Compliance Blog

From time to time, the NAFCU Compliance team receives questions about how to comply with the Telephone Consumer Protection Act (TCPA). Many of these questions relate to the different kinds of consent (e.g., prior express consent versus prior express written consent) that might be required depending on whether the call is to a wireless number or to a residential landline or the call uses an artificial or prerecorded voice or an autodialer. This NAFCU Compliance Monitor article from July 2017 explains some of the operational challenges that arise in the context of the TCPA and obtaining the proper consent.

Over the past few years, NAFCU has blogged about the following issues related to the TCPA:

•  the United States Court of Appeals for the D.C. Circuit vacating part of the Federal Communications Commission's (FCC) 2015 Omnibus Declaratory Ruling and Order,
• the split among some United States Courts of Appeals about what constitutes an autodialer,
• a TCPA status update at the beginning of 2019, and
• the FCC's recent attempts to address robocalls.

There is, however, a federal rule that has not received the same fulsome coverage from the NAFCU Compliance team: the Federal Trade Commission's (FTC) Telemarketing Sales Rule (TSR). The TSR implements the Telemarketing and Consumer Fraud and Abuse Prevention Act (Act). See, 16 CFR § 310.1.

As the name of the rule suggests, it regulates telemarketing. Telemarketing is defined as "a plan, program, or campaign which is conducted to induce the purchase of goods or services or a charitable contribution, by use of one or more telephones and which involves more than one interstate telephone call." See, 16 CFR § 310.2(gg). The definition of telemarketing specifically excludes the following:

"The term does not include the solicitation of sales through the mailing of a catalog which: contains a written description or illustration of the goods or services offered for sale; includes the business address of the seller; includes multiple pages of written material or illustrations; and has been issued not less frequently than once a year, when the person making the solicitation does not solicit customers by telephone but only receives calls initiated by customers in response to the catalog and during those calls takes orders only without further solicitation. For purposes of the previous sentence, the term “further solicitation” does not include providing the customer with information about, or attempting to sell, any other item included in the same catalog which prompted the customer's call or in a substantially similar catalog." See, 16 CFR § 310.2(gg).

This exclusion captures sales that occur when someone calls to make a purchase in response to a mail order catalog. This is in addition to the practices identified in section 310.6 that are exempted from certain requirements of the rule. Some of these express exemptions include conduct that might be regulated under other rules implemented by FTC (e.g., sale of franchises or business opportunities). See, 16 CFR §§ 310.6(b)(1) and (2). And some of the exemptions exist because they are not the kind of conduct that led to the enactment of the Act and the TSR (e.g., business-to-business solicitations other than  calls to induce the retail sale of nondurable office or cleaning supplies). See, 16 CFR § 310.6(b)(7).

The TSR does several things. It prohibits certain practices that constitute deceptive telemarketing acts or practices (e.g., failing to make certain disclosures before a customer consents to pay for goods or services). See, 16 CFR § 310.3. It also prohibits certain practices that constitute abusive telemarketing acts or practices (e.g., a telemarketer using profane or obscene language or dialing any telephone "repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number[.]"). See, 16 CFR § 310.4. The TSR also has a recordkeeping requirement requiring retention of certain records relating to telemarketing activities for at least 24 months. See, 16 CFR § 310.5. And like the TCPA, the Act and theTSR also contemplate a private right of action for violations of the Act or the rule. See, 16 CFR § 310.7. The TSR and the TCPA have another thing in common: They both provide for a national and company-specific do not call list. See, 16 CFR §§ 310.4(b)(1)(iii)(A) and (B) and 47 CFR §§ 64.1200(c)(2) and (d).

That said, neither the Act nor the TSR apply to conduct that is outside of the jurisdiction of the FTC Act. And federal credit unions are outside the scope of the jurisdiction of the FTC Act. See, 15 USC § 45(a)(2). But state-chartered credit unions are subject to the FTC's jurisdiction and the TSR. If a federal credit union used a third-party vendor for telemarketing and the vendor fell under the FTC's jurisdiction, the third-party vendor would have to comply with the Act and the TSR. See, 60 FR 43842, 43843.

The FTC has useful tools that can help credit unions determine whether the TSR might be relevant to them and how to comply with the TSR's requirements:

• Complying with the TSR.
• Q&A for Telemarketers & Sellers About DNC Provisions in TSR.

A credit union may also wish to consult with counsel to see if any of its telemarketing vendors might be subject to the TSR.

Today Only: Save $300!

Why wait until December; take advantage of Pre-Cyber Monday savings now! Today only, save $333 when you use code CYBER to register for any NAFCU conference and online training subscription. Plus, you can use code CYBER on Monday for as many conferences, and for as many people, as you wish. Use code CYBER on Monday. It’s the best savings of the year!