November 22, 2016

FTC Reverses Course on Soundboard Technology to Curtail Abusive Telemarketing Calls

Seller Beware: Consumer Protection Insights for Industry

This month, the FTC issued a Staff Opinion Letter that will revoke a prior opinion letter and will now bring outbound telemarketing calls that utilize soundboard technology within the purview of the Telemarketing Sales Rule's (TSR) provisions governing outbound telemarketing calls that deliver prerecorded messages, commonly referred to as "robocalls."

In 2008, the FTC amended the TSR to include new restrictions on the use of prerecorded messages in telemarketing, including the prohibition on certain telemarketing calls that "deliver a prerecorded message" without prior written consent.

In 2009, the FTC issued a Staff Opinion Letter (2009 Letter) to address the use of soundboard technology to make telemarketing calls. Soundboard technology allows a live agent to communicate with a call recipient by playing recorded audio snippets instead of using his or her own live voice. The 2009 Letter concluded that telemarketing calls using soundboard technology were outside the scope the 2008 amendments to the TSR "because a single live agent stays with the call from beginning to end, listens to every word spoken by the call recipient, determines what is heard by the call recipient, and has the ability to interrupt recordings and use his or her own voice to communicate with the call recipient if needed." At that time, the FTC understood soundboard technology to be "virtually indistinguishable" from normal two-way conversations with live operators.

Now, however, FTC has issued a mea culpa on the issue and is revoking its 2009 Letter for three primary reasons.

  • First, in the seven years since the issuance of the 2009 Letter, the FTC has observed that telemarketers were improperly relying on the 2009 Letter to engage in what effectively were not two-way calls. According to the FTC, telemarketers have been using soundboard technology to allow a single live agent to handle more than one call at the same time. The FTC concluded that use of soundboard technology in this manner does not represent a normal, continuous, two-way conversation between the call recipient and a live person and is inconsistent with the TSR's provisions and the 2009 Letter because "a human being cannot conduct separate conversations with multiple consumers at the same time using his or her own voice."
  • Second, the FTC noted that it is has received numerous complaints from consumers about telemarketing calls utilizing soundboard technology since the issuance of the 2009 Letter. For example, consumers complained about not receiving appropriate responses to their questions, live operators no intervening when requested to do so, and calls that were terminated in response to questions.
  • Third, the FTC added that, because calls made using soundboard technology do indeed deliver a prerecorded message, such calls are covered by the plain language of the TSR.

The revocation of the 2009 letter will be effective as of May 12, 2017, rather than immediately, affording companies using soundboard technology time to come into compliance with the TSR's provisions.

The revocation of the 2009 Letter, however, does not render all calls made using soundboard technology subject to the TSR's restrictions. Some calls, such as purely informational calls, political calls, and calls from charities themselves, for example, do not fall under the TSR's provisions.

The FTC's decision to revoke its 2009 Letter is the latest development in the FTC's continuing efforts over the years to combat telemarketing abuses. As previously reported by this blog, the FTC has pursued telemarketing scammers that target Spanish speakers has pursued "friends" of telemarketers, and even has held a contest soliciting ways to block illegal robocalls on landlines and mobile phones. It should also be noted that the FCC also has rules that align with the FTC's TSR (we blogged about the FCC).

Telemarketers that use soundboard technology, or similar methods, to make telemarketing calls should modify their business practices accordingly in light of the FTC's new guidance.

© Arnold & Porter Kaye Scholer LLP 2016 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.

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