The Devil’s in the Details – FTC Loses Clarity on Robocalls

Recently the FTC held a press conference to announce the winners of their $50,000 Robocall Challenge, which asked the public to come up with a technical solution to block illegal robocalls. What was missing from their definition of robocalls?
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What was missing from the FTC’s announcement of the winners of their Robocall Challenge?

Just one word.

MARKETING

Recently the FTC held a press conference to announce the winners of their $50,000 Robocall Challenge, launched October 2012, which asked the public to come up with a technical solution to block illegal robocalls. In his presentation of the awards and in answering subsequent questions from the media, Chuck Howard, acting director of the commission’s Consumer Affairs division, never once clarified that what makes a pre-recorded phone message an “illegal robocall” is that they must be attempting to sell a product or service.

In other words, they must be MARKETING calls.

Unfortunately, not only did the acting director fail to provide this clarification, he instead said:

“It’s illegal for companies to use any sort of pre-recorded device to place calls to consumers without express written authorization from the consumer.”

That’s a very disturbing misstatement of the actual rules for companies using pre-recorded messages to communicate time-sensitive information to customers about such things as delayed flights, upcoming appointments, prescription refills, possible credit card fraud or overdue payments. All of these and other customer service messages are in fact legal without requiring the customer to authorize them in writing.

What’s more important is that customers want these messages. In a recent survey for the banking industry, we found that 54% of customers want to be immediately notified of irregular account activity or if changes are made to their account information. We also find that customer response rates to pre-recorded messages concerning the status of their application for credit or modification of an existing loan average above 65%, indicating a very high level of acceptance for a form of communication the FTC appears unwilling to acknowledge as beneficial.

While I applaud the enforcement action the FTC recently took to shut down the operations of a scam artist using pre-recorded messages to sell credit card interest rate reductions and extended warranties, I am worried that unless the commission does a better job of educating the public on the law, the call-blocking solutions proposed in response to their challenge will interfere with legitimate forms of customer communication.

That’s why I propose the FTC begin using a new phrase to describe the illegal use of recorded messages for soliciting the sale of goods or services:

Robo-MARKETING-Calls

At the same time, they should make a distinction between Robo-MARKETING-Calls and the customer-pleasing, health-promoting, convenience-increasing, fraud-preventing, credit-improving communications they can refer to as:

Interactive-SERVICE-Calls

If they do this every time they address the topic of illegal calls, they will be presenting fair, balanced and accurate information to the public they are protecting, the businesses they are regulating, and the press who might otherwise miss the very important distinction.

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Brian Moore

About Brian Moore

Brian Moore, senior principal, industry solutions of Nuance's Enterprise division, brings more than 25 years of experience in financial services, mortgage and collections operations and technology to the company. He is also our resident compliance expert, advising companies on how to comply with TCPA, CFPB, TSR and other customer communications compliance regulations.