Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: State attorneys general urge FTC to update Telemarking Rule, (Nov 25, 2014)

By Carrie DeLeon,TRDaily

A group of 38 state attorneys general have called on the FTC to update the Telemarketing Sales Rule in order to “reflect realities of today’s marketplace and better protect consumers from the continued prevalence of telemarketing fraud and abuse.”

In a November 24 letter, the attorneys general noted several areas of concern, including “the increase in the number of fraud complaints from consumers who are contacted by telephone; the pervasiveness of general media solicitations and advertisements that have resulted in the growth of inbound telemarketing; the use of certain payment methods that allow retrieval of funds with little meaningful scrutiny of the recipient’s identity; and the pervasiveness of preacquired account marketing.”

“The consumer protection offices of the State Attorneys General are often at the ‘front line’ in fielding consumer complaints, taking up investigations, and pursuing legal actions against those who prey on victims through telemarketing and negative option scams,” according to the letter submitted by the National Association of Attorneys General (NAAG). “As recent statistics from the Commission bear out, telemarketing remains high on complaint lists, both State and Federal. In fiscal year 2013, over 3.7 million telemarketing complaints were filed with the Commission.”

Among other things, the state attorneys general said that the telemarketing sales rule should be amended to specifically prohibit the use of pre-acquired account information in telemarketing. “It is clear that any supposed benefit in allowing preacquired account data transfers in telemarketing (albeit with restrictions) is far outweighed by the harm such marketing schemes cause to consumers,” they said.

The rule should also be expanded to better address the use of negative option features in telemarketing, they said, adding that “oral negative option contracts are subject to abuse because disclosure of the terms is dependent in part upon which salesperson is making the disclosure.”

Telemarketers and sellers should also be required to create and maintain call records in order to ease efforts by investigators looking into telemarketing abuses. The attorney generals say in the letter that their efforts are often hindered by subpoenas and warning letters that go unanswered.

“Those who open their hearts and wallets deserve to know how their hard-earned dollars are being spent and how much of their money is going to pay telemarketers’ salaries and costs,” New York Attorney General Eric T. Schneiderman said in a November 24 statement. “The FTC’s rules must contain protections for consumers that reflect the most abusive and common types of fraud and abuse. New Yorkers, and donors across the nation, must be able to know how much they give is going to charity, and how much remains in the pockets of fundraisers.”

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