Telemarketers may be forgiven for thinking that regulators have left a pre-Christmas holiday lump of coal in their stockings. The Federal Communications Commission and the Federal Trade Commission are raising penalties and have new rules that come into effect shortly.

 

The FCC (News - Alert) raised the maximum per-violation fine for Telephone Consumer Protection Act (TCPA) violations to $16,000 from $11,000 as a cost of living adjustment. The change is in the agency’s statutory authority. The TCPA was first passed in 1991 and the amount has not been boosted since.

 

Even so, this move, which came into effect with little notice in September 2008 along with other similar fine boosts, has been greeted with skepticism by the industry.

 

“While the FCC is within its legal rights to raise the penalty, we don't see how this move will significantly increase revenues, or deter violators, because rarely does the Commission impose the full amount per violation,” Jerry Cerasale, Direct Marketing Association Senior Vice President-Government Affairs points out. “If the FCC did this it would put many firms out of business, which is not the Commission's intent. Instead its goal is to punish offenders so that they clean up their acts and behave responsibly.”

 

Joseph Sanscrainte, an attorney with Bryan Cave and an authority in telemarketing law and regulations believes the FCC move will have little effect in deterring violators.

 

“The FCC's enforcement history under the TCPA is not as nearly as robust as the FTC's (News - Alert) under the Telemarketing Sales Rule,” Sanscrainte points out. “In order to really gauge the impact of this increase, I think we have to wait and see what happens with regard to the FCC's enforcement actions moving forward.”

 

Steve Brubaker, Senior Vice President, Corporate Affairs of teleservices firm InfoCision Management Corporation is worried that legitimate companies could also be severely hurt by the penalty hike.

 

“We are in full support of criminals being penalized for defrauding consumers, but this cost of living increase of 45 percent can severely handicap legitimate call centers who make an inadvertent error,” says Brubaker. “At $16,000 per infraction, the fines add up.”

 

The FTC for its part will require sellers and telemarketers provide, by no later than December 1, 2008, at the outset of all prerecorded messages, an automated keypress or voice-activated interactive opt-out mechanism. This regulation will enable consumers to opt out as easily as they can from live telemarketing calls. And beginning Sept 1, 2009, firms cannot leave pre-recorded messages with called parties unless they have express written consent.

 

In response the industry reiterated and expanded some earlier concerns about the value and effectiveness of these regulations, reported August 25, 2008 on TMCnet “Analysis: Industry Split on Telemarketing Sales Rule Changes”

 

 

“The FTC regulations: the pre-recorded opt-out and the express written consent are really redundant,” states Cerasale. “They are costing money to companies and eventually consumers in a difficult economic climate, for what is virtually no added protection. That's because under this new FTC rule, you can leave pre-recorded messages only for those who have given you express written permission to do so."

 

InfoCision’s Brubaker agrees. He says what FTC is trying to get at is longwinded messages which try a consumer's patience and force them to wait until the end of sales pitch just to be able to opt-out.

 

“Responsible companies who strive to enhance the relationship with their customers would only use brief messages anyway,” explains Brubaker. ”Here is another example of regulators using an axe instead of a scalpel.”

 

Industry firms have been gearing up to offer services to help telemarketers comply with the new FTC rule. Ifbyphone has enhanced its hosted telephone application platform with a default recording of the required opt-out message, the ability to customize that recording and a pre-packaged solution for accepting opt-out telephone calls.

“Our tools have always enabled businesses to have two-way conversations with their customers,” said Josh Kugler, vice president of technology for Ifbyphone (News - Alert). “What we’ve done with these enhancements is make it even easier for businesses to be in compliance.”