone numbers while visiting Steve Madden’s stores and website. The court found that clear and conspicuous consent had not been adequately proved and Steve Madden ultimately settled the case out of court for more than $10 million.

What About If I’m Calling the Consumer’s Land Line?
The rules are a bit different. Calls, whether informational or telemarketing, made to a land line, (and assuming you are clear on DNC issues) can be made using an ATDS without concern. If you are making an informational call to a land line using a prerecorded message you are also fine. However, if you are making a telemarketing call to a land line using a prerecorded message, you must have express written consent.