Direct Marketers Beware:   As of last week, oral consent to receive some types of marketing calls is not enough.  Last year, the Federal Communications Commission (FCC) adopted several significant changes to its Telephone Consumer Protection Act (TCPA) regulations, which went into effect October 16.

Under these new regulations, businesses must obtain “prior express written consent” before placing telemarketing calls to mobile phones using an automatic telephone dialing system or an artificial or prerecorded voice, and to residential lines before using an artificial or prerecorded voice. The regulation also applies to faxes and text messages.

Another rules change gets rid of the “established business relationship” exception for artificial or prerecorded voice calls to residential lines as well as text messages to mobile phones. This exception allowed businesses to “robocall” if a customer had ever made a purchase from them or used a service of theirs. There are, of course, the usual exemptions for healthcare organizations, emergency calls, charities, and political groups.

Complicating matters further, the FCC has defined “prior express written consent” to mean “an agreement, in writing, bearing the signature of the person called that clearly authorizes the seller to deliver or cause to be delivered to the person” a telemarketing call to mobile phones using an automatic telephone dialing system or an artificial or prerecorded voice, and to residential lines before using an artificial or prerecorded voice. A signature, however, can be electronic or digital per applicable federal law or state contract law.

These new regulations could have significant financial and operational implications for both B2B and B2C businesses, big and small. To start, a customer voluntarily providing his or her phone number during a business transaction does not constitute consent to receive automatic telephone dialing system or artificial or prerecorded voice marketing calls.  Companies that have been building their customer databases for years must now figure out how to collect written agreements or sacrifice years of lead generation.

The most serious implication of these rules changes is what happens when a company violates the rules. Based on past action, or lack thereof, aggressive or even tepid enforcement by the FCC is unlikely. Private action against companies, however, will almost certainly increase under the now-widened scope of the regulations. With the law providing for damages of up to $1,500 per violation, even a small campaign can lead to millions in damages.  Just last month, Bank of America (BoA) agreed to pay [2] $32 million to settle charges that it made harassing debt collection calls to customers’ cell phones. Last year, Sallie Mae settled a case for $24 million and companies such as Yahoo!, Google, Facebook, and Dell, as well as numerous small businesses, have incurred significant costs in defending class actions. In one industry segment, suits have increased by 65% [3] in the past year alone, prior to the new regulations and its widened scope taking effect.

Source: Outsell Insight October 22, 2013