FTC Delays End-Date of Temporary "Safe Harbor" for Prerecorded Telemarketing
Move May Signify Little, But May Be Ray of Hope for Marketers
Posted by Ronald London
The Federal Trade Commission issued a pre-holiday announcement that it would extend its forbearance from enforcing provisions of its Telemarketing Sales Rule (“TSR”) that strictly regulate use of automated prerecorded messages to market goods and services to solicit charitable donations. As reported by the recent posting here, the FTC proposed in October to modify the TSR to make clearer that even prerecorded messages permitted under Federal Communications Commission rules that parallel the TSR, are prohibited by the FTC unless the caller has obtained the express agreement, in writing, of the call recipient for placement of the prerecorded call. This represented a 180-degree shift by the FTC, which previously had proposed to reconcile its rule with the FCC’s under a multi-part “safe harbor” that would have allowed prerecorded sales and solicitations.
At the time the FTC adopted the TSR, and later in proposing to reconcile the TSR to the more permissive FCC rules, it indicated that it would forbear from enforcing its stricter rule pending resolution of the rulemaking in which the reconciliation was proposed (provided, post-proposal, that callers adhered to the proposed safe harbor pending adoption). In October of this year, however, citing significant public opposition to the proposed reconciliation, it decided not to adopt the proposed safe-harbor provision. Instead, it proposed a TSR clarification that would require prior written consent to all telemarketing calls (including those soliciting donations) falling within the FTC’s jurisdiction and thus under the TSR. When it announced this reversal in its thinking, the FTC stated that its forbearance that had theretofore been in effect unofficially since Fall 2003, and officially since mid-November 2004, would come to an end as of January 2, 2007, and the TSR thereafter would require prior express consent to prerecorded message calls.
Last week the FTC announced, and this week published in the Federal Register, a notice that rather than ending in 2006, its forbearance from enforcing the stricter interpretation of the TSR would extend until it resolved the rulemaking by formally adopting the more restrictive clarification. The notice granted petitions seeking to preserve the status quo and extend the forbearance. They claimed that businesses reliant upon such calls had not had sufficient time during the holiday season to obtain the proposed prior written consents and, with respect to some small business that use prerecorded messages, a change would interfere with recorded messages sent under contracts with HMOs and other health care providers pursuant to Department of Health and Human Services regulations implementing the Health Insurance Portability and Accountability Act of 1996 (which calls the FTC deemed to be telemarketing covered by the TSR because they induce the purchase of medical goods or services).
Given the FTC’s reversal on whether to reconcile its rules with the FCC’s and the short fuse it initially placed on ending the forbearance, the extension of the existing non-enforcement may signify nothing more than sensitivity to the health-care-related concerns raised by the parties that sought the extension, and possibly even that the FTC expects to finalize the new rule clarification relatively soon after the first of the year (which would make extending the forbearance of little practical consequence). Alternatively, however, given that nearly two years passed between the original safe-harbor proposal and the more recent reversal, the extended forbearance period could be quite lengthy, and if so the extension might indicate the FTC is less dead set on not reconciling its rules with the FCC’s as the reversal and proposed clarification would suggest. The FTC has only recent received comments weighing in on the impact of the reversal in course, and until the final TSR changes are adopted and codified, there is always the possibility that they may be tweaked, or even revised in a significant way.
