Summary of FCC's Do Not Call Rule

Mary Beth Guard, Executive Editor
Guru Bios

To minimize the annoyance of unwanted commercial calls, federal law gives consumers three options. They may:

1. place their number on the national do-not-call list;
   
2. make do-not-call requests of individual companies on a case-by-case basis; or
   
3. register on the national list, but provide specific companies with express permission to call them.
   

These rights, and several others, emanate from a collection of federal statutes and rules. The Federal Trade Commission (FTC) has rules on the subject, but because the FTC does not have jurisdiction over banks, credit unions, savings banks and insurance companies, the Federal Communications Commission (FCC) utilized the broad authority given to it by Congress over telemarketers to adopt its own rules on the subject that are binding on those entities.

How do these requirements impact your institution?

The rule of the Federal Communications Commission relating to Restrictions on Telemarketing and Telephone Solicitation contains a laundry list of prohibited actions and restrictions. We have omitted the ones here that relate to the use of an automatic telephone dialing system or an artificial or prerecorded voice. If you're using either one, go read the rule, as it has additional provisions that will impact you. The focus here is on ordinary phone calls, not made by automated means and not using a nonhuman, or prerecorded voice. Note that the rules are also different if the entity is something other than a financial institution (because the entity may be covered under the FTC rules, rather than the FCC rules) or is a tax-exempt nonprofit organization. This article deals only with The Do-Not-Call (DNC) related duties which arise from telemarketing and telephone solicitation by a bank, credit union, or savings association.

When You Do and Don't Need to Use the National DNC Database

• True telemarketers (and not those entities who restrict their calls to fall within an exception known as the established business relationship exception or the personal relationship exception, or who make calls only at the direct invitation of, or with permission of the recipient) must obtain and use the national Do Not Call database. [Entities who restrict their calls to consumers to the established exceptions are not required to access and use the national list, but may still have other duties. Information about the exceptions appears below.]
  
  
• True telemarketers (those that go beyond the exceptions) must use the national DNC list to determine which numbers are on it because they are prohibited from contacting consumers who register their telephone numbers on the national do-not-call list. [Are you a telemarketer?]
  
  
• There's a safe harbor for telemarketers that have made a good faith effort to comply with the national DNC rules and a telemarketer will not be liable for violations that result from an error if the telemarketer has made a good faith effort to provide consumers with an opportunity to exercise their do-not-call rights. To fall within the safe harbor, the telemarketer must demonstrate that, as part of its routine business practice:
  1. It has established and implemented written procedures to comply with the do-not-call rules;
  2. It has trained its personnel, and any entity assisting in its compliance, in the procedures established pursuant to the DNC rules;
  3. it has maintained and recorded a list of telephone numbers the seller may not contact;
  4. it uses a process to prevent telemarketing to any telephone number of any list established pursuant to the DNC rules employing a version of the DNC registry obtained from the administrator of the registry within a timeframe specified by rule (originally no more than 3 months prior to the date a call is made, but as of 1/1/05, the search is required to be made at least once every 31 days); and
  5. any subsequent call otherwise violating the DNC rules is the result of error.

  
  

• Calls that do not fall within the definition of "telephone solicitation" as defined in section 227(a)(3) of the Act are not precluded by the national do-not-call list, but that doesn't help financial institutions, because those exceptions only include surveys, market research, political or religious speech calls.
  
  Exceptions to the Use of the National List
  
• The DNC rules do not prohibit calls to businesses and persons with whom the marketer has a "personal relationship." That term refers to an individual personally known to the telemarketer making the call and would include family members, friends and acquaintances. The test is whether a reasonable consumer would expect calls from such a person because they have a close, or, at least, firsthand relationship. Since those types of calls are not prohibited, those calls do not trigger the need to access and use the national DNC database.
  
  
• There is also an exception to the prohibition against calling an individual on the national DNC registry that allows calls to consumers with whom you have an established business relationship (EBR), but the period for which you can deem an established business relationship to exist is limited in duration to eighteen months from the date of the last payment or transaction with the company and/or three months from any inquiry or application. And, regardless of whether there is such a relationship, if the consumer asks to be placed on your internal, company-specific DNC list, you then lose the right to call the consumer, regardless of whether the consumer continues to do business with you. In other words, a DNC request trumps an established business relationship and prohibits marketing calls, even if the individual continues to have a established business relationship with you. The EBR would extend to affiliates, but only if the consumer would reasonably expect them to be included given the nature and type of goods or services offered and the identity of the affiliate. Again, what this means is that if you stay within this exception (and the other exceptions we note), you are not required to purchase the national DNC database and you don't have to scrub your call lists against it.
  
  
• In applying the EBR exception, the test for whether there's been an inquiry (and thus there could be an established business relationship even where a purchase or transaction hasn't been completed) is that an inquiry has been made of a nature to create an expectation on the part of the consumer that a particular company will call them. So, if a consumer merely called to inquire about business hours or location, that wouldn't do the trick, but asking about a company's products or services, or submitting an application, would.
  
  
• The EBR exemption does not allow a company to make calls based upon referrals from existing customers and clients. You can't daisy chain your way into a longer list of acceptable call targets.
  
  
• Contacts to consumers from whom you have "prior express permission" are also permitted, even if the consumer is registered on the national DNC list. Unfortunately, the express permission must be evidenced by a signed, written agreement between the consumer and you which states that the consumer agrees to be contacted by you, and the phone number agreed upon for the contact to the consumer should be listed. The "express permission" vanishes if and when the consumer asks to be placed on your internal DNC list.
  
  You're not off the hook entirely
  
• If your bank ever makes telemarketing calls to consumers, but doesn't make them outside the exceptions (EBR, personal relationship, express permission, etc.), you don't have to purchase and use the national DNC database, BUT you do have other obligations you can't escape. Specifically, you must institute procedures for maintaining a list of persons who request not to receive telemarketing calls made by your institution or on its behalf. The procedures are required to meet four minimum standards relating to having a policy, training your staff, making note of do-not-call requests, and identifying yourself during calls. The specifics are outlined in the rules as follows:
  1. Written policy. Persons or entities making calls for telemarketing purposes must have a written policy, available upon demand, for maintaining a do-not-call list.
  2. Training of personnel engaged in telemarketing. Personnel engaged in any aspect of telemarketing must be informed and trained in the existence and use of the do-not-call list.
  3. Recording, disclosure of do-not-call requests. If a person or entity making a call for telemarketing purposes (or on whose behalf such a call is made) receives a request from a residential telephone subscriber not to receive calls from that person or entity, the person or entity must record the request and place the subscriber's name, if provided, and telephone number on the do-not-call list at the time the request is made. Persons or entities making calls for telemarketing purposes (or on whose behalf such calls are made) must honor a residential subscriber's do-not-call request within a reasonable time from the date such request is made. This period may not exceed thirty days from the date of such request. If such requests are recorded or maintained by a party other than the person or entity on whose behalf the telemarketing call is made, the person or entity on whose behalf the telemarketing call is made will be liable for any failures to honor the do-not-call request. A person or entity making a call for telemarketing purposes must obtain a consumer's prior express permission to share or forward the consumer's request not to be called to a party other than the person or entity on whose behalf a telemarketing call is made or an affiliated entity.
  4. Identification of sellers and telemarketers. A person or entity making a call for telemarketing purposes must provide the called party with the name of the individual caller, the name of the person or entity on whose behalf the call is being made, and a telephone number or address at which the person or entity may be contacted. The telephone number provided may not be a 900 number or any other number for which charges exceed local or long distance transmission charges.

  
  

• Unless the consumer makes a specific request to the contrary, the consumer's request to be placed on an internal DNC list will apply only to the particular business entity making the call (or the entity on whose behalf the call is made) and will not apply to affiliated entities unless the consumer reasonably would expect them to be included given the identification of the caller and the product being advertised.
  
  Internal DNC Lists
  
• Consumers have the right to choose to prohibit telephone solicitations from only certain marketers, if they choose to do so. This gives consumers the right to be placed on a company's internal DNC list -- and it creates a concomitant obligation for companies to establish such a list.
  
  
• Telemarketers are required to honor a company-specific do-not-call request within a reasonable time of such request. Some commenters to the original proposed rule advocated a period of up to 90 days to process requests. FCC didn't buy that, not surprisingly, and noted that with the process being largely automated, requests can often be honored "within a few days or weeks." FCC says "we conclude that a reasonable time to honor such requests must not exceed thirty days from the date such a request is made." However, they go on to note that telemarketers with the capability to honor such company-specific do-not-call requests in less than thirty days must do so.
  
  
• Your Do-Not-Call policy must be made available upon demand to anyone who requests it.
  
  
• It is not necessary for you to have a toll-free number or a Web site that allows consumers to register company-specific do-not-call requests or verify that such a request was made.
  
  
• The FCC, in its prefatory comments to the final rule, specifically stated: "We also decline to require telemarketers to provide a means of confirmation so that consumers may verify their requests have been processed at a later date. Telemarketers should, however, confirm that any such request will be recorded at the time the request is made by the consumer."
  
  
• The record retention period for retaining consumer do-not-call requests on company-specific DNC lists is five years.
  
  Debt Collection Calls
  
• Don't worry! The act of "terminating" an established business relationship doesn't affect a creditor's ability to make debt collection calls because those types of calls are not telephone solicitations and don't include unsolicited advertisements.
  
  Faxes
  
• Even an established business relationship does not provide the necessary permission to deliver unsolicited fax advertisements. To be able to send an unsolicited fax advertisement, you must obtain prior express written invitation to do so, with the recipient's signature, indicating the recipient's clear consent to received faxed ads from you at a particular fax number indicated in the permission. If you do receive permission to send a fax, the faxed message needs to reflect the date and time it is sent, an identification of the business, entity or individual sending the fax, and the telephone number of either the sending machine or of the sender.
  
  Time, Place, and Manner Restrictions
  
• Even permissible calls have restrictions on time of day. They can't be made before 8 a.m. or after 9 p.m. local time at the called party's location.
  
  
• Calls to wireless numbers with wardialers (automated dialing devices), or via automated means or prerecorded messages are forbidden, but the FCC declined to prohibit all live telephone solicitations to wireless numbers, other than through the means described earlier in this sentence. Wireless telephone numbers can be included in the national DNC registry, plus a wireless subscriber can make company-specific DNC requests.
  
  
• Telemarketers are prohibited from blocking the transmission of caller ID information.
  
  Who's Not Covered
  
• Since the FCC rules prohibitions against various telemarketing and telephone solicitation practices are geared toward "residential telephone subscribers" and that term is defined as l) an individual 2) who has contracted with a common carrier to provide telephone exchange service at a personal residence, the name of the act is the "Telephone Consumer Protection Act of 1991" (emphasis ours) and the FCC regulations speaks throughout about consumers, it is our view that calls to businesses and/or to business telephone and fax numbers would not be affected by the law or rule.
  
  What About Lawsuits?
  
• 47 USC 227 (the Telephone Consumer Protection Act) provides a private right of action. It allows a person, if otherwise permitted by the laws or rules of a court of a state, to bring an action in state (as opposed to federal) court for violation of the DNC regulations or statute. The action can seek:
  • recovery for actual monetary damages or $500 in damages for each violation -- whichever is greater; or
  • injunctive relief; or
  • both

  
  In addition, there's a separate provision for private right of action (same section, subparagraph 5) for a person who has received more than one call within any 12-month period by or on behalf of the same entity in violation of the regulations.