A Brief Overview of the Federal Telemarketing Sales Rule

What sets a good telemarketer apart from the rest? While a telemarketing company’s recipe for success is often debated, many would agree that honesty, integrity, and ethical practices are key ingredients. That’s where the federal Telemarketing Sales Rule (TSR) comes in. The law imposes a set of rules and regulations on telemarketing companies nationwide, benefiting honest telemarketers and consumers alike.

The TSR outlines specific types of information that telemarketers must disclose, and prevents them from making misrepresentations. It also limits the times when telemarketers can call consumers, prevents them from calling consumers who have asked not to be called again, and restricts payment on the sale of certain goods and services. Other key provisions include the obligation to transmit Caller ID information, as well as the requirement to keep certain business records for two years.

For example, the following disclosures are mandated by the TSR, among many others:

  • The total cost to purchase the offered goods or services.
  • Any restrictions, limitations, or conditions involved in the purchase.
  • Specific refund, exchange, or cancellation policies.
  • In the case of prize promotions: the odds of winning the prize or the factors used in calculating the odds, the nature or value of the prize, and others.
  • A telemarketer’s affiliation with a government entity.
  • Clear authorization of the customer’s payment or charitable contribution.

While the TSR encompasses a wide range of concerns, some types of businesses and individuals are exempt from its rules. Entities like banks and federal credit unions, common carriers like airlines, and non-profit organizations are not covered.

Given all of its strict guidelines, it may be difficult to see the TSR as a benefit to telemarketing companies. It certainly offers several benefits to consumers, including protections for their privacy and recourse against deceitful telemarketers. It also provides the FTC and state law enforcement attorneys with the means to fight against telemarketing fraud. How does the TSR help telemarketing companies? It gives consumers a way to tell fraudulent telemarketers apart from the many legitimate ones.

Though compliance with the TSR does benefit telemarketers, it’s important to understand what can happen when a telemarketing company violates the rules. For one, companies can be fined up to $40,000 in civil penalties for each violation. Offenders can also face nationwide injunctions (Court Orders) that restrict their ability to carry out certain actions. If any consumers were negatively impacted by their actions, offending companies may also be required to pay redress.

There’s a lot to keep in mind about telemarketing compliance, and it can be difficult to know if certain rules apply to your company. Sometimes unusual or extraordinary circumstances call for a professional opinion. Cove Law can provide you with the effective legal advice you need to make smart decisions for your company. Call to take advantage of our in-depth knowledge of the telemarketing industry.

Share this on...Share on FacebookTweet about this on TwitterShare on LinkedInShare on Google+Email this to someone

Written by Andrew Cove

Cove Law has significant experience defending federal investigations and formal actions by the Federal Trade Commission, the Consumer Finance Protection Board and the U.S. Department of Justice, as well as similar matters on the state level by the respective state Attorney General’s Offices and other local agencies.