In
August 1994, the Telemarketing and Consumer Fraud and Abuse Prevention
Act became law. The purpose of the act is to combat the growth of
telemarketing fraud by providing law enforcement agencies with powerful
new tools and to give consumers new protections and guidance on how to
tell the difference between fraudulent and legitimate telemarketing.
Under the act, the Federal Trade Commission adopted the Telemarketing
Sales Rule, which became effective on Dec. 31, 1995.
Key
provisions of the rule require specific disclosures, prohibit
misrepresentations, limit times when telemarketers may call consumers,
prohibit calls after a consumer requests not to be called, set payment
restrictions for the sale of certain goods and services and require that
specific business records be kept for two years. Typically, sales by
businesses to businesses are not regulated by FTC rules or regulations.
The theory is that businesses are more sophisticated than consumers are
and thus not likely to become victims.
Over
the past 15 years, the Business Technology Association has received
thousands of complaints from owners of office products regarding the
fraudulent and deceptive practices of some vendors of toner and other
supplies. As a result, BTA sought the inclusion of nondurable office
supplies under the rule. Reputable companies will have no difficulty in
complying in regard to their telemarketed sales of nondurable supplies,
such as paper, pencils, toner, developer or any product that is depleted
and must be replaced. The rule does not apply to software, computer
disks, copiers, computers or any other telemarketed office product or
system that can be used over and over again. Most importantly, BTA
members are specifically exempt from the record keeping requirements of
the rule. Thus, office automation resellers who telemarket sales of
nondurable goods need not create or keep any particular records in order
to comply with the rule.
What does the rule require telemarkets to do?
1. The rule requires telemarketers to disclose material information:- The identity of the seller.
- The purpose of the call is to sell goods or services.
- The nature of the goods or services offered.
- The cost and quantity of the goods.
- A no-refund policy if such exists.
2. A telemarketer may not misrepresent the goods offered:
- State the toner is manufactured by Minolta, for example, when it is not.
- State the performance level of the product if it is not based on independent and verifies results.
3. A telemarketer may not:
- Call repeatedly or continuously with the intent to annoy, abuse or harass.
- Call someone who has previously requested that he or she not be called.
- Call any consumer’s residence before 8 a.m. or after 9 p.m. (Be careful of "home" offices).
Violations
of the rule may result in civil penalties of up to $10,000 per
violation. In addition, violators may be subject to nationwide
injunctions that prohibit certain conduct and may also be required to
make refunds to injured customers.
When
all is said and done, BTA members should not have to modify their
business practices in order to comply with the Telemarketing Sales Rule.
Hopefully, only the fraudulent telemarketers will find it necessary to
amend their practices and compete honestly and fairly. If you have any
questions regarding the rule, please feel free to call the Legal Hotline
at (800) 869-6688.
Bob Goldberg
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