By Peter Feltman, CCH Washington Staff Writer

The Federal Trade Commission has approved a final rule which will set up a new Do Not Call Database where consumers who do not wish to receive telemarketing calls can enter their numbers into an FTC list.

The FTC first proposed this early in 2002, and the final rule works by amending the Telemarketing Sales Rule. During the announcement, FTC Chairman Timothy J. Muris said that the FTC will still need Congressional authorization to go forward with the database, and that once Congress acts, FTC enforcement will begin about seven months later.

Under the final rule, if Congress provides authorization, the FTC will fund the no call registry by fees from telemarketers, which the FTC believes will be about $16 million total annually. According to the FTC, it received about 64,000 comments on its proposal, most of which were positive. Consumers will be able to place their numbers on the list via the Internet, or eventually via a toll-free phone number, all at no charge. Telemarketers will have to "scrub" their lists every three months of any names that appear on the FTC's list.

Companies can still continue to call customers with whom they have "established business relationships" or if the customer has purchased, leased, or rented goods from the company within 18 months; or has made an inquiry with the company within three months. Customers whose names are on the list can specify in writing that they allow certain companies to call them as well.

The rule also provides more protection against unauthorized transactions, and limits the sharing of credit card information by telemarketers. In addition, the FTC rule requires telemarketers to transmit their numbers to caller ID devices. Moreover, if the telemarketer's phone carrier allows for the telemarketer's name to be transmitted via caller ID, that must happen as well. If a telemarketer is calling on behalf of a charity, the FTC rule allows for the charity's name to be substituted on caller ID.

The measure also intends to eliminate the "deadtime" that occurs when a customer answers a phone but hears nothing, which is the result of dialing machines that work faster than the telemarketers can keep up with. A sales representative must come on the line within two seconds, or else a recording must be substituted. The rule does allow up to three percent of telemarketing calls to be abandoned, which happens when no sales representative is able to speak with the recipient of an automatically dialed call.

Charitable calls will be covered by the new FTC rule if the caller is a for-profit fundraiser acting on behalf of the charity, and the FTC did this in accordance with the USA Patriot Act. Charities that perform telemarketing themselves would not be subject to the rule. A number of other groups are also not subject to the FTC's jurisdiction, although the Federal Communications Commission is working on a similar rule which would bring some of these under requirements in line with the FTC's. Those groups exempt from FTC authority are banks (although most bank subsidiaries are under the FTC), telephone companies, airlines, insurance companies, credit unions, charities, political campaigns, and political fund raisers.

Intrastate calls, calls made within a state, are not covered, although Muris notes that many states have their own Do Not Call lists. He believes that the FTC's rule will hold up in court, noting that state lists have also passed judicial muster, and he also expects some states to consider automatically adding their lists to the FTC's list. In addition, he anticipates that some states will pass laws to allow for state enforcement of the FTC's rule.

Related items:

FTC Database Would Prevent Telemarketing Calls