Looking to cold call prospects in the United States? Then, it's crucial to familiarize yourself with the Telephone Consumer Protection Act (TCPA) and Telemarketing Sales Rule (TSR).
These regulations set the boundaries for telemarketing activities within which you can engage with prospects. Not complying with these regulations strictly can damage your reputation, and even land you in hefty fines.
To help you navigate this maze effectively, we'll break down everything you need to know about TSR and TCPA compliance in cold calling, ensuring you're equipped with all the info you need to make those calls confidently and compliantly.
DISCLAIMER: This article only intends to educate the readers using information available in the public domain about TCPA and TSR. We urge you not to construe any details provided here as legal advice. For specific legal guidance on matters about TCPA and TSR, please consult your attorney.
What Is TCPA?
The Telephone Consumer Protection Act (TCPA) of 1991 was introduced to regulate unsolicited telemarketing calls. Enforced by the Federal Communications Commission (FCC), the TCPA lays the ground rules for telemarketing practices, including the use of automated dialing systems, prerecorded voice messages, text messages, and fax machines.
What Is TSR?
The Telemarketing Sales Rule (TSR) was established by the Federal Trade Commission (FTC) in the United States to protect consumers from sneaky and unfair telemarketing practices. It was enacted in 1955 and has been amended several times since to adapt to the evolving marketing landscape. The rule applies to all cold calls made to US citizens, regardless of where the call originates from.
The TSR prohibits telemarketing activities like excessive cold calling, misrepresentations, or calling a consumer without their consent. Additionally, it has also set up a National Do Not Call (DNC) Registry and mandated organizations to maintain an entity-specific DNC list to allow US consumers to opt out of receiving telemarketing calls by adding their phone numbers to the list. Violating the TSR can lead to serious fines and penalties.
What Are the TCPA Laws for Cold Calling?
The TCPA has laid down several key regulations that cold callers must abide by when contacting prospects in the US. These include:
- National Database: The law mandates creating a single national database with phone numbers of citizens who do not wish to receive telemarketing calls. Cold callers can purchase this database to avoid contacting individuals on the list.
- Prior Express Consent: It is mandatory for cold callers to obtain prior express consent from individuals for making automated voice calls or using pre-recorded messages.
- Established Business Relationship: When selling a product, cold callers can only call prospects that have an established business relationship with them.
- Calling Hours: Under the TCPA, you can call prospects only between 8 a.m. and 9 p.m. in their residence time zone.
- Caller Identification: The caller must provide their name, the name of their company, and a phone number or address where they can be contacted.
- Automatic Telephone Dialing System (ATDS): TCPA prohibits the use of any automatic telephone dialing system (ATDS) or an artificial or prerecorded voice to any telephone number for which the called party is charged for the call.
- Opt-out Mechanism: All telemarketing prerecorded messages must include automated interactive voice or key-press operated opt-out mechanism.
What Are the TSR Laws for Cold Calling?
Just like the TCPA, the TSR also requires cold callers to disclose the caller identification at the beginning of the call and abide by the calling hours. However, it also covers other aspects, such as:
- Do Not Call (DNC): TSR prohibits cold callers from calling prospects whose numbers are listed on the National DNC Registry or the entity-specific DNC list.
- Disclosing Key Information: Right at the beginning of the call, cold callers must disclose that it is a sales call in a clear and conspicuous manner along with the nature of the goods or services being offered.
- Material Restrictions, Limitations, or Conditions: Cold callers must also disclose all information that prospects need to make an informed purchasing decision, including the product's restrictions, limitations, or conditions.
- Misrepresentation: The TSR prohibits cold callers from making false or misleading statements to make a sale.
- Payment Restrictions: The rule also imposes restrictions on the types of payments that you can request from customers, especially those involving high fraud risk, such as wire transfers.
- Verify Consumer Authorization: The caller must obtain express verifiable authorization from consumers for payment methods other than credit or debit cards.
- Express Informed Consent: The rule mandates obtaining express informed consent from consumers for all transactions where pre-acquired account information is not used.
Differences Between TCPA and TSR
What Happens if You Don't Comply With TCPA and TSR?
Non-compliance with the TCPA and TSR can lead to significant legal and financial consequences. Here's what could happen:
TCPA
- Monetary Penalties: For each violation of the TCPA, companies can face hefty fines ranging from $500 to $10,000. In some cases, this amount can even go up to $1 million.
- Class Action Lawsuit: TCPA violations often lead to class action lawsuits, where the total damages can run in millions or even billions of dollars.
TSR
- Civil Penalties: Companies violating the TSR can face civil penalties of up to $51,744 for each violation.
- Prohibitions: Besides the penalty, violators can also be prohibited from certain nationwide conduct and may have to compensate consumers who were harmed by their actions.
TCPA and TSR Violation: Case in Point
The case of Dish Network Corp is a stark example of the severe consequences of violating the TCPA and TSR. The satellite television provider was found liable for making millions of telemarketing calls to numbers listed on the National DNC Registry to sell and promote satellite TV and programming services.
As a result, Dish Network Corp reached a settlement to pay $126 million in civil penalties for violating the TSR. It further had to pay a combined $84 million to four states for violating the TCPA, bringing the total settlement amount to a whopping $210 million.
What Are the Exemptions for TCPA and TSR?
The TCPA and TSR have certain exceptions where the rules don't apply. These exceptions are aimed at finding a balance between protecting consumers from unwanted calls and allowing businesses to make necessary telemarketing calls. Understanding these exemptions will help you make cold calls effectively without violating the rules.
Exemptions Under TCPA:
- Established Business Relationship: Calling a consumer with whom you already have an existing business relationship is exempt.
- Non-commercial Calls: Calls made to wireless numbers that are not made for marketing purposes, like package deliveries, financial debt collection, and calls by non-profit organizations, are exempt from TCPA laws.
- Calls with Prior Express Consent: If a consumer has given their explicit consent to be contacted, calls made to them are exempt. However, their consent must be obtained per TCPA guidelines.
- Emergency Calls: Calls made for emergency purposes are exempt from TCPA restrictions. For example, calls made regarding health and safety risks.
- HIPAA-related information: Calling someone's residence to share HIPAA-related information or on behalf of a tax-exempt non-profit organization is exempt from TCPA.
Exemptions Under TSR:
- Business-to-business (B2B) Calls: Most phone calls between a telemarketer and a business are exempt from the TSR. But, B2B calls to induce the retail sale of nondurable office supplies (like office stationery), and calls to business lines that solicit individual employees to buy products or services for their own use, must comply with the TSR.
- Established Business Relationship Exemption: Sellers can make cold calls to prospects with whom they have an established business relationship, provided the prospect has not requested to be on their Do Not Call list.
- Written Permission to Call Exemption: Cold callers are exempt from TSR rules if the prospect has given their written consent to receive calls by or on behalf of the seller, even if their number is listed on the National DNC Registry.
- Healthcare Message Exemption: Certain healthcare calls are exempt from TSR under HIPAA. These include calls about health products or services, treatment of the individual, and care coordination or case management.
- Charitable Fundraising Messages Exemption: Telefunders (telemarketers who solicit charitable contributions) may place calls delivering prerecorded messages to prior donors and members of a charity on behalf of which the calls are placed, even if the charity does not have the call recipients’ express written agreement to receive such calls. But, they still must comply with the other requirements of the prohibition, including the automated interactive opt-out requirements.
Best Practices to Ensure Compliance With TCPA and TSR
The U.S. Securities and Exchange Commission (SEC) has laid down certain cold calling rules for cold callers to prevent them from using high pressure tactics or being dishonest to make a sale. These include:
1. Don't Call Outside the Time Frame
Both TCPA and TSR allow cold callers to call prospects between 8 a.m. and 9 p.m. local time. Adhering to this window strictly will help you reach out to your target audience without violating the law. However, this rule only applies if you don't have an established business relationship with the prospect or they've given their express written permission to be called at other times.
2. Obtain Express Consent
Whether you're making a sales call or using a pre-recorded message, obtaining express consent from the prospect can shield you against potential complaints and legal challenges. According to TCPR guidelines, you must obtain prior express written consent from consumers before making calls with an auto-dialer or using a pre-recorded/artificial voice.
TSR, on the other hand, requires cold callers to obtain express informed consent for every telemarketing transaction. You can simply check the National DNC Registry to see if a prospect has consented to receive cold calls.
3. Take the DNC Seriously
We mean it. Treat the DNC registry as a holy grail to stay compliant with TCPA and TSR. It contains the phone numbers of consumers who have indicated their desire not to receive telemarketing calls. Barring a few exceptions, the SEC requires all cold callers to check the National DNC Registry every 31 days to avoid calling numbers listed on it.
Reaching out to customers registered on the DNC list will invite significant legal penalties and fines under both the TCPA and TSR guidelines. Plus, it can lead to consumer complaints and negative publicity, tarnishing your brand's image. So, make sure to regularly verify your calling lists against the DNC registry to avoid these consequences.
4. Stay away From Boiler Room Tactics
Boiler room schemes are tactics designed to tick as many customers into a scam as possible. They often use high-pressure tactics like persistent or unwelcome calls, misleading information, or pushing a sale without the customer's interest. Using these techniques can land you in serious trouble under TCPA and TSR regulations.
Both TCPA and TSR are designed to protect consumers from such invasive and unsolicited telemarketing practices. The TSR prohibits cold callers from using threats, intimidation, and profane or obscene language to pressure a consumer. So, stay away from such tactics to avoid violating the law.
5. Honor Opt-Out Requests
If a prospect wishes not to receive further calls from you, respect their request and act on it promptly. This is not only professional but will also keep you off the hooks of TCPA and TSR watchdogs.
You can easily do this by providing an easy opt-out option during the call. When using automated or pre-recorded messages, provide a key press-activated opt-out mechanism for the prospect to make a do-not-call request within 2 minutes of providing your identification information. Once the prospect requests to opt out, update your calling list immediately to ensure they are not contacted again.
To Wrap Up…
When it comes to cold calling prospects in the US, it's important to carefully navigate your way through TCPA and TSR regulations. While it may seem like a daunting task, familiarizing yourself with these regulations and following the best practices can help you reach out to interested prospects while staying compliant with the laws.
Remember, the key is to maintain transparency, respect consumer rights, and regularly verify your calling list against the DNC registry.
