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October 2009

New FTC Rule Bans Annoying Robocalls

On September 1, 2009, the U.S. Federal Trade Commission (FTC) implemented a new rule banning many types of telemarketing “robocalls.” The new rules make it illegal for companies to make automated sales calls unless they have written consent from the consumer who is receiving the call. However, a number of calls are exempt, including surveys, informational calls such as flight cancellations or delays, and candidate and charitable solicitations. A company violating this new ban could face financial penalties of up to $16,000 per call.

Part of the reason for this new rule is the FTC’s concerns over robocalls pushing automobile “warranty” extensions. You may have received these calls. According to the FTC, one version tells consumers that their vehicles’ warranties are about to expire and that they should “extend coverage before it is too late.” The listener is told to “press one” to speak to a “warranty specialist.” The “specialists” then mislead the consumer into believing that his or her telemarketing company is affiliated with the vehicle dealer or manufacturer of the consumer’s vehicle. The telemarketer then tries to sell the consumer a service contract for between $2,000 to $3,000, which is falsely portrayed as an extension of the consumer’s vehicle warranty.

The FTC is concerned because a number of these companies dial every phone number within a particular area code without knowing anything about the vehicles owned by the consumers they call. Many consumers who received such calls have complained to the FTC because they were met with “abusive behavior” by the telemarketer.

Some of the companies make the telemarketing calls from outside of the United States in an effort to avoid prosecution. However, the FTC is bringing legal action against a number of these companies including one that has generated more than 30,000 consumer complaints. The FTC filed a complaint in federal court against the promoter of the phony extended auto warranties and its telemarketing company. The FTC found that the company had been making hundreds of millions of deceptive calls to consumers across the country. FTC Chair Jon Leibowitz stated that the company used “one of the most aggressive telemarketing schemes the FTC has ever encountered.”

If you receive a call in violation of the new rule, you should complain to the FTC at either its www.donotcall.gov/ web site or by calling 1-888-382-1222.

The state of Wisconsin already prohibits robocalls. However, the new federal rule should make the ban more effective. Also, don’t forget to get on, or remain on, the Wisconsin telemarketer “Do Not Call” registry. Both residential and cellular customers can add their numbers to the list to prevent most telemarketing calls. Once added, the numbers remain on the list for two years. To sign up, visit the Wisconsin No Call List web site or call 1-866-9NO-CALL (1-866-966-2255) toll-free. 

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