Moving the HME Industry Forward

General Healthcare

Federal and State Telephone Consumer Protection Laws – Part 1

January 11, 2016

AMARILLO, TX – Most DME suppliers are aware that when calling a Medicare beneficiary, the supplier must comply with the telephone solicitation statute and Supplier Standard #11. However, many suppliers are not aware that telephone calls to consumers are also governed by a number of other federal and state statutes. Part one of this two part article will discuss the federal statutes. Part two will discuss a representative sample of the state statutes.

Federal Telephone Consumer Protection Laws
Telephone calls and messages designed to encourage the purchase of products or services are regulated by the Federal Communications Commission (“FCC”).1 Likewise, the Federal Trade Commission (“FTC”) enforces rules and regulations that protect against deceptive, misleading, and abusive telemarketing practices. All telephone solicitation is regulated in some form or fashion, but additional constraints are placed on telephone solicitation that is considered “telemarketing.”

The FCC defines telemarketing as “the initiation of a telephone call or message for the purpose of encouraging the purchase or rental of, or investment in, property, goods, or services, which is transmitted to any person.”2 Telemarketer, on the other hand, means “the person or entity that initiates a telephone call or message for the purpose of encouraging the purchase or rental of, or investment in, property, goods, or services, which is transmitted to any person.”3 Based on these broad definitions, any communication initiated by a DME supplier to a consumer (who does not have a prior business relationship with the supplier and has not given his permission to be called) would be considered telemarketing and the supplier’s sales persons would be considered telemarketers.  

Telephone Consumer Protection Act
The FCC restrictions for outbound calls from a telemarketer are codified in the Telephone Consumer Protection Act (TCPA).4 The TCPA works to protect the privacy rights of citizens by restricting the use of the telephone network for unsolicited advertising.5 Generally speaking, these regulations include prohibitions on “the transmission of unsolicited advertisements by telephone…”6 The law strictly prohibits telephone solicitation through the use of auto-dialers and pre-recorded messaging without express prior written authorization, with very few exceptions.7

All outbound solicitation calls are subject to a number of requirements under the TCPA. Specifically, in order for a DME supplier to comply with the TCPA, it must adhere to the following:
1) No calls may be made before 8 a.m. or after 9 p.m. at the called party’s location;8
2) Access the national do-not-call database solely for the purpose of ensuring that it makes no calls to any number listed therein;9
3) Maintain its own list of do-not-call numbers;10
4) Establish appropriate policies and procedures and proper education of its telemarketers on both the national do-not-call list and the company’s do-not-call list, as well as the rules contained in 47 C.F.R. § 64.1200;11
5) Telemarketers must identify themselves individually, identify that they are calling on behalf of DME Supplier B, and provide Mrs. Smith with a call back number;12
6) Calls may not be disconnected prior to at least 15 seconds or four (4) rings; and,13
7) A live sales representative is must be available to speak with the consumer answering the call within two seconds of the consumer answering the call.14

Telemarketing Sales Rule
Similarly, the FTC has implemented the Telemarketing Sales Rule (“TSR”). Like the TCPA, this rule seeks to add an additional layer to telephone solicitation protections for consumers. These protections include a comprehensive list of requirements that a telemarketer must meet:

1) The telemarketer must “promptly” and in “a clear and conspicuous” manner disclose the identity of the seller, that the purpose of the call is to sell goods or services, the nature of the goods or services being sold, and that no purchase or payment is necessary to win a prize or to participate in a prize promotion.15
2) The telemarketer must disclose the total costs to purchase, receive, or use any goods and services offered for sale.16 Disclosure of these costs must be done in a clear and conspicuous manner.17
3) The telemarketer must disclose material restrictions or conditions to purchase goods or services offered for sale.18 Disclosure of these restrictions or conditions must be done fully and clearly.19
4) Where rules require “clear and conspicuous” disclosure of certain information the disclosure shall “appear in the language of the target audience (ordinarily the language principally used in the advertisement or sales material).”20
5) The telemarketer must disclose the lack of a refund policy or the terms and conditions of a refund policy.21
6) The telemarketer cannot misrepresent any of the following:22

a) The total costs to purchase, receive, or use, and the quantity of, any goods or services that are the subject of a sales offer;
b) Any material restriction, limitation, or condition to purchase, receive, or use goods or services that are the subject of a sales offer;
c) Any material aspect of the performance, efficacy, nature, or central characteristics of goods or services that are the subject of a sales offer;
d) Any material aspect of the nature or terms of the seller’s refund, cancellation, exchange, or repurchase policies; and
e) A seller’s or telemarketer’s affiliation with, or endorsement or sponsorship by, any person or government entity.

1) The telemarketer must have the customer’s express verifiable authorization using specified means in order for billing information to be submitted for payment for goods or services.23 The customer must also give express informed authorization.24
2) The telemarketer may not cause a telephone to ring, or engage any person in a telephone conversation, repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number.25
3) The telemarketer may not initiate an outbound call to a person who has previously indicated that he or she does not wish to receive calls made by or on behalf of the seller whose goods or services are being offered.26

Do-Not-Call Registry
Both the FTC and the FCC prohibit calls to a residential line listed on the national do-not-call registry. However, there are some narrow exceptions. The FTC permits calls to such residential lines if (i) the person has given written consent for the contact or (ii) the company has a business relationship with the person for a period of 18 months from the last payment or transaction.27

Under the FTC, it is an abusive telemarketing act or practice and a violation of the TSR for a telemarketer to deny or interfere in “any way, directly or indirectly, with a person’s right to be placed on any registry of names and/or telephone numbers of persons who do not wish to receive outbound telephone calls.”28 Likewise, the TCPA prohibits calls to a residential line listed on the national do-not-call registry and also permits exceptions where the person has provided their prior written permission or the telemarketer making the call has a personal relationship with the person receiving the call.29

In regards to consent from the individual, such permission must “be evidence by a signed, written agreement between the customer and seller which states that the customer agreed to be contacted by this seller and includes the telephone number to which the calls may be placed.”30 However, both the FCC and FTC permit the use of valid electronic signature pursuant to the Federal E-Sign Act.31

But note that while the guidance provided by the FCC expressly permits consent via “email, website form, text message, telephone keypress, or voice recording,”32 the corresponding FTC guidance contemplates electronic signature “if the agreement is reached online.”33 There does not seem to be any similar guidance from the FTC related to permission provided via telephone. The safest route, therefore, would be to seek written permission from an individual listed on the national do-not-call registry prior to initiating contact.

Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato PC, a law firm based in Amarillo, Tex. He represents pharmacies, infusion companies, HME companies and other health care providers throughout the United States. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization, and can be reached at (806) 345-6320 or jbaird@bf-law.com.

References available on request.