For businesses selling services direct to consumers, telemarketing is likely a key component of their sales plan and ultimate success. Several avenues exist to gain leads, including referrals from current customers, partnerships and customer information sharing with businesses in a similar industry, and purchasing telemarketing lists from lead generator companies.
Each of these avenues relies upon a level of trust. When your current customers trust you and your services based on direct experience, they may refer you to friends, family and colleagues. Trust in business partnerships relies on the terms of the contractual business agreement, that each company has received consent to share customer information with their affiliates, and that each company is fulfilling the agreement. When purchasing a telemarketing list from a lead generator company, a business is placing trust in the lead generator that those on the list have given their consent to be contacted and that the list has been gathered in a lawful manner.
Versatile Marketing Solutions, a home security and monitoring systems seller, placed their trust in such lead generator companies when told that purchased lists were properly obtained and contained consenting contacts. When warning signs emerged, like those on the list stating they were on the National Do Not Call registry when called, VMS ignored them. These actions brought a $3.4 million penalty judgment against the company and its owners from the Federal Trade Commission and the Department of Justice.
No company should want to follow in the footsteps of VMS. It is easier than ever for consumers to report violations of the National Do Not Call registry. And for companies that rely on telemarketing, it is just as easy to compare a call list against the registry.
If telemarketing is important to your business’s success, it is a good practice to put procedures in place to ensure that the lists are properly vetted and you are not engaging in illegal telemarketing, exposing you to civil litigation. The Better Business Bureau recommends implementing the following into your telemarketing procedures:
• Familiarize yourself and all staff with the Telemarketing Sales Rule. Details can be found at business.ftc.gov/documents/bus27-complying-telemarketing-sales-rule. Many questions about the TSR are answered at business.ftc.gov/documents/alt129-qa-telemarketers-sellers-about-dnc-provisions-tsr. It is important to note that violations can bring fines of up to $16,000 for each call.
• Comply with Montana State telemarketing laws, which can be found at doj.mt.gov/consumer/telemarketing/.
• Perform your own verification of all purchased lists. To compare numbers on a list to the National Do Not Call registry, go to www.telemarketing.donotcall.gov. For answers on how to use the registry, visit www.donotcall.gov/faq/faqbusiness.aspx.
• Empower telemarketing employees to report consumer complaints and take them seriously. Ignoring people who share that they are on the registry is not a legal defense that you didn’t know. Also, if a consumer asks to be removed from your in-house call list, you must comply. VMS didn’t and continued to call, adding to their legal troubles.
• Continue to vet business partnerships. Once you know that a purchased list does not contain contacts that have been properly obtained, stop using the list and the company that provided it. If you outsource telemarketing, you are still liable for the actions of other companies working on your behalf, including the use of robocalls. Ask tough questions of your potential business partners.
• There are some defenses for calling customers under the TSR, such as when a customer has given express written consent to be contacted and when a customer has initiated an inquiry with your company. Even an isolated violation made in error is recognized under a safe harbor defense. But such defenses will fall away if you don’t have a strong record of compliance.
The online Business Center of the Bureau of Consumer Protection offers businesses resources for staying compliant and can be found at business.ftc.gov/advertising-and-marketing/telemarketing.
For many the idea of facing civil penalties that could bankrupt their company is enough of a deterrent to steer clear of violating the Telemarketing Sales Rule. For those companies not deterred, the Federal Trade Commission has formed the Criminal Liaison Unit, which includes many state and local prosecutors who pursue criminal charges for those who defraud consumers using illegal telemarketing and other means.
Healthy businesses use best practices to generate sales and grow their customer base and referrals. They take the time and do the work needed to ensure success. And they know that success doesn’t come by turning a blind eye to warning signs or violating consumer protection laws and hoping the authorities don’t notice.