By Published on .

The Federal Trade Commission last week unveiled a revised set of proposed rules aimed at telemarketing fraud, and advertisers, marketers and media lobbyists immediately issued sighs of relief.

Gone in the revised rules are many of the most controversial parts of the original draft, including provisions limiting calls to a given individual to once in three months, making courier pickup by businesses seeking to avoid using the mails difficult, requiring contests to start and end within 18 months, and forcing companies to get signed agreements for many phone sales to be effective.

Instead of trying to define procedures to be followed for all sales, the revised FTC rules generally aim at defining fraud with, for instance, the ban on multiple calls within three months replaced with a ban on multiple "harassing" calls.

"We are still going through the nitty-gritty, but we are really pleased that they took time and effort and listened to the comment," said Jerry Cerasale, senior VP-government relations for the Direct Marketing Association. "They've listened to us and some of our concerns. They've taken off some of the real burdens that would have destroyed the use of the telephone."

The Magazine Publishers of America is also very pleased, said Senior VP Michael Pashby, noting that the rewrite removes provisions that would have made it next to impossible for publishers to call subscribers whose subscriptions were about to expire.

Consumer groups were predictably less sanguine. The original rules, drafted by the FTC to implement a law passed by Congress, were stronger and more far reaching, they said.

"We have some serious concerns on a weakening of the rules," said Lee Norrgard, senior investigative analyst for the American Association of Retired Persons. "Telemarketing fraud costs consumers $40 billion a year, and the older population that we represent has been significantly affected."

Mr. Norrgard was especially critical of the FTC's replacing of specific disclosure requirements with a provision requiring disclosure of "material" information.

"It makes it difficult to discern what is legal and what is illegal," he said.

Wisconsin Attorney General James Doyle, who heads a National Association of Attorneys General committee on consumer fraud, felt the revised rules removed many of the consumer protections that had been promised, said an aide.

"Many states have a much tougher state law," said Press Secretary Jim Haney.

Mr. Haney said the removal of bars on courier pickups of checks or automatic transfers without signed consents, along with the removal of new tougher rules for fuller disclosure on prize notifications, had hurt consumers.

"He is still reviewing it, but his initial concern is that the draft is a far weaker one for consumers, than the earlier one," he said.

Advertising and media lobbyists say the rules will still mean some changes but that the changes are within reason. "It's still a very tough rule, but balance has improved," said Dan Jaffee, exec VP, Association of National Advertisers.

Linda Goldstein, an attorney with Hall Dickler Kent Friedman & Wood, who represents the Promotion Marketing Association of America, called the new rules "a vast improvement" over the first draft. "They will be easier for businesses to work with," she said, "but still maintain enough teeth to provide enforcement officials with the necessary tools."

The FTC expects to enact the new rules by August.

Most Popular
In this article: