Warning: The FTC Is Trying To Ban Many Outbound IVR Calls

Voxeo has recently become aware or proposed rule changes by the FTC that could have a major adverse affect on your business: http://www.ftc.gov/opa/2006/10/fyi0662.htm

In summary, the rule would prevent ANY automated outbound calling that is part of a plan, program, or campaign to induce the purchase of goods or services. Call centers would still be relatively free to use humans to make such calls to consumers with a "pre-existing business relationship", but automated IVR type equipment would be banned even in "pre-existing business relationship" scenarios.

1. The FTC's Proposed Rule
   
2. Voxeo's Analysis
   
3. What Can You Do to Stop the FTC?
   

Proposed FTC Rule: Ban Outbound IVR

The Federal Trade Commission (FTC) has proposed a rule making it illegal to do the following:

"Initiat[e] any outbound telemarketing call that delivers a prerecorded message when answered by a person, unless the seller has obtained the express agreement, in writing, of such person to place prerecorded calls to that person. Such written agreement shall clearly evidence such person's authorization that calls made by or on behalf of a specific party may be placed to that person, and shall include the telephone number to which the calls may be placed and the signature of that person; provided, however, that prerecorded messages permitted for compliance ... with the call abandonment safe harbor in § 310.4(b)(4)(iii) do not require such an agreement."

The FTC states: "The purpose of the proposed amendment is to make it explicit that the TSR prevents sellers and telemarketers from delivering a prerecorded message when a person answers a telemarketing call, regardless of whether the call is made to a consumer whose number is listed on the Do Not Call Registry or to a consumer who has an established business relationship with the seller, without the consumer's experss prior written agreement. In soliciting comments on the proposed amendement, the Comission again wishes to emphasize that the proposed prohibition will not prevent telemarketers from transmitting prerecorded information messages to consumers that are not part of a "plan, program or campaign which is conducted to induce the purchase of goods or services or a charitable contribution."

The FTC proposes to begin enforcing this rule by January 2, 2007.

What does this mean? Clearly, this is a ruling that is of interest only to those Voxeo customers that use our software to make outbound calls to consumers. But not all outbound calls are affected by this proposed rule.

According to the wording, this rule applies only to "telemarketing" calls, which the FTC defines as a call that is part of a "plan, program or campaign which is conducted to induce the purchase of goods or services or a charitable contribution." So, emergency notifications are not telemarketing calls. Neither are other purely informational calls (e.g., "your package has been shipped," "your flight has been delayed," etc.).

But any call with an upsell component will be considered a telemarketing call - "Your cable has now been installed, would you like to hear about a special deal to subscribe to HBO?" - even if it has an informational component.

Nor is it clear whether this rule will apply to a call to remind a consumer that it's time to refill a prescription. Such a call seems purely informational, but why remind someone that his or her prescription is about to run out if not to induce that person to buy more of the prescribed drug?

The next issue is the FTC's decision to require more than just a pre-existing business relationship, which has been the rule of thumb to date. Under this proposed rule, outbound call campaigns can go only to consumers who have given express written consent with a signature for a particular phone number to be called. This would seem to eliminate the possibility of any web or email based opt-in system, because the FTC is demanding written consent with a signature. And this rule would seem to require a brand new signed consent each time a consumer adds or changes a phone number to be used.

Voxeo's Analysis

Voxeo believes:

• The FTC Rule is Overbroad and Ambiguous. We believe the rule is intended to stop voice-blast calling "phone spammers", but the language proposed by the FTC prevents far more than just the worst-case phone spammers. For example, consumers previously commenting to the FTC said they do not want valuable calls like prescription refill reminders to be blocked. But, as written, the rule that does not include a carve-out or make a "safe harbor" for such calls. We believe that they think they did by saying INFORMATIONAL calls are okay but not SALES calls. The problem is a call like prescription refill is both INFORMATIONAL and SALES, and the propoosed rule gives us no guidance on that problem.
  
  
• The rule bars pre-recorded calls but allows call center agents. We believe that a more fundamental argument needs to be made that interactive automated calls are not the same as pre-recorded call-blast type calls. In fact, interactive calls are generally superior to call center agents when it comes to consumer preferences. Interactive calls can implement consistent best-practice features to let consumers opt out of calls quickly and easily. Interactive calls are often scripted and perfected before campaigns are launched, and, as a result, they are typically more professional and polite than call center agents. Also, consumers are far more likely to just hang up on an interactive call if they don't want to participate than they are to hang up on a human call center agent. As a result, we believe a carve-out or "safe harbor" for interactive automated calls should be made that provides an easy option to opt-out from future calls.
  
  
• The requirement that consumers who do want to get calls need to authorize such calls in writing with a signature is excessive and impractical. This ruling completely ignores the fact that more and more of our communications take place online and via email. Imagine if you had to collect documents either via mail or FAX with signatures to make your calls. We think the rule should accept email and web authorizations the same as written ones.
  
  
• The FTC is worried that technologies like VOIP will make it even easier for the "spammer / blaster" type telemarketers to place more calls at an even lower price in the near future. What the FTC is not understanding here is that technologies such as VOIP will also make it easier for people to deliver high-quality, professional, opt-out enabled, interactive voice calls at a lower price as well. In short, good interactive calls will become price-competitive with spammer "voice blast" type calls in the coming years. However, again unfortunately, the current proposed rule wording would kill the opportunity for the market to advance to a more consumer friendly type of call.

What Can You Do to Stop the FTC?

The FTC is asking for public comments to this proposed rule. Comments must be submitted by November 6, 2006, which is next Monday. Take some time right now to explain to the FTC why this proposed rule is a bad idea! You can COMMENT HERE using the FTC's online comment form, or you can send a comment in writing to the FTC.

More than any other government agency, the FTC really does listen to your comments, and they base their decisions almost entirely on the comments they get from people. This is because the FTC is 100% focused on protecting consumers, and they take consumer comments very seriously. For example, the only reason the FTC is proposing this rule in the first place is because of comments they got from consumers when they proposed a previous rule change. Indeed, if you read the FTC's public memo on this proposed rule, you will see that it is filled with quotes from commnets submitted via the FTC's online form. So every single comment counts, and the more comments the better!

If you plan to submit your comments in writing (which you will have to if you plan to submit any confidential information that you want the FTC to keep secret), your written comments should refer to "TSR Prerecorded Call Prohibition and Call Abandonment Standard Modification, Project No. R411001." A comment filed in paper form should include this reference both in the text and on the envelope, and should be mailed or delivered to the following address: Federal Trade Commission/Office of the Secretary, Room H?159 (Annex K), 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580.

Here are some examples of comments you might submit to the FTC:

• As a consumer, I want the ability to use the Internet and e-mail to sign up for new services provided via telephone. It's just not practical to make me send a letter or a signed fax.
  
  
• My company makes hundreds of thousands of outbound calls using an automated system that does more than just play back a pre-recorded message. My system interacts with the caller, giving him the ability to ask questions, opt out of the call, and even file a complaint, all with the touch of a button or the speaking of a single word or phrase. Of the hundreds of thousands of calls my company has made, we have only ever received four complaints. This is a reduction of 12,000% over our previous method, which was to use a simple pre-recorded message.
  
  
• As a consumer, I like getting reminders to refill my prescriptions, or updates on new services available from my cable company. What I don't like is getting spam from companies I've never heard of or having my number sold to some directory. You should focus on that problem, instead of making it more difficult or even impossible for me to continue to enjoy valuable phone services.
  
  
• An automated call is vastly better than a simple pre-recorded message. Please carve out automated services, where I can talk to the automated agent, ask questions, find out what the pre-existing business relationship is, if I am not aware, and also say one word or push one button to be placed on the company-specific Do Not Call List.
  
  
• As a consumer, I would rather get a pleasant call from an automated agent, then some outsourced call from an agent from overseas whom I can barely understand.
  
  
• Anyone who says VoIP makes it essentially costless to make outbound calls doesn't understand how VoIP works or is priced in this country. The largest VoIP providers are all phone companies, for whom VoIP is replacing their regular LD offering. The price is not any different. The free stuff is when you are making calls from one computer to another, or using something like Skype.
  
  
• Current automated software makes it simple to give consumers the ability to opt out on the spot, or to ask for further information while on the call. You can ban the use of simple playback of pre-recorded messages, but don't throw the baby out with the bathwater by also killing the innovative technologies that allow for interaction that can be ever better than a live agent.