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FTC Limits Pre-recorded calls

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From the Wall Street Journal

FTC Limits Prerecorded Calls


August 20, 2008; Page D3

Responding to a wave of consumer complaints, the U.S. Federal Trade Commission said it will bar telemarketers from making prerecorded sales calls unless a consumer explicitly agrees to receive such calls.

The FTC also will require all recorded sales calls to provide an opt-out feature to allow consumers to place themselves on the caller's do-not-call list immediately.

The FTC policy "is going to protect consumers from the annoyance and invasion of prerecorded sales messages that seem to be increasing every day," said Susan Grant, director of consumer protection for the Consumer Federation of America.

The commission's rules won't affect automated informational calls, such as recorded calls that alert consumers to flight cancellations or doctor's appointments.

The FTC rejected arguments of industry advocates who wanted permission to make recorded telemarketing calls to consumers with whom the seller had an established business relationship.

"The prerecorded message was an inexpensive way to reach customers and now you'll have to use operators to reach those customers," said Jerry Cerasale, senior vice president for government affairs with the Direct Marketing Association.

The restrictions, Mr. Cerasale said, will increase administrative costs for telemarketers. Some, he said, will have to implement technologies that allow consumers to opt out of the calls with a punch of the keypad or through voice-activated commands.

The FTC's action finalizes telemarketing rules it proposed in 2006 after receiving more than 13,000 comments from consumers who objected to telemarketers' requests for more leeway to make recorded sales calls. "The entire record...is clear that an overwhelming number of consumers hate prerecorded calls," the commission said in a report.

Beginning on Sept. 1, 2009, telemarketers can make recorded calls only to consumers who agree in writing to receive them.

The commission exempted charitable fund-raising calls from that requirement, but charities will have to give consumers the option to opt-out of future calls.

The FTC's telemarketing rules are stronger than similar rules enforced by the Federal Communications Commission, which allows companies to make prerecorded calls if they have a business relationship with the consumer.

Banks, telephone companies and insurance companies are among those that aren't subject to the FTC's jurisdiction, said attorney Charles Kennedy of Morrison & Foerster. However, he said, the FTC still could go after those industries' telemarketing practices if they work with outside telemarketing companies.

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