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Applicability of the Federal Telemarketing Sales Rule

Generally, the Federal Telemarketing Sales Rule applies to individuals and businesses that engage in "telemarketing," i.e., a plan, program, or campaign, involving more than one telephone call, that is designed to induce the purchase of goods or services or a charitable contribution. However, certain types of calls are exempt from the requirements of the Rule.

Exempt Calls

The following types of calls are exempt from the Rule:

(1) unsolicited calls from consumers;

* A call is "unsolicited" if it is not made in response to solicitation by the business. For example, when a consumer makes a hotel reservation or orders a pizza, the consumer's call is unsolicited. A call is not "unsolicited" if it is made in response to a recorded message.

(2) calls placed by consumers in response to a catalog;

* However, in order for the exemption to apply, the catalog must meet certain requirements and the catalog seller cannot solicit consumers by telephone.

(3) business-to-business calls that do not involve retail sales of nondurable office or cleaning supplies;

* "Nondurable office or cleaning supplies" include paper, pencils, solvents, toner, ink, and other items that are depleted when used.

(4) calls made in response to general media advertising; and

* However, if the seller or telemarketer "upsells" the consumer during the call, the upsell is covered by the Rule. Upselling occurs when a seller or telemarketer attempts to sell additional goods or services during a single call after an initial transaction.

* The Rule covers calls from consumers in response to media advertisements regarding most business opportunities.

(5) calls made in response to direct mail advertising.

* However, the exemption only applies if the advertisement clearly, conspicuously, and truthfully discloses the cost and quantity of the product or service, the material restrictions, limitations, and conditions of the offer, and the existence of any "no refund" policy. Advertisements involving prize promotions, credit card loss protection, and negative option features require additional disclosures.

Copyright 2012 LexisNexis, a division of Reed Elsevier Inc.