Are Marketers Ready for New Telemarketing Rules?

New FCC regs could cause headaches and lawsuits

A new telemarketing rule that goes into effect this Wednesday could cause marketers a lot of headaches and potential lawsuits in the coming days.

By Oct. 16, marketers must get prior written consent from consumers before delivering auto-dialed or prerecorded calls or mobile texts to consumers.

While that may not sound onerous, the rules contain very specific requirements for what constitutes prior written consent, meaning that all those opt-in databases companies have may not comply with the new statute. Even if companies had a prior business relationship with a consumer, they no longer can rely on it because the new rule eliminated the "established business relationship" exemption.

"It's a higher standard," explained Marc Roth, a partner in the advertising, marketing and media practice of Manatt, Phelps & Phillips. "Companies are scrambling to figure out how they can re-opt-in their database. It's a pain; it's thorny."

Companies shouldn't be surprised the changes were coming. The Federal Communications Commission passed in February 2012 the stricter rules updating the 1991 Telephone Consumer Protection Act to protect consumers from unwanted robocalls. But the new rules go further by specifying the language that must be used in the consent agreement.

As part of the consent agreement, companies must ask consumers to agree to receive automated or pre-recorded messages and that they understand a purchase is not a condition of the agreement.

Many companies are still working out how best to word the consent agreements, especially because in many instances—like in delivering a coupon or announcing a sweepstakes—no purchase is involved. "They're testing different language options. At a recent telemarketing conference, no [one] had the answer," Roth said.

For example, a simpler agreement might be: "Please send me offers and coupons to my mobile phone. I understand these messages will be sent via automated means and that no purchase is necessary."

There are questions about whether a company can seek agreement by asking a consumer to text back using a short code to receive a confirmation message that will ask for a "yes" reply spelling out the consent.

Roth expects that in the end, it will be the courts that will decide how much latitude companies have in seeking consumer consent. "No one is concerned about the FCC, because they do little enforcement. The big fear is class actions. It's going to be the courts that decide what is necessary and what is not in terms of consent," Roth said.