Today's Trends in Credit Regulation

FCC & FTC Take Aggressive Stance Against Robocalls
By Peter L. Cockrell

Both the Federal Trade Commission and the Federal Communications Commission have jurisdiction to regulate telemarketing, and the past several years have seen the two agencies take an increasingly aggressive stance against “telemarketing robocalls.” Complicating compliance with their regulations, the agencies treat the term “robocall” differently. The FTC uses the term “robocalls” to refer to prerecorded message telemarketing, regardless of whether an automatic dialer is used. The FCC has a more tangled approach: sales calls made to cell phones using a prerecorded message, an autodialer, or both are all regulated as “robocalls.” However, for sales calls to residential lines, the FCC follows the FTC approach and only treats sales calls made using a prerecorded message as “robocalls”, regardless of whether an autodialer is used.

Back in 2008, the FTC announced an amendment to its Telemarketing Sales Rule aimed at outlawing most commercial robocalls, unless the caller obtains written permission from the consumer he is calling. The FTC has been busy since then, bringing enforcement actions against dozens of companies and individuals. As a part of its current Robocall Action Plan, which includes a summit in Washington, DC this fall, the FTC will continue to aggressively enforce its rules as well as pursue technological solutions to better detect, trace, and stop illegal calls.

Not to be outdone, earlier this year the FCC announced new telemarketing standards which harmonize its rules with the TSR and add other new rules as well. The Do-Not-Call Implementation Act requires that the two agencies improve consistency in their regulations and generally coordinate enforcement of their telemarketing laws. The new FCC standards only apply to sales calls and not collection calls, servicing calls, or other non-sales contacts. As under the TSR, the FCC now requires callers to have a consumer’s “prior express written consent” to call a consumer’s cell phone or residential line and deliver a prerecorded sales message. Having an established business relationship is no longer sufficient to permit commercial robocalls—prior written consent is the new standard, although the two agencies still maintain different disclosure requirements for the written consent.

Even if the caller has prior written consent, under the new FCC standards (as under existing FTC standards) any prerecorded sales message still must provide a do-not-call/opt-out mechanism incorporated into the message. The new FCC standards are also more restrictive than prior standards onprerecorded sales messages based on an established business relationship. The FCC now treats as “abandoned” such prerecorded sales calls even if they connect to the consumer within two seconds of the consumer’s completed greeting.

The FCC’s new standards also have provisions that differ from the TSR and that are in fact stricter. When using an autodialer but not sending a prerecorded message, callers will be required to have a called consumer’s “prior express written consent” to place a sales call to the consumer’s cell phone. Prior to this rule change, a creditor could take advantage of a lesser consent standard that a caller has valid consent as long as a consumer volunteers his cell phone number to the creditor. Also, when a caller places a sales call that is deemed “abandoned,” the caller must deliver a short recorded message which identifies the caller within two seconds and which also includes the do-not-call/opt-out mechanism required for all prerecorded sales messages.

Under the TSR, the identifying message is required, but the do-not-call mechanism is not.

Thankfully, the days are long gone when family dinner was habitually interrupted by a solicitor. However, the rules regulating the use of autodialers and prerecorded messages, and the continuing aggressive enforcement posture of the FTC and FCC, put parties that would not generally be considered “telemarketers” at risk of running afoul of the regulations. Even one mistake can be very costly: civil penalties for an illegal call can be as high as $16,000. Compounding the pain, the FCC provides a frequently-used private right of action which permits $500 in statutory damages per negligent violation and $1,500 per willful or knowing violation. Facing these risks, companies utilizing autodialers and prerecorded messages would be wise to ensure that their current policies comply with FTC and FCC regulations.

Peter Cockrell is an associate in the Hanover, MD office of Hudson Cook, LLP. Peter can be reached at 410-865-5418 or by email at

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