Markets Wired

The Federal Trade Commission has settled charges it brought against a group of Canadian telemarketers who allegedly deceived U.S. consumers through the fraudulent sale of telephone calling cards. As a result of the settlement, the court has permanently barred the defendants from engaging in similar cross-border fraud.

In July 2007, the agency charged 9131-4740 Québec, Inc., JPE Holdings, Inc., and the companies’ principals with numerous violations of the FTC Act and the Telemarketing Sales Rule (TSR), including: 1) falsely representing the defendants were with consumers’ banks or credit card companies; 2) misstating that consumers would receive a calling card; 3) billing consumers without their authorization; 4) using false or misleading statements in their telemarketing; 5) calling consumers whose numbers are on the National Do Not Call (DNC) Registry; and 6) failing to pay the fee to access the Registry’s phone numbers. The court order settling the FTC’s charges bars the defendants from engaging in the conduct alleged in the complaint, and imposes a suspended monetary judgment of $3.46 million.

According to the Commission’s complaint, beginning in 2004, the defendants fraudulently marketed telephone cards from Canada to U.S. citizens. The defendants’ telemarketers allegedly falsely posed as consumers’ bank or credit card companies and promised that for $1 they would send a long-distance calling card for a seven- or 10-day trial period, with the dollar being billed to the consumers’ credit cards or debited from their bank accounts. Consumers were told that if they accepted the offer they would receive the calling card, along with information on how to use it and how to cancel it if they decided they were no longer interested in the program. Consumers who agreed to the offer had $1 billed to their credit cards or debited from their bank accounts.

In many instances, the defendants did not send the calling card and information, but continued billing consumers as if they had agreed to keep the service — a $19.95 one-time “activation fee” plus a $49.95 monthly fee. When consumers complained, the defendants typically insisted that the card and information had been sent. Sometime in the fall of 2005, the defendants also allegedly billed consumers for $24.95 without notice or any other prior contact. Finally, the Commission’s complaint alleged that, to pitch the plan, the defendants called people whose numbers are on the National Do Not Call Registry, and never paid the fee required to access the Registry.

The court judgment settling the FTC’s charges contains strong injunctive provisions, as well as monetary relief. It prohibits the defendants from making misrepresentations about any goods or services, from causing consumers’ bank accounts to be debited or their credit cards charged without their express informed consent, and from violating the TSR, including its Do Not Call provisions. It also limits their ability to transfer customer lists and other business information.

Finally, the order imposes a monetary judgment of $3.46 million, the Commission’s estimate of the consumer injury caused by the defendants’ illegal actions. All but $10,000 of the judgment has been suspended, however, based on the defendants’ inability to pay. If they are later found to have misrepresented their financial condition, the entire amount would become due.

The Commission vote authorizing the staff to file the stipulated final judgment, including an injunction, consumer redress, and other equitable relief, was 4-0. The documents were filed in the U.S. District Court for the Northern District of Ohio, Eastern Division, and approved by the Court on November 24, 2008.

The court action announced today settles the FTC’s charges against the following defendants: 9131-4740 Québec, Inc., a corporation, also d/b/a Fusion Telekom; JPE Holdings, Inc., a corporation, also d/b/a Fusion Telekom; Jean-Pierre Brault, individually and as an officer of 9131-4740 Québec, Inc., and Eli Foner, individually and as an officer JPE Holdings, Inc.

NOTE: Stipulated final judgments and orders are for settlement purposes only and do not constitute an admission by the defendants of a law violation. Consent judgments have the force of law when signed by the judge.

Copies of the stipulated final judgment are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580.The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,500 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

(FTC File No. 052-3081; Civ. No. 1:07-cv-2242)
(Fusion Telekom Settle..final.wpd)

An operation that lured consumers with promises that they could earn big money as trained and certified “mystery shoppers ” has agreed to pay $850,000 to settle charges of deceptive marketing and contempt.

Mystery shoppers are paid to shop or dine out and then provide reports about the experience. In March 2007, the Federal Trade Commission charged eight defendants – the three companies Mystery Shop Link, LLC; Tangent Group, LLC; Harp Marketing Services, Inc.; and five individuals – with violating the FTC Act in connection with a nationwide mystery shopping employment scam.

According to the FTC, the defendants claimed that MysteryShopLink.com was hiring mystery shoppers in local areas nationwide. The company ran help wanted ads in newspapers, and on radio and TV. Consumers who responded to the ads reached the defendants’ telemarketers, who represented that MysteryShopLink.com had large numbers of available jobs and not enough shoppers to fill them. In exchange for a $99 fee, consumers were promised enough work to earn a steady full-time or part-time income as mystery shoppers. Instead, consumers received a worthless certification and access to postings for mystery shopping jobs controlled by other companies. Consumers had to apply for these mostly low-paying jobs, and had no advantage over anyone else who found the postings elsewhere on the Internet for free. Most consumers got no jobs and earned no money.

The FTC also charged five of the eight defendants – Mystery Shop Link, LLC, Tangent Group, LLC, and Robin Larry Murphy, Andrew Holman, and Kenneth Johnson – with contempt. The contempt charge alleged that Murphy violated the terms of a consent judgment in a prior telemarketing fraud case involving false promises of government jobs. The 1997 consent judgment barred Murphy from making material misrepresentations of fact while telemarketing, and required him to post a $100,000 bond. In addition to seeking contempt sanctions against Murphy, the FTC also alleged that co-defendants Mystery Shop Link, LLC, Tangent Group, LLC, Andrew Holman, and Kenneth Johnson were in contempt of the previous order because they all participated in running MysteryShopLink.com despite knowing about the prior consent judgment against Murphy.

The settlements announced today were reached with two separate groups of defendants. The first includes defendants Mystery Shop Link, LLC, Tangent Group, LLC, and their principals, Robin Larry Murphy, Andrew Holman, and Kenneth Johnson. This settlement resolves both the new case filed in 2007 and the contempt action. Under the settlement, the FTC will collect the proceeds of Murphy’s $100,000 bond. The settlement also includes a $17.8 million judgment, which is suspended based on the defendants’ inability to pay. The full judgment will be imposed if the defendants are found to have misrepresented their financial condition. This settlement prohibits all the defendants from making misrepresentations in the future. As a repeat offender, Murphy is permanently banned from telemarketing, except for non-deceptive sales to businesses of telecommunications equipment.

The second settlement includes defendants Harp Marketing Services, Inc., and its principals, Aiden Reddin and Marc Gurney. Harp Marketing was the primary outside telemarketing firm that handled consumer calls, and thus sales, for Mystery Shop Link. This settlement requires Harp and its owners to pay $750,000 in redress and prohibits them from making misrepresentations in the future. The Harp settlement also includes a suspended judgment of $6.8 million, the total amount of Mystery Shop Link sales made by Harp’s telemarketers. The full amount of this judgment will be imposed if the defendants are found to have misrepresented their financial condition.

Both settlements prohibit the defendants from collecting payments from Mystery Shop Link customers, and from transferring or benefitting from information about those customers. Both also contain record-keeping and reporting provisions to assist the FTC in monitoring the defendants’ compliance.

The Commission vote authorizing the filing of the stipulated final orders in the U.S. District Court for the Central District of California, Western Division, Los Angeles, was 4-0. The orders were lodged on December 2, 2008.

NOTE: These stipulated final orders are for settlement purposes only and do not constitute an admission by the defendants of a law violation. A stipulated final order requires approval by the court and has the force of law when signed by the judge.

Copies of the complaint and stipulated final orders are available from the FTC’s Web site at http://www.ftc.gov and from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,500 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

(Mystery Shop NR.wpd)
(FTC File Nos. X070029; X960067)
(Civil Action Nos. 96-4142 TJH (VAPx); 07-01791 TJH (SHx))

An operation that lured consumers with promises that they could earn big money as trained and certified “mystery shoppers ” has agreed to pay $850,000 to settle charges of deceptive marketing and contempt.

Mystery shoppers are paid to shop or dine out and then provide reports about the experience. In March 2007, the Federal Trade Commission charged eight defendants – the three companies Mystery Shop Link, LLC; Tangent Group, LLC; Harp Marketing Services, Inc.; and five individuals – with violating the FTC Act in connection with a nationwide mystery shopping employment scam.

According to the FTC, the defendants claimed that MysteryShopLink.com was hiring mystery shoppers in local areas nationwide. The company ran help wanted ads in newspapers, and on radio and TV. Consumers who responded to the ads reached the defendants’ telemarketers, who represented that MysteryShopLink.com had large numbers of available jobs and not enough shoppers to fill them. In exchange for a $99 fee, consumers were promised enough work to earn a steady full-time or part-time income as mystery shoppers. Instead, consumers received a worthless certification and access to postings for mystery shopping jobs controlled by other companies. Consumers had to apply for these mostly low-paying jobs, and had no advantage over anyone else who found the postings elsewhere on the Internet for free. Most consumers got no jobs and earned no money.

The FTC also charged five of the eight defendants – Mystery Shop Link, LLC, Tangent Group, LLC, and Robin Larry Murphy, Andrew Holman, and Kenneth Johnson – with contempt. The contempt charge alleged that Murphy violated the terms of a consent judgment in a prior telemarketing fraud case involving false promises of government jobs. The 1997 consent judgment barred Murphy from making material misrepresentations of fact while telemarketing, and required him to post a $100,000 bond. In addition to seeking contempt sanctions against Murphy, the FTC also alleged that co-defendants Mystery Shop Link, LLC, Tangent Group, LLC, Andrew Holman, and Kenneth Johnson were in contempt of the previous order because they all participated in running MysteryShopLink.com despite knowing about the prior consent judgment against Murphy.

The settlements announced today were reached with two separate groups of defendants. The first includes defendants Mystery Shop Link, LLC, Tangent Group, LLC, and their principals, Robin Larry Murphy, Andrew Holman, and Kenneth Johnson. This settlement resolves both the new case filed in 2007 and the contempt action. Under the settlement, the FTC will collect the proceeds of Murphy’s $100,000 bond. The settlement also includes a $17.8 million judgment, which is suspended based on the defendants’ inability to pay. The full judgment will be imposed if the defendants are found to have misrepresented their financial condition. This settlement prohibits all the defendants from making misrepresentations in the future. As a repeat offender, Murphy is permanently banned from telemarketing, except for non-deceptive sales to businesses of telecommunications equipment.

The second settlement includes defendants Harp Marketing Services, Inc., and its principals, Aiden Reddin and Marc Gurney. Harp Marketing was the primary outside telemarketing firm that handled consumer calls, and thus sales, for Mystery Shop Link. This settlement requires Harp and its owners to pay $750,000 in redress and prohibits them from making misrepresentations in the future. The Harp settlement also includes a suspended judgment of $6.8 million, the total amount of Mystery Shop Link sales made by Harp’s telemarketers. The full amount of this judgment will be imposed if the defendants are found to have misrepresented their financial condition.

Both settlements prohibit the defendants from collecting payments from Mystery Shop Link customers, and from transferring or benefitting from information about those customers. Both also contain record-keeping and reporting provisions to assist the FTC in monitoring the defendants’ compliance.

The Commission vote authorizing the filing of the stipulated final orders in the U.S. District Court for the Central District of California, Western Division, Los Angeles, was 4-0. The orders were lodged on December 2, 2008.

NOTE: These stipulated final orders are for settlement purposes only and do not constitute an admission by the defendants of a law violation. A stipulated final order requires approval by the court and has the force of law when signed by the judge.

Copies of the complaint and stipulated final orders are available from the FTC’s Web site at http://www.ftc.gov and from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,500 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

(Mystery Shop NR.wpd)
(FTC File Nos. X070029; X960067)
(Civil Action Nos. 96-4142 TJH (VAPx); 07-01791 TJH (SHx))

A Utah-based operation that lured online customers with free samples of a purported weight-loss supplement in a scheme to obtain their credit or debit card information has agreed to pay $150,000 to settle Federal Trade Commission charges of deceptive and unfair marketing, and of violations of federal regulations governing the electronic transfer of funds.

According to the FTC’s complaint, the defendants, operating through their umbrella company Ultralife Fitness, Inc., lured customers by promising to send, for a specified trial period, free samples of the dietary supplement Hoodia, which they claimed caused weight loss. The supplement was purportedly derived from the cactus-like Hoodia gordonii plant, which is found in southern Africa.

The FTC’s complaint also alleges that customers provided their credit or debit card information with the understanding that it would be used only to cover shipping and handling costs of the free Hoodia samples. However, customers later discovered that the defendants had enrolled them, without their consent, into continuity programs – one for periodic shipments of Hoodia (at a cost of approximately $50 a month) and another for fitness instruction (at a cost of approximately $30 a month). The complaint states that the defendants withdrew funds or assessed fees before consumers received the Hoodia, after the Hoodia was received but before the trial period ended, and even when the consumer never received the Hoodia supplement.

Also according to the FTC’s complaint, in addition to providing inadequate notice of enrollments in the continuity plans, the defendants failed to give consumers adequate notice of fees, costs, and cancellation polices; and failed to inform them that their financial account information would be used to pay for the continuity plans. The Web site’s order pages made no reference to this information; instead, it was buried in nearly 12 pages of text in the site’s “terms and conditions” section. Further, the link to the terms and conditions section did not convey the relevance or significance of the information.

The FTC’s complaint alleges that corporate defendants Ultralife Fitness, Inc. and Tru Genix, LLC, both of which are based in the South Jordan, Utah, and individual defendants Neil P. Wardle, Pace Mannion, and Christopher J. Wardle violated the FTC Act by:

• failing to adequately disclose information about continuity plans, fees, and cancellation policies;
• misrepresenting that consumers would enjoy a specific trial period during which they would not be charged for anything except shipping and handling of Hoodia samples, and that consumers could cancel their continuity plan memberships;
• routinely billing the consumers’ credit and debit cards without obtaining their express informed consent; and
• making false and unsubstantiated statements that Hoodia would cause long-term or permanent weight loss, including by increasing one’s metabolism, without a consumer having to reduce caloric intake, increase physical activity, or take any other additional steps.

The FTC’s complaint also alleges that the defendants violated the Electronic Fund Transfer Act (EFTA) and other federal regulations governing written authorization for electronic transfer of funds.

Under the terms of the proposed settlement, the defendants are ordered to pay $9.9 million, which is the total estimated consumer injury. However, based on their inability to pay, all but $150,000 of that judgment is suspended. Each of the three individual defendants is responsible for paying $50,000 of the $150,000 owed to the FTC.

Also under the terms of the proposed settlement, the defendants are barred from misrepresenting any material fact in connection with the sale of a dietary supplement, food, drug, device, or heath-related program or service. The same prohibition applies to material facts used to market products or services offered through a “negative-option” plan – a plan in which goods or services are provided automatically, and consumers must either pay for the service or specifically decline it in advance of billing. Specifically, the defendants cannot misrepresent the cost or charges for any good or service they offer; whether a transaction has been authorized by a consumer; that a product burns a significant amount of fat while the user sleeps; that a product can cause substantial weight loss with no additional effort; that a product can cause weight loss of two pounds or more per week without diet or exercise; and that a product can safely enable consumers to lose more than three pounds per week for more than four weeks. The defendants also are barred from using billing information to acquire payment from consumers unless defendants first obtain informed and express consent from the consumers. In addition, the defendants must obtain written authorization for preauthorized electronic fund transfers, in accordance with the EFTA.

The proposed settlement also requires the defendants to disclose all fees and costs, and all material restrictions, limitations, or conditions applicable to the purchase, receipt, or use of any product or service they offer. The defendants also must disclose all material terms of the continuity plans they offer, including any negative option plan. They also are required to provide a refund within seven days if they offer a money-back guarantee and the consumer submits a valid refund request. The defendants also must honor valid and timely requests to cancel a membership, subscription, or agreement to purchase.

The settlement also contains various record-keeping and reporting provisions to assist the FTC in monitoring the defendants’ compliance.

The Commission vote authorizing the staff to file the complaint and agreed-upon final settlement was 4-0. These documents were filed in the U.S. District Court for the Central District of California on November 20, 2008.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant or respondent has actually violated the law. The stipulated final order is for settlement purposes only and does not constitute an admission by the defendants of a law violation. A stipulated final order requires approval by the court and has the force of law when signed by the judge.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,500 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

(Ultralife NR.wpd)
(FTC File No. 062-3146)

A Utah-based operation that lured online customers with free samples of a purported weight-loss supplement in a scheme to obtain their credit or debit card information has agreed to pay $150,000 to settle Federal Trade Commission charges of deceptive and unfair marketing, and of violations of federal regulations governing the electronic transfer of funds.

According to the FTC’s complaint, the defendants, operating through their umbrella company Ultralife Fitness, Inc., lured customers by promising to send, for a specified trial period, free samples of the dietary supplement Hoodia, which they claimed caused weight loss. The supplement was purportedly derived from the cactus-like Hoodia gordonii plant, which is found in southern Africa.

The FTC’s complaint also alleges that customers provided their credit or debit card information with the understanding that it would be used only to cover shipping and handling costs of the free Hoodia samples. However, customers later discovered that the defendants had enrolled them, without their consent, into continuity programs – one for periodic shipments of Hoodia (at a cost of approximately $50 a month) and another for fitness instruction (at a cost of approximately $30 a month). The complaint states that the defendants withdrew funds or assessed fees before consumers received the Hoodia, after the Hoodia was received but before the trial period ended, and even when the consumer never received the Hoodia supplement.

Also according to the FTC’s complaint, in addition to providing inadequate notice of enrollments in the continuity plans, the defendants failed to give consumers adequate notice of fees, costs, and cancellation polices; and failed to inform them that their financial account information would be used to pay for the continuity plans. The Web site’s order pages made no reference to this information; instead, it was buried in nearly 12 pages of text in the site’s “terms and conditions” section. Further, the link to the terms and conditions section did not convey the relevance or significance of the information.

The FTC’s complaint alleges that corporate defendants Ultralife Fitness, Inc. and Tru Genix, LLC, both of which are based in the South Jordan, Utah, and individual defendants Neil P. Wardle, Pace Mannion, and Christopher J. Wardle violated the FTC Act by:

• failing to adequately disclose information about continuity plans, fees, and cancellation policies;
• misrepresenting that consumers would enjoy a specific trial period during which they would not be charged for anything except shipping and handling of Hoodia samples, and that consumers could cancel their continuity plan memberships;
• routinely billing the consumers’ credit and debit cards without obtaining their express informed consent; and
• making false and unsubstantiated statements that Hoodia would cause long-term or permanent weight loss, including by increasing one’s metabolism, without a consumer having to reduce caloric intake, increase physical activity, or take any other additional steps.

The FTC’s complaint also alleges that the defendants violated the Electronic Fund Transfer Act (EFTA) and other federal regulations governing written authorization for electronic transfer of funds.

Under the terms of the proposed settlement, the defendants are ordered to pay $9.9 million, which is the total estimated consumer injury. However, based on their inability to pay, all but $150,000 of that judgment is suspended. Each of the three individual defendants is responsible for paying $50,000 of the $150,000 owed to the FTC.

Also under the terms of the proposed settlement, the defendants are barred from misrepresenting any material fact in connection with the sale of a dietary supplement, food, drug, device, or heath-related program or service. The same prohibition applies to material facts used to market products or services offered through a “negative-option” plan – a plan in which goods or services are provided automatically, and consumers must either pay for the service or specifically decline it in advance of billing. Specifically, the defendants cannot misrepresent the cost or charges for any good or service they offer; whether a transaction has been authorized by a consumer; that a product burns a significant amount of fat while the user sleeps; that a product can cause substantial weight loss with no additional effort; that a product can cause weight loss of two pounds or more per week without diet or exercise; and that a product can safely enable consumers to lose more than three pounds per week for more than four weeks. The defendants also are barred from using billing information to acquire payment from consumers unless defendants first obtain informed and express consent from the consumers. In addition, the defendants must obtain written authorization for preauthorized electronic fund transfers, in accordance with the EFTA.

The proposed settlement also requires the defendants to disclose all fees and costs, and all material restrictions, limitations, or conditions applicable to the purchase, receipt, or use of any product or service they offer. The defendants also must disclose all material terms of the continuity plans they offer, including any negative option plan. They also are required to provide a refund within seven days if they offer a money-back guarantee and the consumer submits a valid refund request. The defendants also must honor valid and timely requests to cancel a membership, subscription, or agreement to purchase.

The settlement also contains various record-keeping and reporting provisions to assist the FTC in monitoring the defendants’ compliance.

The Commission vote authorizing the staff to file the complaint and agreed-upon final settlement was 4-0. These documents were filed in the U.S. District Court for the Central District of California on November 20, 2008.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant or respondent has actually violated the law. The stipulated final order is for settlement purposes only and does not constitute an admission by the defendants of a law violation. A stipulated final order requires approval by the court and has the force of law when signed by the judge.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,500 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

(Ultralife NR.wpd)
(FTC File No. 062-3146)

Effective today, any telemarketing call that delivers a prerecorded message must include a quick and easy way to opt-out of receiving future calls. The opt-out must work both for consumers who answer these calls in person and for those whose answering machines or voicemail services receive the calls.

Prerecorded telemarketing messages are permitted only in limited circumstances – only when the caller has an established business relationship with the consumer being called. Now, additional restrictions on prerecorded messages are going into effect. Under Do Not Call amendments adopted in August, effective today, any permitted prerecorded message must provide the called consumer with an interactive means to opt out of receiving future calls from the seller or fundraiser using the prerecorded message. Moreover, the consumer must be able to opt out at any time while the message is playing by pressing a particular number or speaking a particular word. Once the consumer has opted out, his or her phone number must be automatically added to the in-house Do Not Call list of the calling seller or fundraiser. Then the call immediately must be disconnected so that the consumer’s line is cleared.

If the prerecorded telemarketing message is left on an answering machine or voicemail service, it must include a toll-free opt-out number that, when called, also connects to an automated voice or keypress opt-out mechanism. This will allow consumers to opt out at any hour of the day or night when they retrieve the message, without having to wait until the next business day to call.

All recorded telemarketing calls subject to the Commission’s Telemarketing Sales Rule (TSR) must comply with the new requirements, including calls to solicit sales of goods or services and calls placed by telemarketers to solicit charitable donations. Some calls delivering prerecorded messages (such as political calls, bona fide market survey calls, and calls made in-house by banks or telephone companies) are not covered by the new requirement, however, because the Commission lacks the legal authority to regulate them. In addition, prerecorded healthcare messages covered by the Health Insurance Portability and Accountability Act of 1996 (HIPAA) are exempt from the new requirement.

The automated opt-out requirement is the first of two measures provided by the recent TSR amendment to protect consumers’ privacy at home. The second measure prohibits telemarketing calls that deliver prerecorded messages to anyone who has not agreed in advance to receive such calls. But until September 1, 2009, sellers may continue to use prerecorded messages in calling consumers with whom they have an established business relationship. After that date, sellers may use prerecorded messages only in calls to consumers who have expressly agreed in advance to receive them.

Copies of the prerecorded call amendments to the TSR are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant at www.ftccomplaintassistant.gov or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,500 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

(FTC File No. R411001)
(TSR – Prerecorded.final.wpd)