By Lesley Fair

Under assault by an invasion of robots, Americans unite to restore peace at home.

It sounds like the plot of a 1950s sci fi movie, but it’s really the story of the Federal Trade Commission’s new rule outlawing “robocalls.”  The Rule bans prerecorded marketing calls to consumers unless the telemarketer has their written permission.  Messages that are purely informational – for example, a call to tell them their flight has been canceled or a reminder that an appliance they ordered will be delivered at a certain time – are not affected by the Rule.

As this latest addition to the Telemarketing Sales Rule goes into effect, it’s a good time for marketers to take a refresher course on its key components.  Part 310.3 of the Rule lists practices prohibited as deceptive and offers guidance on how to comply.   When making sales through outbound telemarketing – or when “upselling” during calls initiated by consumers – telemarketers must promptly disclose the identity of the seller, the nature of what’s for sale, and that the purpose of the call is to sell goods or services. Sellers and telemarketers must disclose additional facts before a consumer is asked for payment. The Rule lists categories of material information you must provide:

1. Cost and Quantity.   Before customers pay, you must clearly and conspicuously explain exactly what it is they’re buying and the total cost.
2. Material Restrictions, Limitations, or Conditions.  If the offer comes with strings attached, you must clearly and conspicuously disclose material restrictions, limitations, or conditions – defined as information a consumer needs to make an informed decision about whether to buy something.  Using a vacation certificate as an illustration, an example of material information would include that the certificate can’t be used during the summer or requires reservations a year in advance.
3. Refund Polices.  If you have an “all sales are final” policy, you must let consumers know that before they buy.  If your pitch mentions refunds, cancellation, or exchanges, you must clearly and conspicuously disclose the terms and conditions.
4. Prize Promotions.  If you offer a prize promotion or make any claim that someone has won or may win something, you must disclose certain facts to consumers, including their odds of winning.  If the odds can’t be calculated because they depend on how many people enter, you must explain that to consumers, along with other factors used to calculate the odds.   In addition, you must tell them that no purchase is necessary to participate and that buying something won’t increase their chances of winning.  If they don’t want to buy anything but still want to enter, the Rule says you must give instructions on how to participate.  Are there any material costs or conditions to receive or redeem a prize?  They must be disclosed, too.  For example, if the prize is a “vacation,” but winners must pay for their own hotel, you have to make that clear to consumers.
5. Negative Options.  If the offer includes a negative option, tell customers about all material terms and conditions, including that their account will be charged unless they take affirmative steps, what they have to do avoid charges, and the date when charges will be submitted for payment.  It’s not sufficient just to say that customers will have to call a toll-free number to cancel.  You must give them the number they’ll have to call.

For more, read Complying with the Telemarketing Sale Rule, available at business.ftc.gov.

Lesley Fair is an attorney with the FTC’s Bureau of Consumer Protection.