The Ultimate Guide to Regulations Governing Telemarketing Activities

The Ultimate Guide to Regulations Governing Telemarketing Activities | Telephones for business

The Ultimate Guide to Regulations Governing Telemarketing Activities

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If you own a small business, you know how much work goes into making it a success. If you have inbound or outbound marketing departments in your company, your work just got much more complicated.

You need to comply with federal regulations that govern how those departments must operate, and the government doesn’t hand those regulations to you in a neat binder. In fact, there are several regulations that govern some aspect of telemarketing operations. And, if you find them, you’re then faced with the challenge of interpreting them. It’s an arduous task.

For example, you’ll find an FTC TSR compliance guide for complying with the Telemarketing Sales Rule online. Even that simplified explanation would be 60 pages long if you printed it out. Besides that, that Rule is only one of the regulations you need to address.

With this guide to telemarketing rules and regulations, the compilation has been done for you. It will allow you to save time and aggravation. You may need legal advice to confirm how these regulations apply to your company, but you’ll be in a much better position to avoid liability and the actions the government can take if you’re found to be non-compliant.

Chapter 1: Regulations That Govern Telemarketing Sales

Whether you think of your sales operations as telemarketing, inbound and outbound sales, or another name, the government calls those operations telemarketing. As you’ll see, several governmental agencies are concerned about the rules governing telemarketing. The Federal Trade Commission sets the overall standards for telemarketing sales. The Federal Communications Commission specifically sets the standard for using telephone communications, and the U.S. Congress further addressed the issue of privacy related to telephone recording. The three regulations that govern telemarketing are:

  • The FTC’s Telemarketing Sales Rule (TSR)
  • The FCC’s Telemarketing Consumer Protection Act (TCPA)
  • The Electronic Communications Privacy Act (ECPA) enacted by the U.S. Congress

You’ll see the acronyms used to identify those three regulations throughout this Guide. Congress passed the TSR and TCPA, but enforcement is handled by the FTC and FCC respectively.

Chapter 2: How To Comply With The TSR

The Telemarketing Sales Rule (TSR) was created by the Federal Trade Commission (FTC) to provide a means to enforce the Telemarketing and Consumer Fraud and Abuse Prevention Act (TCFPA). With so many acronyms, it can be confusing. The important thing to know is that you may hear about the TCFPA, but the only thing you need to comply with is the TSR.

Do you need to comply with the Telemarketing Sales Rule?

In summary, except as described in the Exemption section below, any organization placing or receiving telephone calls intended to promote the purchase of goods, services, or a charitable contribution, must comply with the TSR.

That includes “sellers,” that offer goods or services to consumers for profit, and “telemarketers,” who place calls to consumers and receive calls from consumers. The TSR also applies to organizations who support sellers and telemarketers in making or receiving telephone calls as described.

The TSR assumes that all of these organizations are engaged in telemarketing. While non-profit charities aren’t covered by the TSR, any for-profit organization that places telemarketing calls to support such a charity must comply with the TSR.


Business Types

Some organizations aren’t regulated by the FTC and don’t need to comply with the TSR. Those organizations include:

  • Banks, credit unions, federal savings and loans
  • Common carriers including long-distance telephone companies and airlines when they are conducting common carrier business
  • Non-profit organizations

Keep in mind that any organization that provides telemarketing services for one of the entities described above for profit isn’t exempt.

Investment and Insurance Organizations

Investment firms such as brokers and dealers may not be covered by the TSR, but they must comply with the FCC’s telemarketing rules. Insurance companies must comply with the TSR if they aren’t regulated by state law. If you are associated with either of these types of organizations or provide telemarketing services to them, you’ll need to do some research to clarify your legal responsibilities.

Unsolicited Calls from Consumers

If a consumer calls a telemarketing center without any prior contact with that organization, that call isn’t considered telemarketing if:

  • The call wasn’t placed in response to a pre-recorded call from the telemarketer
  • The telemarketer doesn’t upsell the consumer during the call

Calls in Response to a Mailed Catalog

If a consumer places a call to an organization that publishes a catalog that meets the TSR requirements, it isn’t considered a telemarketing call. However, if the telemarketer offers goods or services that aren’t listed in the catalog, that call is covered. Best practices, therefore, would be to consider this type of a call to be covered by the TSR. The calls would also need to comply with the FTC’s Mail or Telephone Order Merchandise Rule.

Most Business-to-Business Calls

Most telemarketer calls to a business are exempt. These are the exceptions where the telemarketer must comply with the TSR:

  • Telemarketers prompting the retail sale of nondurable office or cleaning supplies such as paper, pencils, and cleaning solvents
  • Telemarketers placing calls to a business in order to sell to a consumer at work

Calls in Response to General Media Advertising

Incoming calls from consumers in response to advertising such as TV commercials or home shopping programs aren’t covered by the TSR, only if:

  • The following payment methods aren’t used: remotely created payment orders or checks, cash-to-cash money transfers, and cash reload mechanisms
  • There is no upselling on the part of the telemarketer
  • The consumer isn’t calling in relation to advertisements concerning some franchises and business opportunities, credit card loss protection, credit repair, recovery services, advanced-fee loans, investment opportunities or debt relief services.

Calls in Response to Direct Mail

These calls are exempt from the TSR for both sellers of good or services and telemarketers supporting non-profit charities, except as noted below. In order to claim the exemption, the direct mail piece must include the following disclosures:

  • Cost and quantity
  • Material restrictions
  • Limitations or conditions
  • A no-refund policy if one exists
  • Specific information about prize promotions, credit card loss protection, or a negative option feature

Charitable organizations soliciting contributions via direct mail are exempt if the direct mail piece contains no material misrepresentation about:

  • The nature, purpose, or mission of the requesting charity
  • Whether the contribution is tax deductible
  • How the contribution will be used;
  • The percentage or amount of the contribution that will go to a charitable organization or program
  • Any material aspect of a prize promotion
  • A charitable organization or telemarketer’s affiliations, endorsements, or sponsorships.

No organization can claim this exemption if the direct mail pertains to credit card loss protection, credit repair, recovery services, advance-fee loans, investment opportunities, prize promotions, debt relief services, franchises not covered by the FTC’s Franchise Rule, or business opportunities not covered by the FTC’s Business Opportunity Rule. No organization can claim this credit if they accept any of these payment methods: remotely created payment orders or checks, cash-to-cash money transfers, and cash reload mechanisms. No organization can claim this credit if the telemarketer upsells during the conversation.

Partial Exemptions

Some types of calls have partial exemptions:

  • Selling 900-Number Services
  • Selling Franchises and Business Opportunities
  • Telemarketing calls that precede a face to face sales presentation where the sale is finalized

However, in order to claim this exemption, telemarketers making this type of call must not:

  • Call any number on the National TCPA Do Not Call list or the telemarketer’s Do Not Call list
  • Prevent someone from being placed on a Do Not Call list
  • Call outside permitted times
  • Initiate robocalls without prior consent
  • Abandon calls
  • Fail to display Caller ID information
  • Threaten, annoy, abuse or harass a consumer

Requirements For Sellers And Telemarketers

These requirements pertain to any person or organization who must comply with the TSR.

Required Disclosure of Material Information

Material information can be defined as information that is significant and that could cause someone to take a particular course of action, such as making a purchase or contribution. In general, it refers to the information a consumer would reasonably need to make an informed decision.

Telemarketers and Sellers need to disclose any material information in a way that is clear and conspicuous. In writing, that information needs to be in the same language as the offer and in a font easily read. On the telephone, the information needs to be communicated in the same language as the offer, and in a manner that will make it easy for the consumer to hear and understand.

Requirements Before a Consumer Agrees to Pay

Before the customer pays, the telemarketer must disclose:

  • The total cost of the sales offer
  • Any restrictions or limitations of the offer
  • Whether the seller considers all sales final or will make refunds, accept cancellations or exchanges; if the seller does accept those actions, any terms and conditions must be disclosed
  • All conditions of a prize promotion, including the odds of winning, whether a purchase is necessary, costs or conditions to redeem a prize
  • Limits on customer liability and negative options when issuing a credit card
  • For debt relief service sales: how long it could take to achieve results, if a settlement offer to creditors may be made, the consequences if the consumer fails to make scheduled payments, and that the customer owns any funds put in accounts at the direction of the relief service, and that the consumer may withdraw from the service at any time.

This information must be disclosed before the consumer consents to buy, sends full or partial payment by check is asked for payment information or is scheduled to receive goods and/or make payment through a courier service. Negative options features are described in the TSR.

These are features of an offer where the consumer’s lack of action to reject an offer, or cancel an agreement, is interpreted by the seller as an acceptance of the offer. All such conditions of an offer must be disclosed. In addition, the disclosure must include:

  • The fact that the customer’s account will be charged unless they take action
  • The date on which the charge will be made
  • The steps the customer must take to avoid the charges and information related to those steps; for example, if the customer must call a toll-free number to opt-out, the telephone number must be supplied

Disclosures in Outbound Sales Calls and Upsell Transactions

When a telemarketer makes an outbound call to a consumer, they must disclose four things promptly, truthfully and in a clear and conspicuous manner.

  1. The identity of the seller, but not necessarily the identity of the caller
  2. The purpose of the call, which is to sell goods or services
  3. What goods and services are being offered
  4. For prize promotions, the fact that no purchase is necessary to enter or win, and that a purchase doesn’t increase the chances of winning

Disclosures in Outbound Calls to Obtain Charitable Contributions

There are two disclosure requirements for charitable organizations or telemarketer supporting those charities. These disclosures must be made before any request for contributions.

  • The identity of the charity, but not necessarily the identity of the caller
  • The purpose of the call, which is to solicit a contribution

If an offer is being made by a for-profit telemarketer to encourage donations, the telemarketer must identify the identity of the organization making the offer, and the charity receiving the contribution

Misrepresentations Are Prohibited

False or misleading representations during a telemarketing call to encourage a customer to make a purchase or donation are prohibited. In sales calls, misrepresentations concerning the following are prohibited:

  • The total cost to purchase, receive or use goods or services
  • Any material restriction, limitation or condition that applies to purchasing, receiving or using goods or services
  • Any material factors that describe the performance, effectiveness or characteristics of a product or service
  • Refund, repurchase and cancellation policies
  • Any material aspect of a prize promotion
  • Any material aspects of an investment
  • Misrepresenting the seller’s affiliations, endorsements or sponsors
  • Indicating that a consumer must purchase goods or services to receive credit card loss protection
  • Failing to describe negative option features of a product or service
  • Any material aspect of a debt relief service

In charitable solicitation calls, misrepresentations of the following are prohibited:

  • The purpose or mission of the charity
  • Whether a contribution is tax deductible
  • How the contribution will be used (both purpose and location)
  • The percentage or amount of the contribution that goes to a charitable organization
  • Any material aspect of prize promotions
  • Misrepresenting the seller’s affiliations, endorsements or sponsors

Where written authorizations are required, any form is acceptable, providing it includes the consumer’s signature.

Oral Authorization

Where oral authorizations are required, the telemarketer is required to provide the following information and demonstrate that the consumer received each of these disclosures, understood them, and acknowledged them in order to provide oral authorization:

  • The goods or services purchased or contribution given
  • The number of payments, if more than one is required
  • The date the payments will be processed
  • The amount of each payment
  • The customer or donor’s name
  • The customer or donor’s billing information, making it clear which account will be charged for payments
  • A telephone number the consumer can use during normal business hours to reach a live representative who can answer questions
  • The date of the consumer’s oral authorization

Ask your legal advisor about other laws, such as the EFTA, that may apply to you in obtaining a consumer’s charge authorization.

Authorization Using Written Confirmation

If a seller or telemarketer chooses to verify authorization through written confirmation, the confirmation must be mailed using first class mail with clear and conspicuous indication that it is a confirmation of payment.

In addition, it must be mailed before you submit the billing information for payment. The confirmation must inform the consumer of the date the charge will be processed, when at all possible. And, the information must be clear enough to ensure that the consumer knows which account will be used to collect the payment.

Assisting Sellers or Telemarketers who Violate the TSR is Prohibited

An individual or organization must not assist a seller or telemarketer if they know, or if they consciously avoiding knowing, that the TSR is being violated. In practice, the person cleaning the office of a TSR violator wouldn’t be in violation. However, any third party who does business with the TSR violator to support their telemarketing effort may be found in violation.

Credit Card Laundering Is Prohibited

Credit card laundering, meaning the misuse of a merchant account, is prohibited. For example, an entity that establishes a merchant account to process payments for an entity who did not or could not obtain a merchant account on their own is in violation.

Unauthorized Billing Is Prohibited

Unauthorized billing, meaning submitting billing information for payment without the express informed consent of the consumer, is prohibited. Under the TSR, mere silence or an ambivalent response isn’t considered to be express informed consent.

The consumer must receive all of the disclosures required under the TSR and must be aware that charges will be billed to a specific account. When a telemarketer has pre-acquired account information, the rules change somewhat.

For example, assume that a telemarketer has access to a consumer’s billing information from a previous sale. Then, the telemarketer discusses a negative option free trial for a separate product with that customer. In that situation, the telemarketer must:

  • Obtain the last four digits of the account number to be charged from the customer
  • Obtain express agreement to be charged and for the charge to be made on the account confirmed by the customer using the last four digits
  • Make and retain a recording of the entire transaction

Keep in mind that the telemarketer should not have access to the last four digits of the customer’s account. Instead, the organization must put technology or procedures in place to compare the digits received from the customer to the digits already acquired. If the digits don’t match, the charge must not be processed.

Protecting Privacy

The TSR includes prohibitions intended to ensure that sellers and telemarketers don’t infringe on the consumer’s right not to be disturbed.

Do Not Call Provisions

Two types of Do Not Call provisions are covered in the TSR: entity-specific and national. The entity-specific provision, in effect, requires all sellers and telemarketers to maintain their own Do Not Call Register.

Telemarketers may not call a consumer who has requested not to be called by a particular seller or charity. Violations of this provision can result in a civil penalty of over $40,000 for each violation. Note that separate distinct divisions of an organization are considered to be different sellers.

The National TCPA Do Not Call Registry provision prohibits telemarketers from calling any consumer’s telephone number that is listed in the Registry. Exemptions from the Do Not Call provisions apply to political organizations, charities, organizations conducting telephone surveys, or sellers that have an existing business relationship with the consumer. Sellers and telemarketers must update their lists with the National Registry every 31 days.

Visit the **National Do Not Call Registry online **for additional instructions, information and troubleshooting assistance. Note that both the TSR and the TCPA regulates telemarketing calls. Some sellers or telemarketers may be exempt from one set of regulations, but not the other. Consult your attorney for more information.


A seller or telemarketing organization could be liable for placing any calls in a specific area code unless they have paid for access to the National Registry for that specific area code. This liability applies to all calls placed, whether the numbers appear in the Registry or not. The Do Not Call Safe Harbor provision provides relief for mistakes made by sellers or telemarketers who erroneously call a number on the Do Not Call Registry if they meet these requirements:

  • They have written procedures in place
  • They have trained the personnel responsible for making calls
  • They maintain an entity-specific Do Not Call list
  • They monitor and enforce compliance with the TSR
  • They made the call due to an error


Calls are exempt if the seller has an established business relationship with the consumer that was established in the previous 18 months, and the consumer has not asked to be placed on any Do Not Call list.

There is also a Written Permission to Call exemption. Calls are exempt if they are made to consumers who have provided an express agreement in writing. The agreement must include the telephone number covered by the permission, and it must be signed either by hand or via electronic signature.

Other Do Not Call Provisions

Additional provisions prohibit selling or using a Do Not Call list for any purpose other than compliance. There is also a provision prohibiting interfering with someone’s Do Not Call rights. Other provisions are quite similar to those in the TCPA, including:

  • Calling time restrictions
  • Call abandonment provisions
  • Provisions regarding calls that deliver prerecorded messages
  • Written agreement requirement
  • Automated Opt-Out mechanism
  • Exemptions for calls that are only informational, such as appointment reminders
  • Exemptions for healthcare messages

Caller ID Information Transmission Requirement

The TSR requires that all telemarketing calls transmit the telephone number, and where available the name of the telemarketer, to any consumer’s caller identification service. The telemarketer may substitute the name of the seller or charity, and the seller’s or charity’s business telephone number.

In cases where the caller ID information is dropped during transmission, the telemarketer will not be liable if they can show that all available steps were taken to transmit the information. A telemarketer’s lack of calling equipment that is capable of sending caller ID information does not constitute an excuse for violating this provision.

Prohibition of Threats, Intimidation and Profane or Obscene Language

Telemarketers are not allowed to threaten a consumer with bodily harm, financial ruin or lowering of their credit rating. Any act that applies pressure, including disputes against a consumer’s intelligence, honesty, or familial concern, is prohibited. Repeated calls to the same consumer who has refused an offer, or asked to be placed on the Do Not Call list can also be considered intimidation.

Fraudulent Telemarketing Operations

The TSR identifies specific practices that are prohibited as fraudulent. Sellers and telemarketers are prohibited from providing or receiving unencrypted accounts numbers for consideration, meaning a payment is involved. In effect, it prohibits sellers and telemarketers from selling lists of account numbers.

Credit repair services are prohibited from requesting or receiving payment for services until the time period promised for the services has expired, and the seller has provided the consumer with evidence that the credit record has been approved as promised.

Telemarketers are prohibited from selling services to recover money a consumer has lost in a previous scam. Telemarketers are prohibited from guaranteeing or indicating that a consumer can obtain a loan or credit extension with an advance payment. Payment can only be requested after the promised services are completed.

Telemarketers for debt relief services are prohibited from requesting payment until at least one of the consumer’s debts are renegotiated and the consumer agrees to the outcome. In addition, the customer must have made at least one payment to the creditor as a result of the agreement negotiated. Further, the receipt of the fee must be proportional to the percent of the total debt that has been renegotiated or the total savings that were promised.

Record Keeping Requirements

Sellers and/or telemarketers must keep the following records:

  • Copies of all promotional materials
  • Information about prize recipients
  • Sales records, including the name and address of each customer, the goods or services purchased, date of purchase or shipment, and amount paid
  • Employee records for all current and former employees involved in telephone sales
  • A record of all verifiable authorizations

Who Can Enforce the TSR?

The FTC, private citizens and states may bring civil actions related to violations of the TSR.

Penalties for Violations

Each violation of the TSR is subject to civil penalties of up to $40,654. Violators may also be required to pay damages to injured consumers.

Chapter 3: How To Comply With The TCPA

In general, the FCC rules define telemarketing as any outreach, by initiating a telephone call or message, that is initiated for the purpose of selling goods and services. In this section covering TCPA guidance, you’ll see that definition shortened to “telemarketing calls,” but it includes:

  • Auto-dialed calls
  • Prerecorded calls
  • Text messages
  • Unsolicited fax transmissions

TCPA Calling Restrictions

The TCPA restricts telemarketing under the FCC rules. The FCC recognizes that telemarketing is a legitimate method of selling goods and services, but they are attempting to protect consumers who don’t want to receive that type of call. The restrictions on telemarketing include:

  • No telemarketing calls may be made to a residential telephone number before 8 a.m. or after 9 p.m. - based on the time zone of the residence.
  • No telemarketing calls may be made to any residential telephone number registered with the National Do-No-Call List.
  • No telemarketing calls may be made to any emergency telephone line; for example, 911, emergency lines at a hospital, physician office, poison control center, or fire department.
  • No telemarketing calls may be made to a patient room in a hospital, health care facility, or any similar location.
  • No telemarketing calls may be made to any telephone number used by a paging service, cellular telephone service, or any service that charges the called party.
  • No automatic telephone dialed calls or calls that contain pre-recorded messages may be made to mobile numbers.
  • No unanswered telemarketing call may be disconnected before four rings or 15 seconds have elapsed.
  • No call center may abandon more than three percent of all outgoing calls that are answered live by a person. This calculation applies to a 30-day period. If a marketing campaign extends past 30 days, then the calculation must be done for each 30-day period or a portion of it.
  • If a live sales representative isn’t available to answer an automatically dialed telephone call within two seconds of the called party answering, the call center must provide a recorded message that identifies the name and telephone number of the calling company and an opt-out opportunity that adds the called party to the center’s do-not-call list.

TCPA Exceptions

The TCPA does provide for exceptions to the rules listed above, which include:

  • Calls that are dialed manually and don’t contain a pre-recorded message
  • Calls made during an emergency
  • Calls made representing a tax-exempt nonprofit organization
  • Calls that deliver health care messages by an entity defined in the HIPPA Privacy Rule
  • Calls made to a number within 15 days of it being moved from a “wired service” (landline) to a cellular service
  • Calls made unknowingly to cellular service telephone numbers

Please note that the exemption in situations where a prior business relationship exists was eliminated in 2013.

Additional Restrictions for Pre-Recorded Calls

Calls that are dialed to deliver a pre-recorded message must follow an additional set of rules.

  • Telemarketers must obtain prior written consent from consumers before placing robocalls to a wired or wireless line (landline or mobile phone).
  • The beginning of a recorded message must clearly state the identity of the organization that initiated the call.
  • At some point in the message, a telephone number that can be used to reach the calling organization must be included. Charges for calls to the telephone number can’t exceed charges for local or long distance calling.
  • The message must include a way for the contacted individual to opt out from subsequent calls, effectively requesting inclusion on the organization’s do-not-call list. The opt-out can use a voice command or a key press mechanism.

Chapter 4: How To Comply With The ECPA

The ECPA was released in 1986, and it amended the Wire Tap Statute. Many of the revisions to the Act were initiated to respond to terror threats and are related to the Patriot Act. The basic tenants of the Act still apply to telemarketers.

Restrictions on Recording Telephone Calls

The ECPA makes it illegal to record or to share the recording of an individual’s telephone communications. Luckily, there are two exceptions to that restriction.

The Act authorizes the recording of a communication if one of the parties has given prior consent. However, no one should rely on implied consent. For example, if an employee has consented to have telephone conversations recorded for training purposes, that doesn’t imply that they have consented to have their personal telephone calls recorded.

Callers must be notified of a recording for interstate telephone calls. The notification can be in the form of both parties consenting to the recording, an automatic “beep” tone at intervals during the recording, or an automatic recording notifying both parties that the conversation will be recorded. Many companies use the last notification, which created the familiar “This call may be recorded and monitored for quality assurance and training purposes.”

The Business Extension Exemption

There is an exemption where consent isn’t required if:

  • A business line extension is being recorded
  • The recording equipment is supplied by the business
  • The recording is being done in the ordinary course of business

Those requirements prevent an employee from recording a call on one of their work lines that was initiated or answered by another employee. But, this exemption must be understood in relation to state laws.

The Role of State Legislation

Different states have passed different legislation. Some states require one party notification and some states require two-party notification. If you are making telephone calls that cross state lines, the most restrictive requirement will take precedence. As a result, best practices would include two party notification for all telemarketing calls.


While it can be time-consuming to identify the government regulations that apply to your business, it’s important to take that time to ensure that your business practices can’t be called into question. Kixie created this guide to help you identify and understand the government regulations that govern inbound and outbound sales operations.

We’re also here to provide you with everything your team needs to make better sales calls. We offer leading-edge sales software that will allow you to make more phone calls, improve workflow, capture insightful sales statistics, and manage your sales team with powerful call tracking tools.

You can also integrate Kixie with a variety of systems you may already be using such as Salesforce, HubSpot, and Zendesk. Are you ready to take your sales operations to the next level? Schedule a demo with us to get started today!

**Disclaimer:**This Guide is for informational purposes only, and doesn’t provide legal advice. Government regulations are complex. In addition, updates by the issuing agency and modifications based on court decisions are made on a regular basis. As a result, rules may vary by state. We have made every effort to ensure that the information presented here is correct as of the date of publication. However, we do not assume and hereby disclaim any liability to any party for any loss, damage, or disruption caused by errors or omissions, whether such errors or omissions result from negligence, accident, or any other cause. You should contact your attorney to verify how these regulations apply to your business.