Complying with the 

Telemarketing Sales Rule

FEDERAL TRADE COMMISSION
1

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

The Amended TSR at a Glance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

Charities and For-Profit Telemarketers Calling on Their Behalf . . . . . . . . . . . . . . . . . . . . . . . . .6

Who Must Comply with the Amended TSR? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

Exemptions to the Amended TSR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8

Some Types of Businesses and Individuals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8

Coverage of the Business of Insurance is Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

Some Types of Calls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

Exemptions Explained . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

• Unsolicited Calls from Consumers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

• Most Calls in Response to a Catalog . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

• Business-to-Business Calls, Unless They Involve the Sale of Nondurable Office 

or Cleaning Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

• Most Calls Responding to General Media Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

• Some Calls Responding to Direct Mail Advertising Are Exempt . . . . . . . . . . . . . . . . . . . . .11

Partial Exemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

Calls Relating to the Sale of 900-Number Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

Calls Relating to the Sale of Franchises or Business Opportunities . . . . . . . . . . . . . . . . . . . . . . . .13

Calls that Are Part of a Transaction Involving a Face-to-Face Sales Presentation . . . . . . . . . . . . .13

Requirements for Sellers and Telemarketers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

Sellers and Telemarketers Must Disclose Material Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

What Information Must Sellers and Telemarketers Provide to Consumers? . . . . . . . . . . . . . . . . . . . .15

Cost and Quantity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15

Material Restrictions, Limitations, or Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16

No-Refund Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16

Prize Promotions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17

Credit Card Loss Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17

Negative Option Features . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18

Prompt Disclosures in Outbound Telemarketing Calls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18

Oral Disclosures in Outbound Sales Calls and Upselling Transactions . . . . . . . . . . . . . . . . . . . . .18

Oral Disclosures in Outbound Calls to Solicit Charitable Contributions . . . . . . . . . . . . . . . . . . .20

Misrepresentations are Prohibited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21

Table of Contents
Sales Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21

Cost and Quantity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21

Material Restrictions, Limitations, or Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21

Performance, Efficacy, or Central Characteristics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21

Refund, Repurchase, or Cancellation Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

Material Aspects of Prize Promotions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

Material Aspects of Investment Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

Affiliations, Endorsements, or Sponsorship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

Credit Card Loss Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23

Negative Option Features . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23

Charitable Solicitation Calls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23

The Nature, Purpose, or Mission of Entity on Whose Behalf Solicitation is Made . . . . . . . .23

Tax Deductibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23

Purpose of a Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23

Percentage or Amount of Contribution that Goes to a Charitable Organization or Program . . .24

Material Aspects of Prize Promotions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24

Affiliations, Endorsements, or Sponsorship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24

Payment Methods Other than Debit and Credit Cards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24

Written Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26

Oral Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26

Authorization by Written Confirmation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26

Assisting and Facilitating Sellers or Telemarketers Who Violate the Rule is Prohibited . . . . .28

Credit Card Laundering is Prohibited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29

Unauthorized Billing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30

Express Informed Consent is Required in Every Telemarketing Transaction . . . . . . . . . . . . . . . . . . . .30

Obtaining Express Informed Consent in Telemarketing Transactions Involving Pre-acquired 

Account Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31

When the offer includes a free-to-pay conversion feature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31

When the offer does not include a free-to-pay conversion feature . . . . . . . . . . . . . . . . . . . . . . . .33

Protecting Consumers’ Privacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34

The Do Not Call Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34

The Entity-Specific Do Not Call Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34

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The National Do Not Call Registry Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35

How the National Do Not Call Registry Works . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36

Small, Home-Based Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41

Do Not Call Safe Harbor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42

Exemptions to the National Do Not Call Registry Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . .43

The Established Business Relationship Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43

The Written Permission to Call Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44

Other Provisions Relating to Do Not Call . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45

Selling or Using a Do Not Call List for Purposes Other than Compliance . . . . . . . . . . . . . .45

Denying or Interfering with Someone’s Do Not Call Rights . . . . . . . . . . . . . . . . . . . . . . . . .45

Calling Time Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45

Call Abandonment and Safe Harbor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45

Transmitting Caller ID Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47

Threats, Intimidation, and Profane or Obscene Language . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48

Calling Consumers Repeatedly or Continuously, with the Intent to Annoy, Abuse, or Harass . . . . . .48

Fraudulent Telemarketing Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49

Disclosing or Receiving Unencrypted Account Numbers for Consideration . . . . . . . . . . . . . . . . . . . .49

Payment Restrictions on Sales of Credit Repair Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49

Payment Restrictions on Sales of Recovery Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50

Payment Restrictions on Sales of Advance-Fee Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50

Recordkeeping Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51

Advertising and Promotional Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51

Information about Prize Recipients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51

Sales Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52

Employee Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52

Verifiable Authorizations or Records of Express Informed Consent or Agreement . . . . . . . . . . . . . . .52

Maintaining Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53

Who Must Keep Records? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53

Who Can Enforce the Rule? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54

Penalties for Violating the Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54

Additional Sources of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55

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4 Complying with the Telemarketing Sales Rule

The Federal Trade Commission (FTC) issuedthe amended Telemarketing Sales Rule (TSR)

on January 29, 2003. Like the original TSR issued

in 1995, the amended Rule gives effect to the

Telemarketing and Consumer Fraud and Abuse

Prevention Act. This legislation gives the FTC and

state attorneys general law enforcement tools to

combat telemarketing fraud, give consumers added

privacy protections and defenses against unscrupulous

telemarketers, and help consumers tell the difference

between fraudulent and legitimate telemarketing.

One significant amendment to the TSR prohibits

calling consumers who have put their phone

numbers on the National Do Not Call Registry.

Another change covers the solicitation of charitable

contributions by for-profit telemarketers.

Other key provisions:

• require disclosures of specific information

• prohibit misrepresentations

• limit when telemarketers may call consumers

• require transmission of Caller ID information

• prohibit abandoned outbound calls, subject to

a safe harbor

• prohibit unauthorized billing

• set payment restrictions for the sale of certain

goods and services

• require that specific business records be kept

for two years

The Federal Communications Commission (FCC)

enforces the Telephone Consumer Protection Act

(TCPA), which also regulates telemarketing. The

FCC recently amended its TCPA regulations, which

touch on many of the topics covered by the TSR.

For more information about the TCPA, contact the

FCC at www.fcc.gov. The TSR and the TCPA

regulations cover nearly all telemarketing with

similar rules.

Many states also have laws regulating telemarketing.

The FTC and the FCC are working with states to

harmonize Do Not Call requirements at state and

federal levels for a unified national system enabling

“one-stop” service for consumers, as well as

businesses seeking to comply with the requirements.

For information about a particular state’s laws,

contact the state attorney general’s office or another

state consumer protection agency.

If your telemarketing campaigns involve any calls

across state lines — whether you make outbound

calls or receive calls in response to advertising —

you may be subject to the TSR’s provisions. This

guide describes the types of organizations and

activities that are subject to the TSR and explains

how to comply. It is the FTC staff’s view of the

law’s requirements and is not binding on the

Commission.

If you have questions after reading this guide, contact:

Division of Marketing Practices

Bureau of Consumer Protection

Federal Trade Commission

Washington, DC 20580

(202) 326-3737

tsrquestions@ftc.gov

Introduction
5

Briefly stated, the amended TSR:

• supplements the company-specific Do Not

Call provision of the original Rule with new

provisions based on a National Do Not 

Call Registry.

• creates an “established business relationship”

exception to the National Do Not Call

provisions so that a company may call a

consumer with whom it has such a relationship,

even if the consumer’s number is on the Registry.

• allows a company to call a consumer who has

given the company express written permission

to call, even if the consumer’s number is on 

the Registry.

• prohibits denying or interfering with a

consumer’s Do Not Call request.

• prohibits misuse of Do Not Call lists.

• covers charitable solicitations placed by forprofit telefunders. The National Do Not Call

Registry provisions do not apply to for-profit

telefunders; rather, for-profit telefunders must

keep their own Do Not Call lists and honor

donors’ requests not to be called.

• requires sellers and telemarketers to obtain

express verifiable authorization when payment

is made by methods other than credit card or

debit card, and limits the use of the written

confirmation method.

• requires sellers and telemarketers offering

credit card loss protection plans to disclose

specific information.

• prohibits misrepresentations in the sale of

credit card loss protection plans.

• requires sellers and telemarketers making an

offer that involves a negative option feature to

disclose specific information.

• prohibits misrepresentations about 

negative options.

• specifies that all required disclosures be 

made truthfully.

• requires additional disclosures for prize

promotions.

• prohibits disclosing or receiving, for

consideration, unencrypted consumer account

numbers.

• requires sellers and telemarketers to get a

consumer’s express informed consent before

submitting the consumer’s billing information

for payment.

• sets out guidelines for what constitutes evidence

of express informed consent in transactions

involving “pre-acquired account information”

and “free-to-pay conversion” offers.

• requires telemarketers, for purposes of Caller

ID, to transmit the telephone number, and,

when made available by the telemarketer’s

telephone company, the telemarketer’s name.

• prohibits telemarketers from abandoning any

outbound telephone call, subject to a safe harbor.

• extends the applicability of most provisions of

the Rule to “upselling.”

• requires telemarketers and sellers to maintain

records of express informed consent and

express agreement.

• narrows certain exemptions.

• clarifies that facsimile transmissions, electronic

mail, and similar methods of delivery are direct

mail for purposes of the direct mail exemption.

The Amended TSR at a Glance

5
6 Complying with the Telemarketing Sales Rule

Charities and For-Profit Telemarketers Calling on Their Behalf

The USA PATRIOT Act, passed in 2001, brought charitable solicitations by for-profit telemarketers

within the scope of the TSR. As a result, most of the TSR’s provisions now are applicable to

“telefunders” — telemarketers who solicit charitable contributions.

Telefunders are required to:

• make certain prompt disclosures in every outbound call.

• get express verifiable authorization if accepting payment by methods other than credit or 

debit card.

• maintain records for 24 months.

• comply with the entity-specific Do Not Call requirements, but are exempt from the 

National Do Not Call Registry provision.

Telefunders are prohibited from:

• making a false or misleading statement to induce a charitable contribution.

• making any of several specific prohibited misrepresentations.

• engaging in credit card laundering.

• engaging in acts defined as abusive under the TSR, such as calling before 8 a.m. or after 9 p.m.,

disclosing or receiving consumers’ unencrypted account information, and denying or

interfering with a consumer’s right to be placed on a Do Not Call list.
7

The amended TSR regulates “telemarketing” —defined in the Rule as “a plan, program, or

campaign . . . to induce the purchase of goods or

services or a charitable contribution” involving

more than one interstate telephone call. (The FCC

regulates both intrastate and interstate calling.

More information is available from www.fcc.gov.)

With some important exceptions, any businesses or

individuals that take part in “telemarketing” must

comply with the Rule. This is true whether, as

“telemarketers,” they initiate or receive telephone

calls to or from consumers, or as “sellers,” they

provide, offer to provide, or arrange to provide

goods or services to consumers in exchange for

payment. It makes no difference whether a

company makes or receives calls using low-tech

equipment or the newest technology — such as

voice response units (VRUs) and other automated

systems. Similarly, it makes no difference whether

the calls are made from outside the United States;

so long as they are made to consumers in the

United States, those making the calls, unless

otherwise exempt, must comply with the TSR’s

provisions. If the calls are made to induce the

purchase of goods, services, or a charitable

contribution, the company is engaging in

“telemarketing.”

Certain sections of the Rule apply to individuals or

companies other than “sellers” or “telemarketers” if

these individuals or companies provide substantial

assistance or support to sellers or telemarketers.

The Rule also applies to individuals or companies

that provide telemarketers with unauthorized

access to the credit card system.

7

Who Must Comply with the Amended TSR?
8 Complying with the Telemarketing Sales Rule

Some types of businesses, individuals, andactivities are outside the FTC’s jurisdiction, and

therefore, not covered by the TSR. Certain calls or

callers are exempt from the Rule, too. Moreover,

some of the exemptions from the original Rule

have been narrowed in the Amended Rule. As a

result, some calls or callers may be completely

exempt or they may be partially exempt — that is,

they may have to comply with some of the Rule’s

provisions. The following sections explain the

coverage of the Rule and the exemptions. Be aware

that the FCC also regulates telemarketing practices;

its jurisdiction extends to some entities and

activities that are not subject to regulation by the

FTC. For more information about the FCC’s rules,

visit www.fcc.gov.

Some Types of Businesses and

Individuals

Some types of businesses are not covered by the

Rule even though they conduct telemarketing

campaigns that may involve some interstate

telephone calls to sell goods or services. These

three types of entities are not subject to the FTC’s

jurisdiction, and not covered by the Rule:

• banks, federal credit unions, and federal

savings and loans.

• common carriers — such as long-distance

telephone companies and airlines — when

they are engaging in common carrier activity.

• non-profit organizations — those entities that

are not organized to carry on business for

their own, or their members’, profit.

These types of entities are not covered by the Rule

because they are specifically exempt from the

FTC’s jurisdiction. Nevertheless, any other

individual or company that contracts with one of

these three types of entities to provide

telemarketing services must comply with the Rule.

Examples:

• A nonbank company that contracts with a

bank to provide telemarketing services on the

bank’s behalf is covered.

• A non-airline company that contracts with an

airline to provide telemarketing services on

behalf of the airline is covered.

• A company that is acting for profit is covered

by the Rule if it solicits charitable

contributions on behalf of a non-profit

organization.

Keep in mind that a company soliciting a

charitable contribution is not required to comply

with the Rule’s National Do Not Call Registry

provisions.

Under the provisions of the Telemarketing Act, a

number of entities and individuals associated with

them that sell investments and are subject to the

jurisdiction of the Securities and Exchange

Commission or the Commodity Futures Trading

Commission are not covered by the Rule, even if

they engage in a plan, program, or campaign to sell

through interstate telephone calls.1 These entities

and individuals are covered by the FCC’s

telemarketing rules. For more information, visit

www.fcc.gov.

Exemptions to the Amended TSR
Coverage of the Business of

Insurance Is Limited

The McCarran-Ferguson Act provides that the FTC

Act, and by extension, the TSR, are applicable to

the business of insurance to the extent that such

business is not regulated by state law. Whether the

McCarran-Ferguson exemption removes

insurance-related telemarketing from coverage of

the TSR depends on the extent to which state law

regulates the telemarketing at issue and whether

enforcement of the TSR would conflict with, and

effectively supersede, those state regulations.

Unlike the jurisdictional exemptions for banks and

non-profit organizations, which do not extend to

third-party telemarketers making calls on their

behalf, in the case of the telemarketing of

insurance products and services, the TSR does not

necessarily apply simply because the campaign is

conducted by a third-party telemarketer.

Some Types of Calls

Some types of calls also are not covered by the

Rule, regardless of whether the entity making or

receiving the call is covered. These include:

• unsolicited calls from consumers.

• calls placed by consumers in response to a

catalog.

• business-to-business calls that do not involve

retail sales of nondurable office or cleaning

supplies.

• calls made in response to general media

advertising (with some important exceptions).

• calls made in response to direct mail

advertising (with some important exceptions).

Exemptions Explained ____________

Unsolicited Calls from Consumers

Any call from a consumer that is not placed in

response to a solicitation by the seller, charitable

organization, or telemarketer is exempt from

coverage. Because the consumer initiates the call

without any inducement from the seller or

telemarketer, the call is not considered part of a

telemarketing plan, program, or campaign

conducted to sell goods or services or to induce

a charitable contribution. Some examples

include calls to:

• make hotel, airline, car rental, or similar

reservations.

• place carry-out or restaurant delivery

orders.

• contact a department store or charity

without prompting from an advertisement

or solicitation.

• obtain information or technical support.

Consumer calls in response to a recorded

message: Calls are not considered “unsolicited”

when placed by consumers in response to a

recorded message — whether left on the

consumer’s answering machine, or presented

when the consumer answers under the call

abandonment “safe harbor.”

Upsells: If a seller or telemarketer “upsells” a

consumer during an unsolicited call initiated by

the consumer, the upsell is covered by the Rule.

Most Calls Made in Response to a Catalog

Generally, the Rule does not apply to calls

placed by consumers in response to a mailed

catalog if the catalog:

• contains a written description or illustration

of the goods or services offered for sale;

• includes the business address of the seller;

9
Complying with the Telemarketing Sales Rule

• includes multiple pages of written material

or illustrations;

• has been issued at least once a year; and

• the catalog seller doesn’t solicit consumers

by telephone, but only receives calls initiated

by consumers in response to the catalog, and

during the calls, only accepts orders without

additional solicitation. The catalog seller

may provide the consumer with information

about — or attempt to sell the consumer —

other items in the same catalog that prompted

the consumer’s call or in a similar catalog.

Business-to-Business Calls, Unless They Involve

the Sale of Nondurable Office or Cleaning Supplies

Most phone calls between a telemarketer and a

business are exempt from the Rule. But

business-to-business calls to induce the retail

sale of nondurable office or cleaning supplies

are covered. Examples of nondurable office or

cleaning supplies include paper, pencils,

solvents, copying machine toner, and ink — in

short, anything that, when used, is depleted, and

must be replaced. Such goods as software,

computer disks, copiers, computers, mops, and

buckets are considered durable because they can

be used again.

Although sellers and telemarketers involved in

telemarketing sales to businesses of nondurable

office or cleaning supplies must comply with the

Rule’s requirements and prohibitions, the Rule

specifically exempts them from the

recordkeeping requirements and from the

National Do Not Call Registry provisions. These

sellers and telemarketers do not have to create

or keep any particular records, or purge

numbers on the National Do Not Call Registry

from their call lists to comply with the Rule.

Most Calls Responding to General Media

Advertising

The Rule generally does not apply to consumer

calls made in response to general media

advertising, including: television commercials;

infomercials; home shopping programs; print

advertisements in magazines, newspapers, the

Yellow Pages, or similar general directories;

radio ads; banner ads on the Internet; and other

forms of mass media advertising and

solicitation. Nevertheless, if a seller or

telemarketer “upsells” a consumer during a call

initiated by the consumer, the upsell is covered

by the Rule. In addition, the Rule does cover

calls from consumers in response to general

media advertisements relating to business

opportunities not covered by the Franchise

Rule, credit card loss protection, credit repair,

recovery services, advance-fee loans, or

investment opportunities.2

10

If a telemarketer offers goods or services

that are not in the catalog that prompted

the consumer’s call — or in a substantially

similar catalog — the sales transaction is

covered by the Rule. Regardless of the

TSR’s application to a particular sale,

catalog merchandise sales also are covered

by the FTC’s Mail or Telephone Order

Merchandise Rule (16 C.F.R. Part 435).
Some Calls Responding to Direct Mail

Advertising Are Exempt

Direct mail advertising includes, but is not

limited to, postcards, flyers, door hangers,

brochures, “certificates,” letters, email, facsimile

transmissions, or similar methods of delivery

sent to someone urging a call to a specified

telephone number regarding an offer of some

sort. For purposes of the Rule, “direct mail” is

not limited to messages sent via conventional

mail delivery or private couriers. The exemption

for calls responding to direct mail advertising

that meets the Rule’s requirements is available

both to telemarketers soliciting sales of goods or

services and to telefunders soliciting charitable

contributions.

Sales solicitations: Generally, consumer calls

in response to a direct mail solicitation that

clearly, conspicuously, and truthfully makes

the disclosures required by the Rule are

exempt from the Rule. These disclosures are:

cost and quantity; material restrictions,

limitations or conditions; any “no-refund”

policy; and, if the offer includes a prize

promotion, credit card loss protection, or a

negative option feature, the information about

any of those elements of the offer required by

the Rule. If you are a seller or telemarketer

who uses direct mail, you may use this

exemption only if your direct mail solicitation

messages make the disclosures required by

Section 310.3(a)(1) of the Rule clearly,

conspicuously, and truthfully.

Charitable solicitations: Consumer calls in

response to direct mail messages that solicit

charitable contributions benefit from the

limited direct mail exemption, provided they

contain no material misrepresentation about

the nature, purpose, or mission of the entity

on whose behalf the contribution is requested;

the tax deductibility of any contribution; the

purpose for which the contribution will be

used; the percentage or amount of the

contribution that will go to a charitable

organization or program; any material aspect

of a prize promotion; or a charitable

organization or telemarketer’s affiliations,

endorsements, or sponsorships.

The exemption is for sales calls elicited by direct

mail advertising that truthfully provides a

consumer with the specific information

required under the Rule. In the case of

charitable solicitation calls elicited by direct

mail advertising, the exemption applies to direct

mail advertising that conscientiously avoids the

prohibited misrepresentations.

There is no exemption for calls responding to

any direct mail advertising that relates to credit

card loss protection, credit repair, recovery

services, advance-fee loans, investment

opportunities, prize promotions, or business

opportunities other than those covered by the

Franchise Rule. This is regardless of whether the

advertisement makes the disclosures required by

the Rule and contains no misrepresentations.

Also, any instances of upselling following an

exempt transaction are covered by the Rule.

11
Partial Exemptions

Some calls are exempt from most provisions of the

TSR, but not all. These include:

• calls relating to the sale of 900-Number payper-call services.

• calls relating to the sale of franchises or

certain business opportunities.

• calls that are part of a transaction that

involves a face-to-face sales presentation.

Calls Relating to the Sale of 

900-Number Services ____________

The sale of 900-Number pay-per-call services,

which is subject to the FTC’s 900-Number Rule,

is exempt from most provisions of the TSR. Still,

to comply with the TSR, sellers of pay-per-call

services must not:

• call any number on the National Do Not Call

Registry or on that seller’s Do Not Call list.

• deny or interfere with a person’s right to be

placed on any Do Not Call Registry.

• call outside permissible calling hours.

• abandon calls.

• fail to transmit Caller ID information.

• threaten or intimidate a consumer or use

obscene language.

• cause any telephone to ring or engage a

person in conversation with the intent to

annoy, abuse, or harass the person called.

Partial coverage under the TSR does not 

affect the obligation of sellers and providers of

12 Complying with the Telemarketing Sales Rule

“Upselling” is not exempt. Upselling occurs when a seller or telemarketer tries to sell additional

goods or services during a single phone call, after an initial transaction.

Upsell transactions are covered by the TSR. Even if the initial transaction is exempt because it is an

unsolicited call from a consumer, a response to a general media advertisement or certain direct

mail solicitations, or an outbound non-sales call (say, a customer service call), any upsell following

the initial transaction is subject to all relevant provisions of the Rule.

Examples:

A consumer calls a department store to inquire about the price of a microwave oven. Because

the call is not the result of a solicitation by the seller, the initial inquiry is exempt from the

Rule. If the seller tries to upsell a refrigerator during the same call, the upsell transaction is

subject to the Rule.

A consumer calls in response to an infomercial advertising a home gym product for sale. If the

home gym product is the only item offered during the call, the call is exempt. But if the

telemarketer offers a free-trial offer to a cookbook series after the sales pitch for the home gym,

the cookbook offer constitutes a separate transaction and is an upsell covered by the TSR. If

both the home gym product and the cookbook series are prominently featured in the general

media advertisement, transactions involving either or both products fall within the general

media exemption. But if the cookbook is visible on the set of the infomercial, mentioned only in

passing, or mentioned as an afterthought, pitching the cookbook during the a consumer’s call

about the home gym product is considered an upsell and is not exempt from the Rule.
13

900-Number Services to comply with the 

900-Number Rule (16 C.F. R. Part 308).

Calls Relating to the Sale of Franchises 

or Business Opportunities__________

Calls relating to the sale of franchises or business

opportunities that are covered by the FTC’s

Franchise Rule (16 C.F.R. Part 436) are exempt

from most provisions of the TSR. To comply with

the TSR, sellers and telemarketers selling

franchise or business opportunities subject to the

Franchise Rule must not:

• call numbers that are on the National Do Not

Call Registry or on that seller’s Do Not Call

list.

• deny or interfere with a person’s right to be

placed on any Do Not Call Registry.

• call outside permissible calling hours.

• abandon calls.

• fail to transmit Caller ID information.

• threaten or intimidate a consumer or use

obscene language.

• cause any telephone to ring or engage a

person in conversation with the intent to

annoy, abuse, or harass the person called.

Partial coverage under the TSR does not affect

the obligation of franchisors to comply with the

Franchise Rule.

Calls that are Part of a Transaction

Involving a Face-to-Face Sales

Presentation ____________________

The TSR generally does not cover telephone

transactions where the sale of goods or services

or a charitable contribution is not completed

until after a face-to-face presentation by the seller

or charitable organization, and the consumer is

not required to pay or authorize payment until

then. This exemption is for transactions that

begin with a face-to-face sales presentation and

are completed in a telephone call, as well as those

that begin with a telephone call and are

completed in a face-to-face sales presentation.

The key to the face-to-face exemption is the

direct and personal contact between the buyer

and seller. The goal of the Rule is to protect

consumers against deceptive or abusive practices

that can arise when a consumer has no direct

contact with an invisible and anonymous seller

other than the telephone sales call. A face-to-face

meeting provides the consumer with more

information about — and direct contact with —

the seller, and helps limit potential problems the

Rule is designed to remedy.

Nevertheless, even in transactions where there is a

face-to-face meeting, telemarketers must not:

• call numbers on the National Do Not Call

Registry or on that seller’s Do Not Call list.

• deny or interfere with a person’s right to be

placed on any Do Not Call Registry.

• call outside permissible calling hours.

• abandon calls.

• fail to transmit Caller ID information.

• threaten or intimidate a consumer or use

obscene language.

• cause any telephone to ring or engage a

person in conversation with the intent to

annoy, abuse, or harass the person called.

If the transaction is completed in a face-to-face

meeting at the consumer’s home or away from

the seller’s place of business, the seller must

comply with the FTC’s Cooling Off Rule 

(16 C.F.R. Part 429).

13
14 Complying with the Telemarketing Sales Rule

Sellers and Telemarketers Must

Disclose Material Information

The Rule requires sellers and telemarketers,

whether making outbound calls to consumers or

receiving inbound calls from consumers, to provide

certain material information before the consumer

pays for the goods or services that are the subject of

the sales offer. Material information is information

that would likely affect a person’s choice of goods

or services or the person’s decision to make a

charitable contribution. More simply, it is

information a consumer needs to make an

informed decision about whether to purchase

goods or services or make a donation. Sellers and

telemarketers may provide the material information

either orally or in writing. Failure to provide any of

the required information truthfully and in a “clear

and conspicuous” manner, before the consumer

pays for the goods or services offered, is a deceptive

telemarketing act or practice that violates the Rule

and subjects a seller or telemarketer to a civil

penalty of $11,000 for each violation.

When making outbound calls, a telemarketer must

promptly disclose certain types of information to

consumers orally in the sales presentation.

Requirements for Sellers and Telemarketers

Before a Consumer Pays: Before sellers and telemarketers get a consumer’s consent to purchase — or

persuade a consumer to send full or partial payment by check, money order, wire, cash, or any other means

— they must provide the consumer with the information required by Section 310.3(a)(1) of the Rule.

Sellers and telemarketers also must provide the required information before asking for any credit card,

bank account, or other information that they will or could use to obtain payment. In addition, sellers and

telemarketers must provide the required information before requesting, arranging for, or asking a

consumer to request or arrange for a courier to pick up payment for the goods or services offered. Couriers

include Federal Express, DHL, UPS, agents of the seller or telemarketer, or any other person who will go to

a consumer’s home or other location to pick up payment for the goods or services being offered.

When sellers and telemarketers have pre-acquired account information, they must provide the required

disclosures before the customer provides express informed consent. Pre-acquired account information is

any information that enables you to cause a charge against a consumer’s account without obtaining the

account number directly from the consumer during the transaction for which the consumer will be

charged.

Clear and Conspicuous: Clear and conspicuous means that information is presented in a way that a

consumer will notice and understand. The goal is that disclosures be communicated as effectively as the

sales message. When written, clear and conspicuous information generally is printed in a type size that a

consumer can readily see and understand; that has the same emphasis and degree of contrast with the

background as the sales offer; and that is not buried on the back or bottom, or in unrelated information

that a person wouldn’t think important enough to read. When a seller or telemarketer makes required

disclosures in a written document that is sent to a consumer and follows up with an outbound sales call

to the consumer, the disclosures are considered clear and conspicuous only if they are sent close enough

in time to the call so that the consumer associates the call with the written disclosures. When disclosures

are oral, clear and conspicuous means at an understandable speed and pace and in the same tone and

volume as the sales offer.

14
15

What Information Must Sellers and

Telemarketers Provide to Consumers?

The law requires that when sellers and

telemarketers offer to sell goods or services, they

must provide the consumer with material

information about the offered goods or services

necessary to avoid misleading consumers. The

term material means likely to affect someone’s

choice of goods or services or decision to make a

charitable contribution, or someone’s conduct with

regard to a purchase or donation.

The Rule specifies six broad categories of material

information that sellers and telemarketers must

provide to consumers:

1. Cost and Quantity ______________

The Rule requires sellers and telemarketers to

disclose the total costs to purchase, receive, or use

the offered goods or services. While disclosing the

total number of installment payments and the

amount of each payment satisfies this

requirement, the number and amount of such

payments must correlate to the billing schedule

that will be implemented. For example, the Rule’s

requirements would not be met if you were to

state the product’s cost per week if the consumer

has to pay installments on a monthly or quarterly

basis. The Rule also requires you to tell a

consumer the total quantity of goods the

consumer must pay for and receive. You must

provide both these items of material information

to the consumer before the consumer pays for the

goods or services that are the subject of the sales

offer. You may provide this material information

orally or in writing, as long as the information is

clear and conspicuous.

Sometimes, though, the total cost and quantity

are not fixed when the initial transaction takes

place, but, instead, are determined over time. For

example, in a negative option plan, like those

offered by some record or book clubs, the

consumer may agree to purchase a specific

number of items over a specified time period.

The consumer receives periodic announcements

of the selections; each announcement describes

the selection, which will be sent automatically

and billed to the consumer unless the consumer

tells the company not to send it. Similarly, a

continuity plan offers subscriptions to collections

of goods. During the course of the plan, the

consumer can choose to purchase some or all the

items offered in the collection. Consumers who

agree to buy an introductory selection also agree

to receive additional selections on a regular

schedule until they cancel their subscription to

the plan.

Both negative option and continuity plans are

structured to provide consumers the opportunity

to purchase a series of products over time. The

cost of the plan as a whole is determined by the

number and type of items in the series the

consumer decides to accept, and at the time of

the initial sales offer, neither the seller nor the

consumer necessarily knows how much product

the consumer will purchase, or the total cost of

the products.

To comply with the Rule, a seller or telemarketer

offering a negative option or a continuity plan

must disclose the total costs and quantity of

goods or services that are part of the initial offer;

the total quantity of additional goods or services

that a consumer must purchase over the duration

15
16 Complying with the Telemarketing Sales Rule

of the plan; and the cost, or range of costs, to

purchase each additional good or service

separately. Some negative option plans are subject

to the FTC’s Negative Option Rule.

2. Material Restrictions, Limitations,

or Conditions____________________

The Rule requires sellers and telemarketers to

disclose all material restrictions, limitations, or

conditions to purchase, receive, or use goods or

services that they are offering to the consumer.

Material information is information that a

consumer needs to make an informed purchasing

decision. A material restriction, limitation, or

condition is one that, if known to the consumer,

would likely affect the decision to purchase the

goods or services offered; to purchase them at the

offered price; to purchase them from that

particular seller; or to make a charitable

contribution. Examples of material information

that must be disclosed include:

• a requirement that a consumer pay for

offered goods or services by cashier’s check,

money order, or in cash.

• in the case of an offer of a credit card, a

requirement that a consumer make a deposit

in order to receive and use the card offered

(that is, that the credit card is a secured card).

• in the case of a vacation certificate, a

restriction, limitation, or condition that

prevents a purchaser from using the

certificate during the summer; or that

requires a purchaser to make reservations a

year in advance to travel using the certificate;

or that requires the consumer to incur

expenses beyond the price of the certificate to

redeem the certificate for a vacation.

• the underlying illegality of goods or services,

such as the illegality of foreign lottery

chances.

Sellers and telemarketers may disclose orally or in

writing information about material restrictions,

limitations, or conditions to purchase, receive, or

use the goods or services being offered, as long as

the information is clear and conspicuous and

disclosed before the consumer pays.

3. No-Refund Policy ______________

If there’s a policy of honoring requests for

refunds, cancellations of sales or orders,

exchanges, or re-purchases, sellers and

telemarketers must disclose information about

the policy only if they make a statement about

the policy during the sales presentation. If the

sales presentation includes a statement about

such a policy, it must also include a clear and

conspicuous disclosure of all terms and

conditions of the policy that are likely to affect a

consumer’s decision on whether to purchase the

goods or services offered.

If the seller’s policy is that “all sales are final” —

that is, no refunds, cancellations of sales or

orders, or exchanges or re-purchases are allowed

— the Rule requires you to let consumers know

before they pay for the goods or services being

offered. You may give this information to

consumers orally or in writing, and the

information must be clear and conspicuous.

16

Cost and Quantity Disclosure in the

Marketing of Credit Products: If sellers and

telemarketers are offering credit products

subject to the Truth in Lending Act (TILA) or

Regulation Z, compliance with the credit

disclosure requirements and the timing of the

disclosures mandated by TILA or Regulation

Z constitute compliance with the total cost

and quantity disclosure requirements of the

TSR with respect to the credit instrument.

Nevertheless, the cost and quantity of any

goods or services purchased with that credit

also must be disclosed.
4. Prize Promotions ______________

A prize promotion includes (1) any sweepstakes

or other game of chance, and (2) any

representation that someone has won, has been

selected to receive, or may be eligible to receive a

prize or purported prize. A prize is anything

offered and given to a consumer by chance.

For the element of chance to be present, all that is

necessary under the Rule is that the consumer is

guaranteed to receive an item, and, at the time of

the offer, the telemarketer does not identify the

specific item that the person will receive. For

example, say you send a solicitation promising

recipients that they will receive one of four or five

listed items but you do not tell recipients which

of the listed items they will receive. In that case,

any item the consumer receives is a prize, and the

solicitation is a prize promotion.

A seller or telemarketer that offers a prize

promotion must provide consumers with several

items of information before the consumer pays

for any goods or services being offered. This

information may be given to consumers orally or

in writing, and the information must be clear and

conspicuous. You must tell consumers:

• the odds of winning the prize(s). If the odds

can’t be calculated in advance because they

depend on the number of people who enter

the promotion, for example, you must tell

that to consumers, along with any other

factors used to calculate the odds.

• that they can participate in the prize

promotion or win a prize without buying

anything or making any payment, and that

any purchase or payment will not increase

the chances of winning. When offering a

prize promotion in outbound calls, you must

disclose this information orally and promptly.

A legitimate prize promotion does not

require any purchase or payment of money

for a consumer to participate or win. If a

purchase or payment of money is required

for eligibility for a prize, it is not a prize

promotion; it is a lottery, which is generally

unlawful under federal and state lottery laws.

• how they can enter the prize promotion

without paying any money or purchasing any

goods or services. This disclosure must

include instructions on how to enter, or an

address or local or toll-free telephone

number where consumers can get the nopurchase/no-payment entry information.

• about any material costs or conditions to

receive or redeem any prize. For example, if

one of the offered prizes is a “vacation,” but

the recipient must pay for her own

accommodations, that’s a cost or condition

that is likely to affect the consumer’s response

to the offer and therefore, must be disclosed.

5. Credit Card Loss Protection ______

A seller or telemarketer offering a credit card loss

protection plan — one that claims to protect,

insure, or otherwise limit a consumer’s liability 

in the event of unauthorized use of a customer’s

credit card — must disclose the limits on a

cardholder’s liability under federal law for

unauthorized use of a credit card (15 U.S.C. Part

1643). Since the law limits cardholder liability for

unauthorized use — for example, when a credit

card is lost or stolen — to no more than $50,

disclosure of this information to consumers will

help ensure that they have the material

information necessary to decide whether the

protection plan offered is worth the cost.

17
18 Complying with the Telemarketing Sales Rule

6. Negative Option Features ________

The term “negative option feature” is used in the

Rule. It is when the seller interprets the

consumer’s silence, or failure to take an

affirmative action to reject goods or services or

cancel an agreement as acceptance of the offer.

One type of negative option offer is a “free-to-pay

conversion” offer (also known as a “free-trial

offer”), where customers receive a product or

service for free for an initial period and then have

to pay for it if they don’t take some affirmative

action to cancel before the end of the period.

Other types of negative option features include

continuity plans and other arrangements where

consumers automatically receive and incur

charges for shipments in an ongoing series unless

they take affirmative action to stop the shipment.

Under the TSR, any seller or telemarketer whose

offer of a product or service involves a negative

option feature must truthfully, clearly, and

conspicuously disclose three pieces of

information:

• the fact that the customer’s account will be

charged unless he or she takes an affirmative

action — such as canceling — to avoid the

charge.

• the date(s) on which the charge(s) will be

submitted for payment.

• the specific steps the customer must take to

avoid the charges.

While the best practice is to provide an actual date

on which payment will be submitted, it is acceptable

to disclose an approximate date if you don’t — or

can’t — know the actual date, provided the

approximate date gives the consumer reasonable

notice of when to expect the debit or charge. As for

disclosing how the consumer can avoid charges, it is

not sufficient under the Rule to disclose that a

consumer would have to call a toll-free number to

cancel without disclosing the number.

Prompt Disclosures in Outbound

Telemarketing Calls

Oral Disclosures in Outbound Sales Calls

and Upselling Transactions ________

An outbound call is a call initiated by a

telemarketer to a consumer. The Rule requires

that a telemarketer making an outbound sales call

promptly disclose the following four items of

information truthfully, clearly, and

conspicuously:

The identity of the seller. The seller is the entity

that provides goods or services to the consumer

in exchange for payment. The identity of the

telemarketer, or person making the call, need

not be disclosed if it is different from the

identity of the seller. If the seller commonly uses

a fictitious name that is registered with

appropriate state authorities, it is fine to use that

name instead of the seller’s legal name.

That the purpose of the call is to sell goods or

services. The Rule requires that the purpose of

the call be disclosed truthfully and promptly to

consumers. How you describe or explain the

purpose of the call is up to you, as long as your

description is not likely to mislead consumers.

For example, it would be untruthful to state that

a call is a “courtesy call,” if it’s a sales call.

18

Promptly: “Promptly” is defined by Webster’s

Dictionary as “performed at once or without

delay.” For purposes of the Rule, “promptly”

means before any sales pitch is given and

before any charitable solicitation is made.

Required information about a prize promotion

must be given before or when the prize offered

is described.
The nature of the goods or services being offered.

This is a brief description of items you are

offering for sale.

In the case of a prize promotion, that no

purchase or payment is necessary to participate

or win, and that a purchase or payment does not

increase the chances of winning. If the consumer

asks, you must disclose — without delay —

instructions on how to enter the prize

promotion without paying any money or

purchasing any goods or services.

These same disclosures must be made in an

upselling transaction if any of the information in

these disclosures is different from the initial

disclosures (if the initial transaction was an

outbound call subject to the Rule) or if no

disclosures were required in the initial

transaction, such as a non-sales customer service

call. For example, in an external upsell, where the

second transaction in a single telephone call

involves a second seller, you must tell the

consumer the identity of the second seller — the

one on whose behalf the upsell offer is being

made. On the other hand, in an internal upsell,

where additional goods or services are offered by

the same seller as the initial transaction, no new

disclosure of the seller’s identity is necessary

because the information is the same as that

provided in the initial transaction.

19

Multiple Purpose Calls. Some calls have more than one purpose. They may involve the sale of

goods or services and another objective, like conducting a prize promotion or determining

customer satisfaction. They may involve a charitable solicitation combined with a prize promotion.

In any multiple purpose call where the seller or telemarketer is planning to sell goods or services in

at least some of the calls, four disclosures must be made promptly — that is, during the first part

of the call before the non-sales portion of the call. Similarly, in any multiple purpose call where 

the telemarketer is planning to solicit charitable contributions in at least some of the calls, two

disclosures must be made promptly — that is, during the first part of the call, before the noncharitable solicitation part of the call.

Example

Say a seller calls a consumer to determine whether he or she is satisfied with a previous purchase

and then plans to move into a sales presentation if the consumer is satisfied. Since the seller plans

to make a sales presentation in at least some of the calls (the seller plans to end the call if the

consumer is not satisfied), four disclosures must be made promptly during the initial portion of

the call and before inquiring about customer satisfaction.

However, a seller may make calls to welcome new customers and ask whether they are satisfied

with goods or services they recently purchased. If the seller doesn’t plan to sell anything to these

customers during any of these calls, the four oral disclosures are not required. That’s the case even

if customers ask about the sellers’ other goods or services, and the seller responds by describing the

goods or services. Because the seller has no plans to sell goods or services during these calls, the

disclosures are not required.
20 Complying with the Telemarketing Sales Rule

How does a for-profit company that telemarkets for a non-profit organization make the required oral

disclosures? When a for-profit company makes interstate calls to solicit charitable contributions for a

non-profit organization, the for-profit telemarketer must make the required prompt disclosures for

charitable solicitation calls. The company must identify the entity on behalf of whom the charitable

solicitation is made and state that the purpose of the call is to solicit a charitable contribution.

However, if a for-profit company solicits charitable contributions on behalf of a charity and offers

goods or services that are of more than nominal value — a book, magazine subscription, or perhaps

a membership — to induce donations, the required oral disclosures for both sales and charitable

contributions must be made. “Nominal” means a value less than the amount of any contribution

being solicited. In a situation where the goods or services offered are of more than nominal value,

stating the name of the non-profit organization on whose behalf the call is being made is sufficient.

This disclosure also would satisfy the requirement that the entity on whose behalf a charitable

contribution is being solicited be identified.

Examples:

“I am calling on behalf of [name of non-profit organization] to offer you a subscription to the

organization’s newsletter, which [description of newsletter] and to ask for a donation to help

support the work of [name of non-profit organization].”

“I am calling for [name of non-profit organization] to seek your support. For a donation of $25 or

more, [name of non-profit organization] will extend to you a one-year membership, which entitles

you to [description of the membership]. Your donation will help us to continue the [non-profit

organization’s] important work . . .”

Oral Disclosures in Outbound Calls to

Solicit Charitable Contributions

Telefunders must make two prompt oral

disclosures clearly and conspicuously:

The identity of the charitable organization on

whose behalf the solicitation is being made. The

charitable organization is the entity on whose

behalf a charitable contribution is sought. The

identity of the telemarketer, or person making the

call, need not be disclosed. If the charitable

organization commonly uses a fictitious name 

that is registered with appropriate state

authorities, that name may be disclosed instead 

of the charitable organization’s legal name.

That the purpose of the call is to solicit a

charitable contribution. The Rule requires that 

the purpose of the call be disclosed promptly 

to consumers. How the purpose of the call is

described or explained is up to you, as long as

your description or explanation is not likely to

mislead consumers.
21

Misrepresentations are Prohibited

The Rule prohibits sellers and telemarketers from

making false or misleading statements to induce

anyone to pay for goods or services or make a

charitable contribution. For example:

• you cannot falsely claim that you need a

consumer’s bank account number or credit

card number only for identification purposes,

when, in fact, you will use the number as

payment for the goods or services offered.

• a seller of precious metals cannot induce

anyone to invest by falsely claiming that the

seller offers the metals at or near wholesale

price.

• it would be illegal under the Rule to solicit a

charitable contribution by claiming that 100

percent of the funds collected would benefit

the stated charity, when only 30 percent of the

money goes to the charity.

In addition, the Rule prohibits sellers and

telemarketers from misrepresenting specific

categories of information about a telemarketing

transaction that are likely to affect a consumer’s

decision to purchase the goods or services offered.

The Rule also prohibits both express and implied

misrepresentations. Sellers and telemarketers

cannot circumvent the Rule by creating a false

impression in a consumer’s mind through the

artful use of half-truths or misleading or

incomplete information.

In sales transactions, the Rule prohibits

misrepresentations about the following:

1. Cost and Quantity

The Rule prohibits sellers and telemarketers from

misrepresenting the total costs to purchase,

receive, or use the goods or services offered, or

the quantity of goods or services offered at the

stated price. For example, you may not tell

consumers that they may purchase a magazine

subscription for three years at $1.50 a month,

when the subscription is available at that price for

one year only.

2. Material Restrictions, Limitations, or Conditions

The Rule prohibits sellers and telemarketers from

misrepresenting any material restriction,

limitation, or condition to purchase, receive, or

use goods or services offered to the consumer.

For example, you may not falsely claim that a

hotel certificate may be used any time at any

major hotel chain in the country, when it can be

used only at certain times or at a limited number

of hotels.

3. Performance, Efficacy, or Central Characteristics

The Rule prohibits sellers and telemarketers from

misrepresenting any material aspect of the

performance, efficacy, nature, or central

characteristics of the goods or services offered to

the consumer. For example, it is a violation of the

Rule to claim falsely that:

• a water processor offered for sale can

eliminate all known contaminants from 

tap water.

• a service offered by the seller can improve a

person’s credit rating.

• a machine will operate properly without

maintenance.

• precious metals outperform other types of

investments.

• a seller can recover money lost by the

consumer in a previous telemarketing

transaction.

• a purchaser of a business venture can earn

“more money in a week than you now earn in

a year” or achieve specific levels of income.

21
4. Refund, Repurchase, or Cancellation Policies

The Rule prohibits sellers and telemarketers from

misrepresenting any material aspect — one that

likely would have an effect on the consumer’s

purchasing decision — of the nature or terms of

the seller’s refund, cancellation, exchange, or

repurchase policies. For example, the Rule

prohibits you from claiming that “our policy is to

make our customers happy — if at any time you’re

not absolutely delighted, just send the merchandise

back,” if there are time limits, “restocking”

charges, or other important restrictions on the

return of the goods. It also prohibits sellers and

telemarketers from claiming that tickets may be

cancelled any time up to the date of an event when

cancellation requests like that would not be honored.

5. Material Aspects of Prize Promotions

The Rule prohibits sellers and telemarketers from

misrepresenting any material aspect of a prize

promotion: you may not lie about any aspect of a

prize promotion that is likely to affect a

consumer’s decision to buy any goods or services

offered in conjunction with a prize promotion, to

buy them at the offered price, or to buy them

from you. For example, you may not misrepresent:

• the odds of being able to receive a prize (for

example, falsely saying that everyone who

enters is guaranteed to win a prize, or falsely

claiming that a particular person is “the top

winner in the entire state”).

• the nature or value of a prize (for example,

falsely claiming a prize is an “expensive

genuine diamond tennis bracelet,” when the

prize has only nominal value or doesn’t

contain any diamonds).

• that a purchase or payment is required to

win a prize or participate in a prize

promotion (for example, falsely claiming that

a consumer must buy magazine subscriptions

to enter a prize promotion).

6. Material Aspects of Investment Opportunities

The Rule prohibits sellers and telemarketers from

misrepresenting any material aspect of an

investment opportunity. You may not make any

false or misleading statements about an

investment opportunity that are likely to affect a

prospective purchaser’s decision to invest. You

may not misrepresent any information needed to

make an informed investment decision. Examples

of material aspects of an investment opportunity

include: the risk involved in the investment, the

liquidity of the investment, or the earnings

potential or profitability of the investment.

Depending on the nature of the investment

opportunity, other material aspects may include

markup over acquisition costs; past performance,

marketability, or value of an investment; or fees

charged in credit-financed purchases of precious

metals.

7. Affiliations, Endorsements, or Sponsorships

The Rule prohibits sellers and telemarketers 

from misrepresenting affiliations with — or

endorsements or sponsorships by — any person,

organization, or government entity. For example,

you cannot falsely claim that you’re a member of

the Better Business Bureau or the local chamber

of commerce, or that you’re affiliated with the

local police or some national charity. Neither can

you create the impression in a consumer’s mind

that the postal permit number displayed on a

mail solicitation is a sign that the U.S. Postal

Service has approved a promotion. In addition,

sellers and telemarketers cannot falsely claim or

create the impression in a consumer’s mind that

they are related to or affiliated with a company

with which the consumer usually does business.

22 Complying with the Telemarketing Sales Rule
8. Credit Card Loss Protection

The Rule prohibits sellers and telemarketers from

misrepresenting that any customer needs offered

goods or services to receive protection against

unauthorized charges that he or she already has

under federal law (15 U.S.C. Part 1643). For

example, you cannot falsely claim that a

consumer who doesn’t purchase the credit card

loss protection you’re offering might be liable for

thousands of dollars in unauthorized charges

should a credit card be stolen. In fact, the law

caps a customer’s liability for unauthorized

charges on her credit card at $50.

9. Negative Option Features

The Rule prohibits sellers and telemarketers from

misrepresenting any material aspect of a negative

option feature of an offer, including: the fact that

the consumer’s account will be charged unless the

consumer takes an affirmative action to avoid the

charges, the dates the charges will be submitted

for payment, and the specific steps the customer

must take to avoid the charges. For example, the

Rule prohibits you from representing that to avoid

being charged, the consumer need only call a tollfree number to cancel if, in fact, the number is

never answered. In this case, you would be

misrepresenting the specific steps the customer

must take to avoid the charge, because the steps

described wouldn’t achieve that purpose.

In charitable solicitation calls, the Rule

prohibits misrepresentations about:

1. The Nature, Purpose, or Mission of the Entity on

Whose Behalf the Solicitation is Made

The Rule prohibits telefunders from

misrepresenting the nature, purpose, or mission

of any entity on whose behalf a charitable

contribution is being solicited. It would violate

the Rule for a telefunder to claim, expressly or by

implication, that a charitable contribution is

being requested on behalf of a charity that seeks

to protect endangered species if the purpose of

the charity is to support a local petting zoo of

barnyard animals. And a telefunder may not

represent that a charitable organization engages

in cancer research if the organization simply

educates the public about cancer through its

fundraising calls.

2. Tax Deductibility

Whether a contribution is tax deductible — or 

an organization is tax exempt — may be an

important consideration when potential donors

are deciding whether or how much to contribute.

The Rule therefore prohibits telefunders from

misrepresenting, expressly or by implication, that

any charitable contribution is partly or fully tax

deductible, or falsely implying that an

organization on whose behalf a contribution is

solicited is “tax exempt.”

3. Purpose of a Contribution

The Rule prohibits telefunders from

misrepresenting how the requested contribution

will be used. This includes not only how a

donation will be spent, but also the locality where

the direct effect of the donation will be felt. The

purpose for which a contribution is sought

usually is important to a donor, and any 

23
misrepresentations about that would be likely to

mislead a consumer. It would violate the Rule for

you to state or imply that a donation will benefit

sick children in the local area if the money

collected is not spent to benefit sick children or is

not spent to benefit sick kids in the donor’s local

area. You also cannot claim that a donation will

be used to pay for bullet-proof vests for local law

enforcement officers if the money goes to some

other purpose. The charitable purpose described

to potential donors may not be peripheral or

incidental to the primary purpose for which the

donation will be used.

4. Percentage or Amount of Contribution that

Goes to the Charitable Organization or Program

The Rule prohibits telefunders from

misrepresenting the percentage or amount of the

contribution that goes to a charitable

organization or program. This prohibition covers

statements made in response to the questions of

potential donors, as well as unprompted standalone statements. Even though the TSR does not

require you to affirmatively disclose the

percentage or amount of the contribution that

goes to a charitable organization or program, if a

potential donor raises the question, you must

answer truthfully and must not misrepresent this

information in any way.

5. Material Aspects of Prize Promotions

The Rule prohibits telefunders from

misrepresenting any material aspects of a prize

promotion in conjunction with a charitable

solicitation. You may not make a false statement

about any aspect of a prize promotion that could

affect a donor’s decision to make a charitable

contribution in conjunction with the prize

promotion.

6. Affiliations, Endorsements, or Sponsorship

The Rule prohibits telefunders from

misrepresenting their own or a charitable

organization’s affiliation with, or endorsement or

sponsorship by, any person, organizations, or

government entity. For example, you cannot

falsely claim that the organization on whose

behalf you are calling is affiliated with, sponsored

by, endorsed by, or otherwise approved by any

other entity or organization. Nor could you

falsely claim to be endorsed or “approved by” the

local police. In addition, you cannot falsely claim

— or create the impression — that you are

related to or affiliated with a charity that the

donor has heard of or contributed to in the past.

Payment Methods Other than Debit

and Credit Cards

The Rule requires “express verifiable

authorization” when the payment is made by a

method other than a credit card (subject to the

Truth in Lending Act and Regulation Z), or a debit

card (subject to the Electronic Fund Transfer Act

and Regulation E). Because many novel payment

methods lack protection against unauthorized

charges and dispute resolution rights should the

customer be unhappy with the goods or services,

the Rule requires that when customers in

telemarketing transactions pay by such methods,

sellers and telemarketers must meet a higher

standard for proving authorization. This provision,

the prohibition on sharing unencrypted account

numbers, and the requirement that a consumer’s

express informed consent be obtained in every

telemarketing transaction, are in place to protect

consumers from unauthorized charges.

24 Complying with the Telemarketing Sales Rule
Under the Rule, authorization is considered

verifiable if it is obtained in one of three ways:

• advance written authorization from the

consumer;

• an audio recording of the consumer giving

express oral authorization; or

• written confirmation of the transaction sent

to the consumer before you submit the charge

for payment.

25

What about cash, checks, and money orders? The “express verifiable authorization” requirement does

not apply to conventional checks that the consumer writes, signs, and mails, or to payments by money

order, cash, gift certificates, or direct billing (where the customer or donor receives a written bill or

statement before having to pay). These payment methods have been used for years, and consumers are

familiar with the advantages and relative risks of each. But there are payment methods that consumers

may be unfamiliar with and that lack fundamental protections. In the latter instance, the Rule requires

more proof of authorization to protect consumers from unauthorized charges: If payment is made by

demand draft or “phone check,” mortgage or utility billing (where goods or services other than the

mortgage or utility payment is billed on these accounts), or a similar unconventional method, a

telemarketer must obtain the customer or donor’s “express verifiable authorization.”

Who is responsible for obtaining verifiable authorization? Under the Rule, sellers and telemarketers

that receive payment by methods other than credit or debit cards are responsible for obtaining

verifiable authorization in those transactions. Even if you use the services of a third party to process

or submit billing information other than credit or debit card information, you are responsible for

ensuring that the disclosure requirements of the Rule for verifying authorization are met. Under the

Rule, a third party also can be held liable for violating the Rule if the third party substantially assists a

seller or telemarketer and knows — or consciously avoids knowing — that the seller or telemarketer is

violating the Rule by failing to obtain verifiable authorization.

Processing and submitting account information constitutes substantial assistance to a seller or

telemarketer. Therefore, if a third party is processing account information for a seller or telemarketer,

the third party should ensure that whoever is obtaining consumers’ account information obtains

verifiable authorization in accordance with the Rule’s requirements. A third party who processes and

submits bank account information cannot avoid liability by not asking questions about whether

authorization procedures comply with the Rule. Indeed, a third party can be held liable under the

Rule if it knows that the authorization procedures do not comply with the Rule and it processes or

submits account information for payment anyway.

Does the Rule apply if I only supply the software to process or submit bank account information for

payment? Maybe. Providing the means to submit a consumer’s account information for payment

constitutes substantial assistance to a seller or telemarketer. If the seller or telemarketer who is using the

software is violating the Rule, a law enforcement agency may ask about the extent to which the software

provider ensured that authorization procedures were in place to comply with the Rule. A software

provider cannot sell its product with its “eyes closed” to the business practices used by the software

purchaser, consciously avoiding any knowledge of the wrongdoing. Deceptive telemarketers favor novel

payment methods, such as demand drafts. Therefore, third parties should know who they’re doing

business with — and whether the people they do business with are complying with the Rule.
Here are the requirements for each type of

authorization.

Written Authorization ____________

Any form of written authorization from a

consumer is acceptable, as long as it has the

consumer’s signature. For example, a consumer

may transmit written authorization to the seller

or telemarketer by facsimile or may send a

“voided” signed check as written authorization.

An electronic signature also is valid, provided it

would be recognized as a valid signature under

applicable federal or state contract law.

Oral Authorization________________

Any audio recording of an oral authorization3 for

payment must clearly demonstrate that the

consumer has received each of seven specific

pieces of information about the transaction and

that the consumer has authorized that funds be

taken from (or charged to) his or her account

based on the required disclosures by the seller or

telemarketer. A general question like, “Do you

understand all the terms of the sale?” followed by

a consumer’s “uh-huh” or “yeah” is not enough to

demonstrate authorization. The tape recording

must show that the consumer received each piece

of information below and that, based on this

information, the consumer understood and

acknowledged each term of the transaction and

authorized the transaction.

A consumer must be told and must acknowledge:

• the number of debits, charges, or payments

(if more than one).

• the date the debits, charges, or payments will

be submitted for payment.

• the amount of the debits, charges, or

payments.

• the customer or donor’s name.

• the customer or donor’s billing information,

identified in specific enough terms that the

consumer understands which account will be

used to collect payment for the transaction.

• a telephone number that is answered during

normal business hours by someone who can

answer the consumer’s questions.

• the date of the consumer’s oral authorization.

The Rule also requires that audiorecorded oral

authorization be made available upon request to

the customer or donor, as well as to the customer

or donor’s bank or other billing entity.

Authorization by Written 

Confirmation ____________________

If sellers and telemarketers choose verifiable

authorization through written confirmation, they

must send the confirmation to the consumer via

first class mail — and identify it clearly and

conspicuously as confirmation of payment —

before submitting the consumer’s billing

information for payment. That does not mean

that you must wait to submit this information

until a consumer receives the confirmation: The

Rule requires only that you send it before you

submit the billing information for payment.

26 Complying with the Telemarketing Sales Rule

The Electronic Fund Transfer Act (EFTA)

Other laws, such as the EFTA (15 U.S.C. Part

1693 et seq.), may impose different obligations about obtaining a consumer’s authorization of a charge. It is the responsibility of

each seller and telemarketer to determine

how to comply with all applicable laws and

rules. Compliance with the TSR requirements for obtaining authorization does not

eliminate the obligation to comply with

EFTA and other applicable laws.
27

The Rule leaves it to sellers and telemarketers 

to determine what procedures are necessary 

to ensure that confirmations are sent prior to

submission, to put these procedures in place,

and to ensure that records are generated and

maintained to document that confirmations are

sent at the appropriate time and required refunds

are provided.

The written confirmation must contain all 

the information required in a tape recorded

authorization. In addition, if you choose to 

use the written confirmation method of

authorization, you must have a refund policy 

in place and must disclose in the written

confirmation how to obtain a refund if the

consumer disputes the written confirmation.

The Rule’s prohibition on misrepresenting a

refund policy applies in the context of obtaining

verifiable authorization by means of written

confirmation. Note: In transactions involving

pre-acquired account information combined

with a free-to-pay conversion, sellers and

telemarketers may not use the written

confirmation method of obtaining

authorization. In these transactions, written

confirmation does not constitute “express

verifiable authorization.”

27

Date the debit, charge, or payment will be submitted for payment

This disclosure ensures that consumers know when to expect the charge or debit. To comply with

this requirement, it makes good sense to provide an actual date on which payment will be

submitted: “This debit from your checking account will occur on April 14, 2004.” However, it is

acceptable for you to disclose an approximate date if you don’t — or can’t — know the actual date,

provided the approximate date gives the consumer reasonable notice of when to expect the debit or

charge. For example, you could tell a consumer, “The charge will appear on your next mortgage

statement,” or “Your account will be charged within two weeks from today.”

Similarly, in a transaction involving a continuity plan, it would be sufficient for you to note when

any initial charge will be submitted for payment, and then at what intervals each successive payment

would be submitted, should the customer opt not to decline to purchase additional goods or

services. For example, in a book club plan, you could tell a customer that the initial $4.95 charge

would be debited from his or her bank account on May 15, and that each month after that, his or

her account will be billed one week from the date of each successive shipment.

Billing information in specific enough terms that the consumer understands what account will be

used to collect payment for the transaction

To identify the account with sufficient specificity for the customer or donor to understand what

account will be charged, you must state the name of the account and enough other distinguishing

information about the account to ensure that the customer understands which account will be charged.

For example, telling the consumer that the charge will be placed on his mortgage account is not

specific enough information. It would be necessary to identify the account further, perhaps by the

name of the lender and the property address, or a reference to some portion of the account number

or expiration date. It is your obligation to ensure that the consumer knows specifically what account

will be charged for the goods or services.
28 Complying with the Telemarketing Sales Rule

I

t is a violation of the Rule to substantially assist

a seller or telemarketer while knowing — or

consciously avoiding knowing — that the seller or

telemarketer is violating the Rule. Thus taking

deliberate steps to ensure one’s own ignorance of a

seller or telemarketer’s Rule violations is an

ineffective strategy to avoid liability. The help that

a third-party provides must be more than casual

or incidental dealing with a seller or telemarketer

that is not related to a violation of the Rule. For

example, cleaning a telemarketer’s office,

delivering lunches to the telemarketer’s premises,

or engaging in some other activity with little or no

relation to the conduct that violates the Rule

would not be enough to support liability as an

assistor or facilitator.

Third parties who do business with sellers and

telemarketers should be aware that their dealings

may provide a factual basis to support an inference

that they know — or deliberately remain ignorant

of — the Rule violations of these sellers and

telemarketers. For example, a third party who

provides sellers or telemarketers with mailing lists,

help in creating sales scripts or direct mail pieces,

or any other substantial assistance while knowing

or deliberately avoiding knowing that the seller or

telemarketer is engaged in a Rule violation may be

violating the Rule.

28

Assisting and Facilitating Sellers or Telemarketers

Who Violate the Rule is Prohibited
29

Credit card laundering is the misuse of a“merchant account” with a financial

institution. A merchant account is a kind of bank

account: it is what a seller or telemarketer needs to

gain access to a credit card collection and payment

system and to get cash for goods and services sold.

Obtaining access to the credit card system through

another’s merchant account without the

authorization of the financial institution is credit

card laundering. This practice violates the Rule,

and is a criminal offense under federal law and the

laws of some states.

Here’s how the system works for companies that

make legitimate use of the credit card system: To

be able to accept payment from a consumer who

wants to charge the price of goods or services to a

credit card, a seller or telemarketer must have a

“merchant account” with a financial institution

that is a member of a credit card system (for

example, Visa or MasterCard) that issued the

consumer’s credit card. When the consumer pays

by credit card, the merchant generates a credit

card sales draft. The seller then deposits the draft

into the seller’s merchant account, and obtains the

cash amount of the deposited draft. The financial

institution sends the credit card sales draft

through the particular credit card system, which

posts a corresponding charge to the consumer’s

credit card account.

In credit card laundering work, sellers and

telemarketers who are unable to establish a

merchant account with a financial institution

sometimes use the unlawful services of a 

launderer (also known, inaccurately, as a “factor”).

A launderer opens a “back door” into the credit

card system by providing access to a merchant

account — and the whole credit card collection

and payment system — without the authorization

of the financial institution or the credit card

system. Except as expressly permitted by a credit

card system, it is a Rule violation for anyone:

• with a merchant account to deposit into the

credit card system any credit card sales draft

generated by a telemarketing transaction that

is not the result of a sale to the buyer by the

person who has the merchant account.

• to use or solicit someone who has a merchant

account (or an employee, representative, or

agent of someone who has a merchant

account) to deposit into the credit card system

any credit card sales draft generated by a

telemarketing transaction that is not the result

of a sale to the buyer by the person who has

the merchant account.

• to obtain access to the credit card system

through a business relationship or an

affiliation with a merchant, when the access is

not authorized under the terms of the

merchant account or by the applicable credit

card system.

29

Credit Card Laundering is Prohibited
30 Complying with the Telemarketing Sales Rule

I

t is a violation of the Rule to cause billing

information to be submitted for payment —

directly or indirectly — without the express

informed consent of the customer or donor.

The Rule requires that in any telemarketing

transaction, sellers and telemarketers obtain 

the express informed consent of the customer 

or donor to be charged a specific amount on 

a particular identified account, to pay for 

the goods or services offered, or to make 

a charitable contribution.

Express Informed Consent Is

Required in Every Telemarketing

Transaction

The Rule contains no specific requirements for

how sellers and telemarketers must obtain express

informed consent in transactions where they do

not use pre-acquired account information. As a

practical matter, however, in these transactions it

would be necessary for you to get the account

number to be charged from the consumer, because

the information isn’t available any other way. In

obtaining this information from the consumer, you

must get his express agreement to be charged for

the goods or services being offered and to be

charged using the account number he or she

provides. Any false or misleading statement to

induce someone to divulge his or her account

information to pay for goods or services or to

make a charitable contribution is an additional

Rule violation.

30

Unauthorized Billing

What is express informed consent? Under the Rule, consent is express if it is affirmatively and

unambiguously articulated by the consumer. Silence is not express consent, nor is an ambivalent

response like, “Well, maybe . . .,” “Gee, I don’t know about that . . .,” or a noncommital “uh-huh.” For

consent to be informed, a consumer, prior to giving consent, must receive all the disclosures required

by the Rule.

For example, consent would not meet the requirement that it be “informed” if the consumer does not

receive all the Rule’s required material disclosures — both the prompt oral disclosures for outbound

calls and the disclosures of all material information required in all telemarketing transactions.

Consent is an affirmative statement that the consumer agrees to purchase the goods or services (or to

make the charitable contribution) and is aware that the charges will be billed to a particular account.
Obtaining Express Informed Consent

in Telemarketing Transactions

Involving Pre-acquired Account

Information

Pre-acquired account information is any

information that enables sellers and telemarketers

to place a charge against a consumer’s account

without getting the account information directly

from the consumer during the transaction for

which the account will be charged. The use of preacquired account information radically changes the

usual dynamic in sales transactions, which requires

that a telemarketer obtain the customer’s

acceptance of the offer, as well as the customer’s

account number to be charged. Telemarketers using

pre-acquired account information are able to cause

a charge to a consumer’s account without getting

the account number from the consumer during the

transaction. The Rule establishes safeguards to

protect consumers in all telemarketing transactions

in which sellers and telemarketers have preacquired account information.

The Rule establishes separate requirements for preacquired account information transactions

involving “free-to-pay conversion” offers.

That’s because when used together with free-topay conversion offers, pre-acquired account

information has resulted in significant numbers of

unauthorized charges to consumers who think

they can’t be charged at the end of a free trial

because they haven’t provided their account

information. The Rule specifies what sellers and

telemarketers must do to prevent this from

occurring and to get a consumer’s express

informed consent.

When pre-acquired account information is

used and the offer includes a free-to-pay

conversion feature, telemarketers must:

• obtain from the customer at least the last four

digits of the account number to be charged.

• obtain the customer’s express agreement to

be charged for the goods or services and to be

charged using the account number for which

the customer has provided at least the last

four digits.

• make and maintain an audio recording of the

entire telemarketing transaction.

Obtaining the last four digits from the customer:

To meet the requirement that sellers and

telemarketers “obtain from the customer” at least

the last four digits of the account number to be

charged, you must ask the customer to provide

this information, and the customer must provide

it to demonstrate an understanding that by doing

so, he or she is agreeing to make a purchase. You

must inform the customer that you have the

customer’s account number or the ability to

charge the account without getting the full

account number from the consumer. Reading the

information to the customer and asking for 

31

Free-to-pay conversion offers, sometimes

known as “free-trial offers,” are offers or

agreements where customers receive a

product or service for free for an initial

period and then incur an obligation to pay

unless they take affirmative action to cancel

before the end of the period.
confirmation of the digits is not complying with

the Rule. Neither is it sufficient to read the digits

to the customer, and then ask the customer to

recite them back. In addition, it is not adequate 

to reuse digits that a customer may have provided

for identification purposes during another

portion of the call — such as in an inbound call

where you ask the customer to provide his or 

her account number by pressing digits on the

telephone keypad.

Express Agreement to be Charged: To meet the

requirement that telemarketers get a customer’s

express agreement to be charged for the goods and

services — and to be charged using the account

number for which he or she has provided at least

four digits — you must ensure that the consumer

expressly and unambiguously agrees to both the

purchase and the means of payment. The four

digits the customer provides must actually be the

last four digits of the account to be charged. If the

four digits the customer provides aren’t the last

four digits of the account, the customer hasn’t

expressly agreed to be charged, and the transaction

is void for lack of express verifiable authorization.

This is not to be interpreted as mandating that a

seller or telemarketer have the unencrypted last

four digits of a customer’s account number to

compare the digits the customer provided to the

actual account number. Rather, the agencies that

issued rules under the Gramm-Leach-Bliley Act

caution financial institutions against sharing the

unencrypted last four digits of a customer’s

account with a telemarketer, even to ensure that

the customer has provided these digits accurately

in giving express informed consent. The meaning

here is simply that a charge cannot be processed

unless the four digits provided by the customer 

are in fact the last four digits of the account to be

charged. One way to ensure that the four digits

match is to perform a real-time inquiry to verify

that the leading digits of the pre-acquired

account number plus the four provided by the

customer are a valid account. There are other

ways to do this; the Rule does not require any

particular method.

Audio Recording of the Transaction: In a

transaction where sellers and telemarketers have

pre-acquired account information and are

offering goods or services on a free-to-pay

conversion basis, the entire telemarketing

transaction must be recorded on audio. The

audio recording must capture the material terms

provided to the consumer, as well as the context

and manner in which the offer is presented,

because this can be critical to demonstrate that a

consumer’s consent is both express and informed.

In a single-transaction call, this means taping the

entire call; in a multi-purpose call it means

recording the entirety of each transaction using

pre-acquired account information coupled with a

free-to-pay conversion offer.

In a situation where telemarketers are bound by

state law to obtain consent to record the

transaction, they may ask permission to tape

before beginning to record; this is the only

portion of the call that may be conducted

without recording. If it is necessary to explain the

purpose of the call or to identify the seller to

obtain the customer’s permission to record,

telemarketers must reiterate this information

once the recording begins to demonstrate that the

required prompt disclosures were made in the

outbound call.

32 Complying with the Telemarketing Sales Rule
When pre-acquired account information 

is used but the offer does not include 

a free-to-pay conversion feature,

telemarketers must: ______________

• at a minimum, identify the account to be

charged with enough specificity for the

customer or donor to understand.

• obtain the customer or donor’s express

agreement to be charged for the goods or

services and to be charged using the account

number the seller or telemarketer has

identified.

The Rule’s requirements for obtaining express

informed consent in these transactions are less

strict than when a free-to-pay conversion feature

is involved. That’s because while pre-acquired

account information itself can lead to

unauthorized billing, the record shows this is less

likely when there’s no free-to-pay conversion offer.

Identifying the Account with Sufficient

Specificity: A telemarketer must state the name of

the account and enough other distinguishing

information about the account to ensure that the

customer understands which account will be

charged. For example, it is not good enough to

tell the consumer only that a charge will be

placed on his Visa credit card. You must identify

the card more precisely, either by stating the

name of the issuing bank, or some portion of the 

account number. As the telemarketer, you are

obligated to ensure that the consumer knows

exactly which account will be charged for the

goods or services. The underlying intention of

the Rule is that the telemarketer expressly inform

the customer that the seller or telemarketer

already has the number of the customer’s

specifically identified account or has the ability to

charge that account without getting the account

number from the consumer.

Express Agreement to be Charged: The Rule does

not specify a particular procedure for sellers and

telemarketers to follow when using pre-acquired

account information without a free-to-pay

conversion so you can demonstrate that the

customer has expressly agreed to be charged. To

comply with this requirement, you must elicit an

affirmative and unambiguous statement from the

consumer that demonstrates his intention to

agree to be charged, and to be charged on a

specific account. Silence is not a substitute for

such a statement, nor are ambivalent or

noncommital responses like, “Well, maybe . . .” or

“uh-huh.”

33
34 Complying with the Telemarketing Sales Rule

The Rule prohibits sellers and telemarketersfrom engaging in certain abusive practices that

infringe on a consumer’s right to be let alone. The

Rule’s privacy protections include prohibitions on:

• calling a person whose number is on the

National Do Not Call Registry or a person

who has asked not to get telemarketing calls

from a particular company or charity.

• misusing a Do Not Call list.

• denying or interfering with a person’s Do Not

Call rights.

• calling outside the permissible hours.

• abandoning an outbound telephone call.

• failing to transmit Caller ID information.

• using threats, intimidation, or profane or

obscene language.

• causing any telephone to ring or engaging

any person in telephone conversation

repeatedly or continuously with intent to

annoy, abuse, or harass.

The Do Not Call Provisions

The original Rule contained a provision prohibiting

calls to any consumer who previously asked not to

get calls from or on behalf of a particular seller. The

amended Rule retains that provision, and adds a

new one prohibiting calls to any numbers

consumers have placed on the National Do Not

Call Registry maintained by the FTC.

The Entity-Specific Do Not 

Call Provision __________________

It is a Rule violation to call any consumer who has

asked not to be called again (the “entity-specific

Do Not Call” provision). A telemarketer may not

call a consumer who previously has asked not to

receive any more calls from or on behalf of a

particular seller or charitable organization. It also

is a Rule violation for a seller who has been asked

by a consumer not to call again to cause a

telemarketer to call that consumer. Sellers and

telemarketers are responsible for maintaining

their individual Do Not Call lists of consumers

who have asked not to receive calls placed by, or

on behalf of, a particular seller. Calling a

consumer who has asked not to be called

potentially exposes a seller and telemarketer to a

civil penalty of $11,000 per violation.

Protecting Consumers’ Privacy

What if a consumer asks a specific division of a corporation not to call? Does a call from a different

division violate the Rule? Distinct corporate divisions generally are considered separate sellers under

this Rule. Factors relevant to determining whether distinct divisions of a single corporation are

treated as separate sellers include whether there is substantial diversity between the operational

structure of the divisions and whether the goods or services sold by the divisions are substantially

different from each other. If a consumer tells one division of a company not to call again, a distinct

corporate division of the same company may make another telemarketing call to that consumer.

Nevertheless, a single seller without distinct corporate divisions may not call a consumer who asks

not to be called again, even if the seller is offering a different good or service for sale.

34
On the question of charitable solicitations,

telefunders must maintain individual Do Not

Call lists for charities on whose behalf they make

telemarketing calls. Calling someone who has

asked not to be called on behalf of a charitable

organization potentially exposes the telefunder

who places the call to a civil penalty of $11,000

per violation.

The National Do Not Call Registry

Provision ______________________

The FTC’s National Do Not Call Registry has

been accepting registrations from consumers who

choose not to receiving telemarketing sales calls

since June 27, 2003. Consumers can place their

telephone numbers on the National Registry by

making a toll-free telephone call or via the

Internet. Consumer registrations are valid for five

years, or until the consumer asks to be taken off

the National Registry or the number is

disconnected. Only telephone numbers are

included in the National Registry. This means

that all household members who share a number

will stop receiving most telemarketing calls after

the number is registered. Consumers may register

both their residential “land line” telephone

numbers and their wireless telephone numbers.

Sellers, telemarketers, and their service providers

have been able to access the Registry through a

dedicated Web site since September 2003. It is a

Rule violation to make any covered calls

beginning October 1, 2003 without having

accessed the Registry. Sellers and telemarketers

will have to update their call lists — that is, delete

all numbers in the National Do Not Call Registry

from their lists — at least every three months.

As of October 1, 2003, sellers and telemarketers

are prohibited from calling any consumer whose

number is in the database. Violators will be

subject to civil penalties of up to $11,000 per

violation, as well as injunctive remedies.

This provision does not apply to business-tobusiness calls or calls to consumers from or on

behalf of charities. Still, telefunders calling to

solicit charitable contributions must honor a

donor’s request not to be called on behalf of a

particular charitable organization.

35

Example: Charity A is a non-profit

charitable organization not covered by the

TSR. Charity A engages Telefunder 1, a forprofit service bureau subject to the TSR, to

conduct fundraising telephone campaigns

on its behalf. Charity A uses Telefunder 1 to

conduct a fundraising campaign for six

months, then uses Telefunder 2, another forprofit service bureau, for the next six

months. It will violate the Rule for

Telefunder 2 to initiate an outbound

telephone call on behalf of Charity A to a

person who has already asked not to be

called on behalf of Charity A. It is the

responsibility of Telefunder 2 to get the Do

Not Call list relating to Charity A compiled

and maintained by Telefunder 1, and to keep

from placing calls to anyone on that list

when calling on behalf of Charity A.

If Telefunder 2 also conducts a fundraising

campaign for Charity B, Telefunder 2 may

call potential donors on behalf of Charity B

even if they’re on Charity A’s Do Not Call

list. But when calling on behalf of Charity B,

Telefunder 2 may not call potential donors

on Charity B’s Do Not Call list.
Complying with the Telemarketing Sales Rule

How the National Do Not Call 

Registry Works __________________

Coverage Under the TSR

What calls are co What calls are covered?

The Do Not Call provisions of the TSR cover

any plan, program, or campaign to sell goods

or services involving interstate phone calls.

This includes calls by telemarketers who solicit

consumers, often on behalf of third-party

sellers. It also includes sellers who are paid to

provide, offer to provide, or arrange to provide

goods or services to consumers. However,

sellers and telemarketers should also be aware

that the FCC regulates telemarketing calls. For

more information, see the FCC’s Web site,

www.fcc.gov.

What types of calls are not co What types of calls are not covered by the vered by the

National Do Not Call Registr National Do Not Call Registry?

The Do Not Call provisions do not cover calls

from political organizations, charities,

telephone surveyors, or companies with which

a consumer has an existing business

relationship. However, sellers and

telemarketers should also be aware that the

FCC regulates telemarketing calls. For more

information, see the FCC’s Web site,

www.fcc.gov.

If a call inc If a call includes a telephone sur ludes a telephone survey and a vey and a

sales pitch, sales pitch, is it co is it covered?

Yes. Callers purporting to take a survey, but

also offering to sell goods or services, must

comply with the Do Not Call provisions. But 

if the call is for the sole purpose of conducting

a survey, it is exempt. However, sellers and

telemarketers should also be aware that the

FCC regulates telemarketing calls. For more

information, see the FCC’s Web site,

www.fcc.gov.

Accessing the Registry

Who can access the National Registr Who can access the National Registry?

Access to the National Registry is limited to

sellers, telemarketers, and other service

providers. Sellers are companies that provide,

offer to provide, or arrange for others to

provide goods or services to a customer in

return for some type of payment as part of a

telemarketing transaction. Telemarketers are

companies that make telephone calls to

consumers on behalf of sellers. Service

providers are companies that offer services to

sellers engaged in telemarketing transactions,

such as providing lists of telephone numbers

to call, or removing telephone numbers from

the sellers’ lists.

Some sellers are exempt from the FTC’s Rules

but are required to access the National Registry

under the FCC’s Rules. Other sellers (charities

and political organizations) are exempt from

accessing the National Registry under both

agencies’ rules. These exempt sellers still may

access the National Registry voluntarily 

and do not have to pay a fee for that access.

They must, however, submit appropriate

certification information to gain access to the

National Registry.

Can I use numbers on the National Registr Can I use numbers on the National Registry for

any purpose other than preventing telemarket y purpose other than preventing telemarketing calls? ing calls?

No. The National Registry may not be used for

any purpose other than preventing

telemarketing calls to the telephone numbers

on the Registry. Any entity that accesses the

National Registry will be required to certify,

under penalty of law, that it is accessing the

Registry solely to comply with the TSR or to

prevent calls to numbers on the Registry.

36
How can I access the National Registr How can I access the National Registry?

The FTC is preparing a fully automated 

and secure Web site at

www.telemarketing.donotcall.gov to provide

members of the telemarketing industry with

access to the National Registry’s database of

telephone numbers, sorted by area code. The

first time you access the National Registry, you

must provide identifying information about

yourself and your company. If you are a

telemarketer or service provider accessing the

National Registry on behalf of your sellerclients, you will be required to identify your

seller-clients and provide their unique account

numbers. The only consumer information

available from the National Registry is

telephone numbers. After you (or the company

telemarketing on your behalf) have accessed

the National Registry the first time, you’ll have

the option of downloading only changes in the

data that have occurred since the last time you

accessed the Registry.

When can I access the National Do Not Call When can I access the National Do Not Call

Registr Registry?

Effective September 2, 2003, the National Do

Not Call Registry will be available to the

telemarketing industry. Enforcement of the

National Do Not Call Registry begins October

1, 2003. Companies required to access the

National Registry and remove the numbers on

the Registry from their calling lists must do so

by October 1, 2003, to be in compliance.

What information must I pro What information must I provide to access the vide to access the

National Registr National Registry?

The first time you access the system, you will

be asked to provide certain limited identifying

information, such as your company name and

address, contact person, and the contact

person’s telephone number and email address.

If you are accessing the National Registry on

behalf of a seller-client, you also will have to

identify that seller-client.

How often will I have to access the How often will I have to access the 

National Registr National Registry and remo y and remove numbers ve numbers 

from my calling list? from my calling list?

After October 1, 2003, you will have to

synchronize your lists with an updated version

of the National Registry every three months.

How often may I download data from the How often may I download data from the

National Registr National Registry?

You will be able to access data as often as you

like during the course of your annual period

for those area codes for which you have paid.

However, to protect system integrity, you may

download data files from the National Registry

only once in any 24-hour period.

What information can I access from the What information can I access from the

National Registr National Registry?

The only consumer information that

companies will receive from the National

Registry is registrants’ telephone numbers. The

numbers will be sorted and available by area

code. Companies will be able to access as many

area codes as desired (and paid for), by

selecting, for example, all area codes within a

certain state. Of course, companies also will be

able to access the entire National Registry.

May I check just a few numbers at a time to May I check just a few numbers at a time to

see if they are registered? see if they are registered?

Companies that have provided the required

identification information and certification

and paid the appropriate fee (if they want to

access more than five area codes) will be

allowed to check a small number of telephone

numbers (10 or less) at a time via interactive

Internet pages. This will permit small volume

callers to comply with the Do Not Call

requirements of the TSR without having to

download a potentially large list of all

registered telephone numbers within a

particular area.

37
What format will the National Registr What format will the National Registry use?

Data will be available from the National

Registry using Internet-based formats and

download methods that serve both small and

large businesses. Data also will be available in

three different sets: full lists, change lists, and

small list look-ups. Full lists and change lists

will be available as flat files or XML tagged

data files. You will indicate your preference for

flat files or XML tagged data files as part of

your profile.

With a Web browser, you will access a secure

Web page that will allow you to select the

download set that you prefer. For the small list

look-up, you will be asked to enter from one to

10 telephone numbers on an online form.

After entering the numbers and clicking on a

button, the National Registry will display the

list of numbers you entered and whether each

number is in the Registry.

You will be limited to the numbers in the area

code(s) to which you have subscribed. The full

list will contain just 10-digit telephone

numbers, with a single number on each line.

For the change list in flat file format, each line

of the file will contain a telephone number, the

date of the change, and an “A” (for Added) or

“D” (for Deleted). The change list data will be

fixed-width fields.

For those who select XML tagged data, the

XML tags will include: a login and encrypted

password; the name and email address of the

company contact person; certification that

access to the National Registry is solely to

comply with the provisions of the TSR; the

account number(s) for which the download is

being performed; and whether a full list or

change list is to be downloaded.

For both flat files and XML tagged data, if you

select a change list, you will be provided all

telephone numbers that have been added to, or

deleted from, the National Registry since the

date of your previous access. Change lists, for

both flat files and XML tagged data, will be

available to provide changes on a daily basis

(representing the additions and deletions from

the day before).

To assist in automating the download process,

the National Registry will offer the option to

set up Web services for requesting change lists

in XML tagged data format.

Paying for Access

How much does it cost to access the National How much does it cost to access the National

Registr Registry?

Data for up to five area codes will be available

for free. Beyond that, there is an annual fee of

$25 per area code of data, with a maximum

annual fee of $7,375 for the entire U.S. database.

How often will I have to pay a fee? How often will I have to pay a fee?

The fee must be paid annually. Payment of the

fee provides access to the data for an “annual

period,” which is defined as the twelve months

following the first day of the month in which

the seller paid the fee. For example, a seller

who pays its annual fee on September 15, 2003,

has an “annual period” that runs from

September 1, 2003 through August 31, 2004.

Who must pay the fee? Who must pay the fee?

All sellers covered by the TSR must pay the

appropriate fee for an area code of data before

they call, or cause a telemarketer to call, any

consumer within that area code, even those

consumers whose telephone numbers are not

on the National Registry. The only exceptions

are for sellers that call only consumers with

which they have an existing business

relationship or written agreement to call, and

do not access the National Registry for any 

38 Complying with the Telemarketing Sales Rule
other purpose. Charities and political

organizations that voluntarily want to access

the National Registry to prevent calling

consumers whose numbers are on the Registry

may access the Registry at no cost.

Telemarketers and service providers may

access the National Registry, at no cost,

through the use of their seller-client’s unique

account number. Even though they are not

required by law to do so, telemarketers and

service providers may gain access to the

National Registry on their own behalf, but

they must pay a separate fee for that ability.

But before placing calls on behalf of a sellerclient, telemarketers are required to ensure

that their seller-client has paid the appropriate

annual fee.

How can I pay the fee? How can I pay the fee?

Fees will be payable via credit card (which will

permit the transfer of data in the same session,

if the payment is approved) or electronic fund

transfer (EFT). EFT will require you to wait

approximately three days for the funds to clear

before data access will be provided. You must

pay the fee prior to gaining access to the

National Registry. Sellers and exempt entities

can pay the fee directly or through their

telemarketers or service providers (to which

the seller or exempt entity has provided the

necessary authority).

What if I pay for a small number of area What if I pay for a small number of area

codes, and then later in the year e and then later in the year expand my xpand my

business to call more area codes? Will I have business to call more area codes? Will I have

to pay twice? to pay twice?

If you need to access data from more area

codes than you initially selected, you may do

so, but you will have to pay for access to those

additional area codes. Obtaining additional

data from the National Registry during the

first six months of your annual period will

require a payment of $25 for each new area

code. During the second six month period, the

charge to obtain data from each new area code

is $15. Payment for additional data provides

you with access to the additional data for the

remainder of your annual period.

What happens after I pay for access? What happens after I pay for access?

After payment is processed, you will be given a

unique account number and permitted access

to the appropriate portions of the National

Registry. Using that account number in future

visits to the Web site will speed the time

needed for access. On subsequent visits to the

Web site, you will be able to download either a

full updated list of numbers from your selected

area codes or a more limited list, consisting of

changes to the National Registry (both

additions and deletions) that have occurred

since the day of your last download. This limits

the amount of data that you need to download

during each visit. The change file will consist

of each telephone number that has changed,

whether it was added or deleted, and the date

of the change.

If I’m a telemarketer or ser If I’m a telemarketer or service pro vice provider

working for a seller working for a seller, can I use the seller’ can I use the seller’s

account number to access the National account number to access the National

Registr Registry?

A telemarketer or other service provider

working on behalf of a seller may access the

National Registry directly or through the use

of its seller-client’s unique account number. If

access is gained through its seller-client’s

account number, the telemarketer or service

provider will not have to pay a separate fee for

that access. The extent of its access will be

limited to the area codes requested and paid

for by its seller-client. The telemarketer or

service provider also will be permitted to

access the National Registry at no additional

cost, once the annual fee has been paid by its

seller-client. Of course, sellers or telemarketers

must use a version of the National Registry

that’s no more than three months old before

they make any telemarketing calls.

39
If a telemarketer or service provider is

accessing the National Registry directly, that is,

if a telemarketer or service provider decides to

obtain the information on its own behalf, it

will have to pay a separate fee and comply with

all requirements placed on sellers accessing the

Registry. Such a telemarketer or service

provider will be provided an account number

that can be used only by that company. In

other words, that account number is not

transferrable.

What if a seller uses one telemarketer at the What if a seller uses one telemarketer at the

beginning of the year and switches to another beginning of the year and switches to another

later in the year? Will the seller have to pay later in the year? Will the seller have to pay

twice?

No. Each seller will have a unique account

number that it can give to the telemarketers

and service providers who may access the

National Registry on the seller’s behalf.

Compliance

What happens to companies that don’t pay for What happens to companies that don’t pay for

access to the National Registr access to the National Registry?

A company that is a seller or telemarketer

could be liable for placing any telemarketing

calls (even to numbers NOT on the National

Registry) unless the seller has paid the required

fee for access to the Registry. Violators may be

subject to fines of up to $11,000 per violation.

Each call may be considered a separate

violation. However, sellers and telemarketers

should also be aware that the FCC regulates

telemarketing calls. For more information, see

the FCC’s Web site, www.fcc.gov.

What if I call a number that’ What if I call a number that’s not on the s not on the

National Registr National Registry without checking the y without checking the

Registr Registry first? y first?

It’s against the law to call (or cause a

telemarketer to call) any number on the

National Registry (unless the seller has an

established business relationship with the

consumer whose number is being called, or the 

consumer has given written agreement to be

called). But it’s also against the law for a seller

to call (or cause a telemarketer to call) any

person whose number is within a given area

code unless the seller first has paid the annual

fee for access to the portion of the National

Registry that includes numbers within that

area code.

In addition, it’s against the law for a

telemarketer, calling on behalf of a seller, to

call any person whose number is within a

given area code unless the seller has first paid

the annual fee for access to the portion of the

National Registry that includes numbers

within that area code. Telemarketers must

make sure that their seller-clients have paid for

access to the National Registry before placing

any telemarketing calls on their behalf.

However, sellers and telemarketers should also

be aware that the FCC regulates telemarketing

calls. For more information, see the FCC’s Web

site, www.fcc.gov.

What’s my liability if my compan s my liability if my company

inadvertently calls a number on the National inadvertently calls a number on the National

Registr Registry?

The TSR has a “safe harbor” for inadvertent

mistakes. If a seller or telemarketer can show

that, as part of its routine business practice, it

meets all the requirements of the safe harbor, it

will not be subject to civil penalties or

sanctions for mistakenly calling a consumer

who has asked for no more calls, or for calling

a person on the National Registry. However,

sellers and telemarketers should also be aware

that the FCC regulates telemarketing calls. For

more information, see the FCC’s Web site,

www.fcc.gov.

40 Complying with the Telemarketing Sales Rule
How do the registries operated by the FTC, How do the registries operated by the FTC, the

FCC, and the v and the various states fit together? arious states fit together?

On June 26, 2003, the FCC announced that it

was joining the FTC in creating and enforcing

one National Registry. Together, the FTC and

the FCC have jurisdiction over nearly all sales

calls placed to U.S. consumers.

Over half the states currently administer their

own Do Not Call lists. Most of these states will

add the numbers on their registries to the

National Do Not Call Registry. However, the

TSR does NOT preempt state law, so sellers,

telemarketers, and others who do

telemarketing will have to check with various

states to determine what is required for

compliance at the state level. For information

about the FCC’s telemarketing regulations,

visit the FCC’s Web site at www.fcc.gov. A full

copy of the FCC’s regulations can be found at:

http://hraunfoss.fcc.gov/edocs_public/attach

match/FCC-03-153A1.pdf.

The FTC and FCC are working to harmonize

state and federal Do Not Call laws. The goal is

to achieve a single National Registry for the

convenience and efficiency of consumers as

well as businesses.

Troubleshooting

What if I have problems when I tr What if I have problems when I try to access y to access

the National Registr the National Registry?

The Web site at

www.telemarketing.donotcall.gov has help

available online during regular business hours

via a secure electronic form.

Where can I get more information about Where can I get more information about 

compliance? compliance?

The best source of information about

complying with the Do Not Call provisions of

the TSR is the FTC’s Web site at

www.ftc.gov/donotcall. It includes business

information about the National Registry. You

can view the entire TSR at that site.

It’s important that sellers and others involved

in telemarketing recognize that both the FTC

and the FCC regulate telemarketing practices.

Those involved in telemarketing should review

regulations put in place by both agencies. The

FCC’s regulations may be found at:

http://hraunfoss.fcc.gov/edocs_public/attach

match/FCC-03-153A1.pdf.

41

How does the National Registry impact small, home-based direct sellers?

FTC staff does not contemplate enforcing the National Do Not Call Registry provisions against

individuals who make sales calls out of their own homes to personal friends, family members, or

small numbers of personal referrals. In fact, most of the calls made by such small direct sellers

probably would be local or “intrastate” calls, and therefore not covered by the TSR. The TSR

applies to telemarketing campaigns that involve more than one interstate call.

Nevertheless, small home-based direct sellers should be aware that the Do Not Call regulations of

the FCC cover intrastate calls. The FCC regulations exempt “personal relationship” calls — where

the party called is a family member, friend, or acquaintance of the telemarketer making the call.

As a matter of goodwill, small direct sellers may want to avoid contacting a person whose number

is on the Registry. The National Do Not Call Registry has a free, single number look-up feature to

enable small direct sellers to verify whether an individual number is in the Registry database.
42 Complying with the Telemarketing Sales Rule

Do Not Call Safe Harbor

If a seller or telemarketer can establish that as part of its routine business practice, it meets the

following requirements, it will not be subject to civil penalties or sanctions for erroneously calling a

consumer who has asked not to be called, or for calling a number on the National Registry:

• the seller or telemarketer has established and implemented written procedures to honor

consumers’ requests that they not be called.

• the seller or telemarketer has trained its personnel, and any entity assisting in its compliance, in

these procedures.

• the seller, telemarketer, or someone else acting on behalf of the seller or charitable organization

has maintained and recorded an entity-specific Do Not Call list.

• the seller or telemarketer uses, and maintains records documenting, a process to prevent calls to

any telephone number on an entity-specific Do Not Call list or the National Do Not Call

Registry. This, provided that the latter process involves using a version of the National Registry

from the FTC no more than three months before the date any call is made.

• the seller, telemarketer, or someone else acting on behalf of the seller or charitable organization

monitors and enforces compliance with the entity’s written Do Not Call procedures.

• the call is a result of error.

What happens if a consumer is called after he or she has asked not to be called? If a seller or

telemarketer calls a consumer who has:

• placed his number on the National Registry

• not given written and signed permission to call

• either no established business relationship with the seller, or has asked to get no more calls from

or on behalf of that seller . . .

the seller and telemarketer may be liable for a Rule violation. If an investigation reveals that neither

the seller nor the telemarketer had written Do Not Call procedures in place, both will be liable for

the Rule violation. If the seller had written Do Not Call procedures, but the telemarketer ignored

them, the telemarketer will be liable for the Rule violation; the seller also might be liable, unless it

could demonstrate that it monitored and enforced Do Not Call compliance and otherwise

implemented its written procedures. Ultimately, a seller is responsible for keeping a current entityspecific Do Not Call list, either through a telemarketing service it hires or its own efforts.

What does “error” mean? If a seller or telemarketer has and implements written Do Not Call

procedures, it will not be liable for a Rule violation if a subsequent call is the result of error. But it

may be subject to an enforcement investigation, which would focus on the effectiveness of the

procedures in place, how they are implemented, and if all personnel are trained in Do Not Call

procedures. If there is a high incidence of “errors,” it may be determined that the procedures are

inadequate to comply with the Rule’s Do Not Call requirements, the safe harbor is not fulfilled, and

the calls violate the Rule. On the other hand, if there is a low incidence of “errors,” there may not be

a Rule violation. The determination of whether an excusable “error” occurs is based on the facts of

each case. A safe rule of thumb to ensure that adequate Do Not Call procedures are implemented is

to test periodically for quality control and effectiveness.

42
43

To whom does the established business o whom does the established business

relationship apply? relationship apply?

An established business relationship is between

a seller and a customer; it is not necessarily

between one of the seller’s subsidiaries or

affiliates and that customer. The test for

whether a subsidiary or affiliate can claim an

established business relationship with a sister

company’s customer is: would the customer

expect to receive a call from such an entity, or

would the customer feel such a call is

inconsistent with having placed his or her

number on the National Do Not Call Registry?

Factors to be considered in this analysis

include the nature and type of goods or

services offered and the identity of the

affiliate. Are the affiliate’s goods or services

similar to the seller’s? Is the affiliate’s name

identical or similar to the seller’s? The greater

the similarity between the nature and type of

goods sold by the seller and any subsidiary or

affiliate and the greater the similarity in

identity between the seller and any subsidiary

and affiliate, the more likely it is that the call

would fall within the established business

relationship exemption.

43

Examples:

A magazine seller may make a telemarketing call to a customer whose number is on the National

Registry for 18 months after the date of the customer’s last payment for magazines or for 18

months after the seller’s last shipment date of magazines, whichever is later.

A consumer calls a company to ask for more information about a particular product. If the

company returns the consumer’s call within three months from the date of the inquiry, whether

the consumer’s telephone number is on the National Registry is immaterial. But after that threemonth period, the company would need either the consumer’s express agreement to get more calls

or a transaction-based established business relationship to support more calls.

Exemptions to the National Do Not Call

Registry Provisions ______________

The Established Business Relationship

Exemption

Sellers and telemarketers may call a consumer

with whom a seller has an established business

relationship, provided the consumer has not

asked to be on the seller’s entity-specific Do Not

Call list. The Rule states that there are two kinds

of established business relationships.

One is based on the consumer’s purchase,

rental, or lease of the seller’s goods or services,

or a financial transaction between the consumer

and seller, within 18 months preceding a

telemarketing call. The 18-month period runs

from the date of the last payment, transaction,

or shipment between the consumer and the

seller.

The other is based on a consumer’s inquiry or

application regarding a seller’s goods or services,

and exists for three months starting from the

date the consumer makes the inquiry or

application. This enables sellers to return calls to

interested prospects even if their telephone

numbers are on the National Registry.
The Written Permission to Call Exemption

The Rule allows sellers and telemarketers to 

call any consumer who gives his or her express

agreement to receive calls, even if the consumer’s

number is in the National Do Not Call Registry.

The consumer must give express agreement in

writing to receive calls placed by — or on behalf

of — the seller, including the number to which

calls may be made, and the consumer’s signature.

The signature may be a valid electronic

signature, if the agreement is reached online.

If a seller seeks a consumer’s permission to call,

the request must be clear and conspicuous, and

the consumer’s assent must be affirmative. If the

request is made in writing, it cannot be hidden;

printed in small, pale, or non-contrasting type;

hidden on the back or bottom of the document;

or buried in unrelated information where a

person would not expect to find such a request.

A consumer must provide consent affirmatively,

such as by checking a box. For example, a

consumer responding to an email request for

permission to call would not be deemed to have

provided such permission if the “Please call

me” button was pre-checked as a default.

In the FTC’s enforcement experience,

sweepstakes entry forms often have been used

in a deceptive manner to obtain

“authorization” from a consumer to incur a

charge or some other detriment. Authorization

or permission obtained through subterfuge is

ineffective. The FTC scrutinizes any use of such

sweepstakes entry forms as a way to get a

consumer’s permission to place telemarketing

calls to her number.

44 Complying with the Telemarketing Sales Rule

Examples:

A consumer who purchased aluminum siding from “Alpha Company Siding,” a subsidiary of

“Alpha Corp.,” likely would not be surprised to receive a call from “Alpha Company Kitchen

Remodeling,” also a subsidiary of “Alpha Corp.” The name of the seller and the subsidiary are

similar, as are the type of goods or services offered — home repair and remodeling.

If a consumer purchases a computer with peripherals — printer, keyboard, speakers — from a

local retail store, the consumer will have an established business relationship with that store for 

18 months from the date of purchase. In addition, the consumer may have an established business

relationship with the computer manufacturer and possibly the manufacturer of the peripherals, as

well as the operating system manufacturer, as long as the customer has a contractual relationship

with any of these entities. If the printer comes with a manufacturer’s written warranty, the

manufacturer of the printer has an established business relationship with the customer. If the

operating system comes with a manufacturer’s written warranty, the manufacturer of the system

has an established business relationship with the customer, too.

However, if a consumer buys a subscription to a magazine from a magazine publisher that

happens to be owned by a corporation with diverse holdings, the customer’s established business

relationship would exist only with the magazine publisher, not the corporate parent or any other

corporate subsidiaries.
Other Provisions Relating to 

Do Not Call ____________________

Selling or Using a Do Not Call List for Purposes

Other than Compliance

It is a violation of the Rule for anyone to sell,

rent, lease, purchase, or use an entity-specific

Do Not Call list or the National Registry for any

purpose other than complying with the Rule’s

Do Not Call provisions or preventing calls to

numbers on such lists. This provision applies to

list brokers, third-party services, and others, in

addition to sellers and telemarketers. It is

intended to ensure that consumers’ phone

numbers on Do Not Call lists and the National

Registry are not misused. It is a violation of this

provision for a seller to market its own entityspecific Do Not Call list to another entity for

use as a “do call” list.

Sellers and telemarketers (on behalf of sellers)

must purchase access to the relevant Do Not

Call data from the National Registry database.

The Rule prohibits participating in any

arrangement to share the cost of accessing the

National Registry database. A telemarketer may

not divide the costs to access the National

Registry database among various client sellers;

access for each client seller must be purchased

separately. Similarly, a telemarketer may not

access the National Registry to obtain Do Not

Call data and transfer the data to or share it

with another telemarketer.

Denying or Interfering with Someone’s Do Not

Call Rights

It is a Rule violation to deny or interfere with

someone’s right to be placed on the National Do

Not Call Registry or on any entity-specific Do

Not Call list. This provision prohibits a

telemarketer from refusing to accept a

consumer’s entity-specific Do Not Call request,

whether by hanging up the telephone when the 

consumer asserts the request, harassing the

consumer for having made such a request, or

simply failing to diligently capture information

about a consumer’s Do Not Call request and

add it to the appropriate entity-specific Do Not

Call list. In addition, it would violate this part of

the Rule for any person to purport to accept

telephone numbers or other information for

entry into the National Do Not Call Registry.

No data from third parties is accepted into the

National Do Not Call Registry.

Calling Time Restrictions

Unless a telemarketer has a person’s prior consent

to do otherwise, it is violation of the Rule to make

outbound telemarketing calls to the person’s home

outside the hours of 8 a.m. and 9 p.m.

Call Abandonment 

(and Safe Harbor)

The Rule expressly prohibits telemarketers from

abandoning any outbound telephone call, but has

an alternative that allows some flexibility while

enabling you to avoid liability under this provision.

The call abandonment provision and safe harbor

take effect October 1, 2003.

Abandoned calls often result from the

telemarketers’ use of predictive dialers to call

consumers. Predictive dialers promote

telemarketers’ efficiency by simultaneously calling

multiple consumers for every available sales

representative. This maximizes the amount of time

telemarketing sales representatives spend talking to

consumers and minimizes representatives’

“downtime.” But it also means some calls are

abandoned: consumers are either hung up on or

kept waiting for long periods until a representative

is available.

45
Under the Rule’s definition, an outbound

telephone call is “abandoned” if a person answers it

and the telemarketer does not connect the call to a

sales representative within two seconds of the

person’s completed greeting. The use of prerecorded message telemarketing, where a sales

pitch begins with or is made entirely by a prerecorded message, violates the TSR because the

telemarketer is not connecting the call to a sales

representative within two seconds of the person’s

completed greeting.

The abandoned call safe harbor provides that a

telemarketer will not face enforcement action for

violating the call abandonment prohibition if the

telemarketer:

• uses technology that ensures abandonment of

no more than three percent of all calls

answered by a live person, measured per day

per calling campaign.

• allows the telephone to ring for 15 seconds or

four rings before disconnecting an

unanswered call.

• plays a recorded message stating the name and

telephone number of the seller on whose

behalf the call was placed whenever a live sales

representative is unavailable within two

seconds of a live person answering the call.

• maintains records documenting adherence to

the three requirements above.

To take advantage of the safe harbor, a

telemarketer must first ensure that a live

representative takes the call in at least 97 percent of

the calls answered by consumers. Calls answered by

machine, calls that are not answered at all, and

calls to non-working numbers do not count in this

calculation.

A telemarketer also must eliminate “early hangups”

by allowing an unanswered call to ring either four

times or for 15 seconds before disconnecting the

call. This element of the safe harbor ensures that

consumers have reasonable time to answer a call

and are not subjected to “dead air” after one, two,

or three rings.

In addition, in the small permissible percentage of

calls in which a live representative may not be

available within two seconds of the consumer’s

completed greeting, the telemarketer must play a

recorded message. The message must state the

46 Complying with the Telemarketing Sales Rule

What about situations where a consumer

agrees to receive pre-recorded message

telemarketing calls? FTC staff do not

anticipate enforcing this provision against

sellers and telemarketers who have the prior

consent of a called consumer. For example, a

dry cleaner in Kansas City, doing business in

both Missouri and Kansas, gets permission

from its customers to call them with prerecorded messages about the schedule for

pick-up and delivery. The dry cleaner does

not risk a law enforcement action from the

FTC for violating the call abandonment

prohibition, because a pre-recorded message

call, made with the prior permission of the

called party, is not an abandoned call.

The “per day, per calling campaign” measure

A telemarketer running simultaneous

campaigns (on behalf of the same or different

sellers) cannot average the abandonment

rates for all campaigns, offsetting for

example, a six percent abandonment rate for

one campaign with a zero percent

abandonment rate for another. Each separate

campaign is subject to a maximum

abandonment rate of three percent per day.
name and telephone number of the seller

responsible for the call, enabling the consumer to

know who was calling and, should the consumer

wish, to return the call. The Rule expressly states

that sellers and telemarketers still must comply

with relevant state and federal laws, including, but

not limited to, the Telephone Consumer Protection

Act (47 U.S.C. Part 227) and FCC regulations at 47

C.F.R. Part 64.1200. The FCC regulations prohibit

such recorded messages from containing a sales

pitch, but, like the TSR provision discussed here,

require that the message state “only the name and

telephone number of the business, entity, or

individual on whose behalf the call was placed and

that the call was for ‘telemarketing purposes.’” The

recorded message must not contain a sales pitch.

The number on the recorded message must be one

to which a consumer can call to place an entityspecific Do Not Call request.

Finally, a telemarketer wishing to avail itself of the

safe harbor for abandoned calls must keep records

that document its compliance with the first three

safe harbor components in accordance with the

recordkeeping provision of the Rule (Section

310.5). The records must establish that the

abandonment rate has not exceeded three percent

and that the ring time and recorded message

requirements have been fulfilled.

Transmitting Caller ID Information

It is a violation of the Rule to fail to transmit or

cause to be transmitted the telephone number,

and, when available by the telemarketer’s telephone

company, the name of the telemarketer to any

consumer’s caller identification service. This

provision takes effect January 29, 2004.

To comply with this requirement, a telemarketer

may transmit its own number and, where

available, its own name, to consumers’ caller

identification services. The Rule also allows a

substitution of the name of the seller (or

charitable organization) on whose behalf the

telemarketer is calling, and the seller’s (or

charitable organization’s) customer (or donor)

service telephone number, which is answered

during regular business hours. The Rule permits a

service bureau calling on behalf of many clientsellers to transmit a client-seller’s customer service

number (or the donor service number of a

charitable organization client) as well as the

names of these entities, if the service bureau’s

telephone company has the capacity to transmit

this information.

There may be situations when a consumer who

subscribes to a Caller ID service does not receive a

telemarketer’s transmission of Caller ID

information despite the fact that the telemarketer

has arranged with its carrier to transmit this

information in every call. This can happen if the

Caller ID information is dropped somewhere

between the telemarketer’s call center and the

consumer’s telephone. Telemarketers who can

show that they took all available steps to ensure

transmission of Caller ID information in every call

will not be liable for isolated inadvertent instances

when the Caller ID information fails to make it to

the consumer’s receiver. Nevertheless, a

telemarketer’s use of calling equipment that is not

capable of transmitting Caller ID information is

no excuse for failure to transmit the required

information.

The FCC’s telemarketing regulations under the

TCPA also include provisions governing the

transmission of Caller ID (47 C.F.R. Part 64.1200).

47
Threats, Intimidation, and Profane 

or Obscene Language

Sellers and telemarketers are prohibited from using

threats, intimidation, and profane or obscene

language in a telemarketing transaction. This

prohibition covers all types of threats, including

threats of bodily injury, financial ruin, and threats

to ruin credit. It also prohibits intimidation,

including acts that put undue pressure on a

consumer, or that call into question a person’s

intelligence, honesty, reliability, or concern for

family. Repeated calls to an individual who has

declined to accept an offer also may be viewed as

an act of intimidation.

Calling Consumers Repeatedly or

Continuously, with the Intent to

Annoy, Abuse, or Harass

A consumer asks to be placed on a company’s Do

Not Call list. If the telemarketer who receives that

request decides to dial the consumer’s number

repeatedly, hanging up each time or making

obnoxious or offensive remarks to the consumer in

retaliation, the calls would violate this provision of

the Rule. Repeated calls urging a consumer to take

advantage of an offer also would violate this

provision, provided they are made with the intent

to annoy, abuse, or harass.

48 Complying with the Telemarketing Sales Rule
49

Several distinct practices occur in fraudulenttelemarketing operations. The TSR takes

specific aim at these practices.

Disclosing or Receiving Unencrypted

Account Numbers for Consideration

Along with the provisions on express verifiable

authorization and unauthorized billing, another

provision is designed to ensure that consumers are

not charged without their consent. Basically, the

Rule makes it illegal to disclose or receive

unencrypted account numbers for consideration,

unless the disclosure or receipt is to process a

payment for a transaction the consumer has

consented to after receiving all necessary

disclosures and other protections the Rule

provides. Other than processing a transaction to

which the consumer has consented, there is no

legitimate purpose for disclosing or receiving a

consumer’s unencrypted account number. Because

of the likelihood that people illicitly trading in

unencrypted account numbers will misuse the

information by placing unauthorized charges

against consumers’ accounts, this practice is

deemed abusive and is prohibited under the Rule.

The term “unencrypted” means not only complete,

visible account numbers, whether provided in lists

or singly, but also encrypted information with a

key to decrypt. “Consideration” can take a variety

of forms, all of which are aimed at compensating

the provider of the account number information.

Forms of consideration include cash or other

forms of payment for the list up front or after the

sale, and payment of a percentage of each “sale”

made using the account numbers, among others.

Payment Restrictions on Sales of

Credit Repair Services

Credit repair services promise consumers with a

bad credit history that they can remove negative

information from, or otherwise improve, a

consumer’s credit history, credit record, or credit

rating, regardless of whether the information is

accurate.

The Rule prohibits sellers and telemarketers from

requesting or receiving payment for credit repair

services before two events occur:

One, the time frame during which the seller has

promised services will be provided must have

expired. Sellers can represent the time frame for

the delivery of the services either orally or in

writing, including in the contract for the

services. If there’s a discrepancy between the

various representations by the credit repair seller,

the longest time frame represented determines

when payment may be requested or received.

Two, the seller must provide the consumer with

evidence that the improvement promised in the

consumer’s credit record has been achieved. The

evidence must be a consumer report from a

consumer reporting agency, issued more than

six months after the results were achieved.

Nothing in the TSR affects the requirement in

the Fair Credit Reporting Act that a consumer

report may be obtained only for a specific

permissible purpose.

49

Fraudulent Telemarketing Operations
Payment Restrictions on Sales of

Recovery Services

So-called “recovery services” target consumers who

have already been victimized by telemarketing

fraud. In these operations, a deceptive telemarketer

calls a consumer who has lost money or failed to

receive a promised prize in a previous scam. The

recovery room telemarketer falsely promises to

recover the lost money or the promised prize, in

exchange for a fee paid in advance. But even after

the fee is paid, the services promised are not

provided. Typically, the consumer never hears from

the telemarketer again.

The Rule prohibits any recovery service from asking

for or accepting payment for any goods or services

purporting to help a consumer recover funds paid

in a previous telemarketing transaction — or to

recover anything of value promised to a consumer

in a previous telemarketing transaction — until

seven business days after the funds or other items

recovered are delivered to the consumer.

The Rule’s restriction on when recovery rooms can

ask for and accept payment does not apply to

services provided by licensed attorneys. In

addition, the Rule takes aim only at recovery

services that promise the return of money or other

items of value paid for or promised to the

consumer in a previous telemarketing transaction.

It does not apply to attempts to recover money or

items lost outside of telemarketing.

This prohibition does not cover debt collection

services. In fact, debt collection services are not

covered by the Rule in general, because they are

not “conducted to induce the purchase of goods or

services” — a prerequisite for Rule coverage as

dictated by the Rule’s definition of “telemarketing.”

Debt collectors must comply with the FTC’s Fair

Debt Collection Practices Act.

Payment Restrictions on Sales of

Advance-Fee Loans

In advance-fee loan schemes, a telemarketer, in

exchange for a fee paid in advance, promises to get

a loan or a credit card for a consumer or represents

a high likelihood of success in getting or arranging

a loan or other extension of credit for a consumer,

regardless of the consumer’s credit history or

credit record. After the consumer pays the fee, he

or she typically doesn’t receive the promised loan

or other extension of credit. Advance-fee loans

generally are marketed to consumers who have bad

credit histories or difficulty getting credit for other 

50 Complying with the Telemarketing Sales Rule

This prohibition is directed at the deceptive marketing and sale of bogus credit repair services; it is

not directed at the nondeceptive telemarketing of secured credit cards or legitimate credit

monitoring services. No one can permanently remove or “erase” negative entries on a consumer’s

credit report if the information is accurate and current. Deceptive credit repair services may be able

to cause negative credit information to disappear from a consumer’s credit report temporarily by

flooding a credit bureau with letters disputing the accuracy of the negative entries. But once the

credit bureau verifies with creditors that the negative items are accurate, they will reappear on a

consumer’s credit report and stay there for up to seven years and, in the case of a bankruptcy, for 10

years. If an item is inaccurate, incomplete, or more than seven or 10 years old, consumers can

remove or correct the information themselves at no charge if they follow the dispute procedures in

the Fair Credit Reporting Act. Consumers do not need the services of a third party to correct an

inaccurate or out-of-date credit report. No one can do anything to “repair” a bad credit report that is

accurate and up to date.
51

The Rule requires most sellers and telemarketersto keep certain records that relate to their

telemarketing activities. The Rule’s recordkeeping

requirements do not apply to sellers and

telemarketers of nondurable office and cleaning

supplies. The following records must be

maintained for two years from the date that the

record is produced:

• advertising and promotional materials

• information about prize recipients

• sales records

• employee records

• all verifiable authorizations or records of

express informed consent or express

agreement.

Explanations of these categories follow.

Advertising and Promotional

Materials

Sellers and telemarketers must keep at least one

specimen copy of all substantially different

advertising, brochures, telemarketing scripts, and

promotional materials. It is not required to keep

copies of documents that are virtually identical

except for immaterial variations or minor

alterations. Obviously, if no scripts or advertising

or promotional materials are used in connection

with the telemarketing activity, no materials need

to be retained.

Information about Prize Recipients

The Rule requires sellers and telemarketers to

maintain the name and last known address of each

prize recipient, as well as the prize awarded, for all

prizes represented to be worth at least $25. The

value of a prize is determined by what you directly

state or imply to a consumer. If you represent to a

consumer, directly or by implication, that a prize is

worth $25 or more, you must keep records about

the prize recipients, even if the actual value of the

51

reasons. The Rule prohibits sellers and

telemarketers who guarantee or represent a high

likelihood of success in obtaining or arranging a

loan or other extension of credit from asking for or

accepting payment until a consumer gets the

extension of credit promised.

This prohibition on advance fees for loans or other

extensions of credit applies only if sellers and

telemarketers guarantee or represent a high

likelihood of success in obtaining or arranging for a

loan or other extension of credit. Legitimate

creditors may offer various extensions of credit

through telemarketing and may require an

application fee or appraisal fee in advance. There

must be no guarantee or representation of a high

likelihood that the consumer will obtain the

extension of credit. This prohibition in the Rule

does not apply to firm, “pre-approved” offers of

credit by creditors who properly use a “pre-screened”

list in accordance with the FTC staff commentary on

the Fair Credit Reporting Act (FCRA).

Recordkeeping Requirements
prize is less than $25. On the other hand, when

there are no direct or implied representations

about the value of a prize, you must keep records

for prizes that cost you $25 or more to purchase.

Sales Records

The Rule requires sellers and telemarketers to

maintain the following information about your

sales: the name and last known address of each

customer; the goods or services purchased; the

date the goods or services were shipped or

provided; and the amount the customer paid for

the goods or services. Only records relating to

actual sales need to be maintained; you are not

required to keep records of all customer contacts

when customers do not make a purchase.

Employee Records

Sellers and telemarketers must keep employee

records for all current and former employees

directly involved in telephone sales. These records

include the name (and any fictitious name used),

the last known home address and telephone

number, and the job title(s) of each employee. If

fictitious names are used by employees, the Rule

requires that each fictitious name be traceable to a

specific employee. Businesses must maintain upto-date information on current employees and

last-known information on former employees.

Sellers and telemarketers are not required to

update information on former employees. In

addition, records of individuals not directly

involved in telephone sales do not have to be kept

for purposes of the Rule. Nevertheless, such

information may be required under other state or

federal laws.

Verifiable Authorizations or Records

of Express Informed Consent or

Express Agreement

When the method of payment is not a credit card

(subject to the protections of the Truth in Lending

Act and Regulation Z), or a debit card (subject to

the protections of the Electronic Fund Transfer Act

and Regulation E), sellers and telemarketers must

obtain a consumer’s express verifiable

authorization before causing billing information to

be submitted for payment. The Rule requires you

to maintain a record of all verifiable authorizations

that must be provided or received under the Rule.

This requirement does not apply to conventional

checks, written, signed, and mailed to you by the

consumer, or to certain other methods, listed in

the section on express verifiable authorization.

Sellers and telemarketers should retain records of

the verifiable authorization for each transaction, in

any form, manner, or format consistent with the

methods of authorization permitted under the

52 Complying with the Telemarketing Sales Rule

Consumer credit products: For offers of

consumer credit products subject to the

Truth in Lending Act (TILA) and Regulation

Z, compliance with the recordkeeping

requirements under those regulations is

sufficient for compliance with the TSR

recordkeeping requirement.

Magazine sales: For the sale of magazines

through a fulfillment house, where sellers

and telemarketers do not know or have

control over the dates of shipment, you may

comply with the requirement to keep a

record of the shipment date by keeping a

record of the date the order was placed with

the fulfillment house or the date that the

service is to begin.
Rule. For example, if you obtain a written

authorization from the consumer, a copy of it

must be maintained; if authorization is via audio

recording, a copy of the recording must be

maintained. While the recording may be retained

in any format, it must include all the information

that must be disclosed to the consumer, as well as

the consumer’s oral authorization. If a consumer

gives written confirmation, you must maintain all

the information provided in the confirmation.

For records of express informed consent and

express agreement (required by the unauthorized

billing provision of the Rule [Section 310.4(a)(6)]

and the National Do Not Call Registry provision

[Section 310.4(b)(1)(iii)(B)(i)]), you must create

and maintain records of consent and agreement

for each required transaction, and keep them in

much the same way you keep such records in the

ordinary course of business.

Maintaining Records

The Rule is not intended to impose any new

recordkeeping procedures on sellers and

telemarketers. You may maintain the records in any

manner, format, or place that you keep such

records in the ordinary course of business,

including in electronic storage, on microfiche, or

on paper.

Who Must Keep Records?

Sellers and telemarketers do not have to keep

duplicative records if they have a written

agreement allocating responsibility for complying

with the recordkeeping requirements. Without a

written agreement between the parties, or if the

written agreement is unclear as to who must

maintain the required records, telemarketers must

keep employee records, while sellers must keep the

advertising and promotional materials,

information on prize recipients, sales records, and

verifiable authorizations. In the event of

dissolution or termination of the business of a

seller or telemarketer, the principal of the business

must maintain all records of the business. In the

event of a sale, assignment, or other change in

ownership of the seller or telemarketer’s business,

the successor business must maintain the records.

53

Does the Rule require that other information

be maintained concerning the verifiable

authorizations? No, but it is sound policy for

sellers and telemarketers who use the written

confirmation method of authorization for

non-debit and credit card payments to

maintain records showing that the

confirmation was sent to the customer

before the customer’s billing information

was submitted for payment. In addition, you

may want to keep records of any refunds you

provide to consumers who claim that the

written confirmation was inaccurate. If law

enforcement authorities get consumer

complaints about unauthorized billing, they

may ask the seller or telemarketer to produce

the information to show that the Rule

requirements were followed.
54 Complying with the Telemarketing Sales Rule

The FTC, the states, and private citizens maybring civil actions in federal district courts to

enforce the Rule. State attorneys general or any

other officer authorized by the state to bring

actions on behalf of its residents may bring actions

by the states. Private citizens may bring an action

to enforce the Rule if they have suffered $50,000 or

more in actual damages.

If state officials or private citizens bring a legal

action under the Rule, they must provide written

notice of their action to the FTC before filing a

complaint, if feasible, or immediately upon filing

the action. The notice must include a copy of the

complaint and any other pleadings to be filed with

the court. Private litigants and state officials should

send such notices to:

Office of the Director

Bureau of Consumer Protection

Federal Trade Commission

Washington, D.C. 20580

State officials also may submit electronic notice,

and copies of pleadings, via the Consumer Sentinel

Web site. Information about Consumer Sentinel is

available at www.consumer.gov/sentinel.

54

Who Can Enforce the Rule?

Penalties for Violating the Rule

Anyone who violates the Rule is subject to civil penalties of up to$11,000 per violation. In addition, violators may be subject to

nationwide injunctions that prohibit certain conduct, and may be

required to pay redress to injured consumers.
55

Direct Marketing Association, Inc.

Washington Office:

1111 19th Street, N.W., Suite 1100

Washington, D.C. 20036-3603

(202) 955-5030

The FTC has information available about the

following subjects at www.ftc.gov or from its tollfree HelpLine, 1-877-FTC-HELP:

• FTC’s Franchise Rule

• FTC’s 900-Number Rule

• FTC’s Cooling Off Rule

• FTC’s Mail or Telephone Order Merchandise

Rule

• FTC’s Negative Option Rule

• Continuity Plans

• Fair Credit Reporting Act

• FTC’s Fair Debt Collection Practices Act

• The Truth in Lending Act

The FCC has information about the TCPA.

Federal Communications Commission

Consumer & Governmental Affairs Bureau

Complaints & Inquiries Division

445 12th Street, S.W.

Washington, D.C. 20554

email: fccinfo@fcc.gov

www.fcc.gov/cgb/complaints.html

1-888-CALL-FCC (1-888-225-5322) — voice

1-888-TELL-FCC (1-888-835-5322) — TTY

The FTC works for the consumer to prevent

fraudulent, deceptive, and unfair business practices

in the marketplace and to provide information to

help consumers spot, stop, and avoid them. To 

file a complaint or to get free information on

consumer issues, visit www.ftc.gov or call toll-free,

1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-

653-4261. The FTC enters Internet, telemarketing,

identity theft, and other fraud-related complaints

into Consumer Sentinel, a secure, online database

available to hundreds of civil and criminal law

enforcement agencies in the U.S. and abroad.

55

Additional Sources of Information
56 Complying with the Telemarketing Sales Rule

1. These entities are: brokers, dealers, transfer

agents, municipal securities dealers, municipal

securities brokers, government securities brokers,

and government securities dealers (as those terms

are defined in Section 202(a)(11) of the

Investment Advisers Act of 1940); and futures

commission merchants, including brokers,

commodity trading advisers, commodity pool

operators, leverage transaction merchants, floor

brokers, or floor traders (as those terms are

defined in Section 6(1) of the Commodity

Exchange Act).

2. An investment opportunity is anything that is

offered, offered for sale, sold, or traded based on

representations about past, present, or future

income, profit, or appreciation. Examples of

investment opportunities include art, rare coins,

oil and gas leases, precious or strategic metals,

gemstones, or FCC license or spectrum lottery

schemes. In addition, business ventures that are

not covered by the FTC’s Franchise Rule are

investment opportunities.

3. State laws vary on permitting the recording of

telephone conversations and the requirements to

obtain consent of the recorded party. Consult an

attorney for guidance on these issues.

56

Footnotes

Your Opportunity to Comment

The National Small Business Ombudsman and 10 Regional FairnessBoards collect comments from small businesses about federal

compliance and enforcement activities. Each year, the Ombudsman

evaluates the conduct of these activities and rates each agency’s

responsiveness to small businesses. Small businesses can comment to

the Ombudsman without fear of reprisal. To comment, call toll-free 

1-888-REGFAIR (1-888-734-3247) or go to www.sba.gov/ombudsman.
Federal Trade Commission

6th & Pennsylvania Avenue, N.W.

Washington, D.C. 20580