We are all familiar with the FTC’s Telemarketing Sales Rule that allows a company to call a consumer, whose phone number is on the Do Not Call Registry, for up to 18 months if it has an “established business relationship” with the consumer and he or she has not asked the firm to stop calling.
But what is an Established Business Relationship?
The FTC says there are two kinds of established business relationships. One is based on the consumer’s purchase, rental, or lease of the seller’s goods or services, or a financial transaction between the consumer and seller, within 18 months preceding a telemarketing call.
The other is based on a consumer’s inquiry or application regarding a seller’s goods or services, and exists for three months starting from the date the consumer makes the inquiry or application.
It's important to note that according to the FTC's Rule, a completed sweepstakes entry form does not establish a business relationship with a consumer. In fact, the FTC has recently charged a scooter manufacturer, Electric Mobility Corporation, and its owner Michael Flowers with making more than 3 million illegal sales calls since 2003 to consumers with phone numbers on the Do Not Call List who had entered the company’s “Win a Free Rascal” sweepstakes.
Flowers will pay $100,000, and Electric Mobility is subject to a $2 million penalty, which is suspended based on its inability to pay.
Electric Mobility regularly encourages consumers to enter its sweepstakes through direct mail, newspapers and TV advertisements, which is how it managed to obtain millions of phone numbers, many of them on the registry.
According to the FTC, in the fine print under the section of the sweepstakes entry form allocated for the contestant's phone number, the company reminded consumers to list their phone number so the company could contact them in the event they became "the next lucky winner."
Nur-ul-Haq, a lawyer in the FTC's Northeast Region office, said that Electric Mobility's contest forms were insufficient to justify an exception to the "do not call" rules on either basis the company cited: that filling out the form amounted to an "express written consent" to be telephoned, or established an ongoing business relationship between the company and the contest entrants.
The New Jersey company admitted no wrongdoing in settling the case, the FTC said. "We have a disagreement on how to interpret the rules," said Flowers.
"The main point of this case was that by virtue of entering a sweepstakes, a consumer doesn't create an established business relationship with the merchant," Haq said.
Post a comment