Inflation Hits FTC Penalty Amounts
What is the penalty increase?
As a result of inflation, the Federal Trade Commission (FTC) has finalized amendments that will raise the maximum civil penalty from $16,000 to $40,000 per violation. That’s quite a jump! The adjusted penalty amount will take effect on August 1, 2016 and applies to violations of Section 5 of the FTC Act, which gives the FTC broad authority to prohibit “unfair or deceptive acts or practices.”
How does telemarketing fit into all of this?
The Telemarketing Sales Rule (TSR) was adopted in accordance with the Telemarketing and Consumer Fraud and Abuse Prevention Act (TCFAPA). Specifically, the TCFAPA provided the FTC the regulatory authority to adopt and enforce telemarketing regulations, such as the TSR:
“The Commission shall prescribe rules prohibiting deceptive acts or practices and other abusive telemarketing acts or practices.”
Under the TCFAPA, any violation of the TCFAPA and therefore, the TSR is a violation of Section 18 of the FTC Act. Section 18 of the FTC Act provides the FTC the authority to adopt unfair and deceptive acts or practices regulations to implement the provisions of Section 5 of the FTC Act. In a nutshell, a violation of the TSR is equivalent to a violation of the unfair and deceptive acts or practices regulations and is, therefore, subject to the newly adjusted maximum penalty of $40,000 per violation.
What specifically should companies pay attention to?
As previously stated, penalties have now more than doubled for unfair and deceptive acts or practices violations of the FTC Act and, therefore, of the TSR and even the CAN-SPAM Act. Some common mistakes businesses make that may lead to significant fines due the adjusted penalty amount of $40,000 include, but are not limited to, the following:
- Calling numbers on the National DNC Registry without an exemption
- Failing to suppress against the National DNC Registry once an EBR has expired
- Failing to suppress against the business’ internal DNC list at the required minimum frequency
- Failing to honor DNC requests or a DNC policy request within 30 days
- Failing to train agents to make all TSR-required disclosures at the beginning of every call
- Placing calls outside of the allowable timeframe of 8AM-9PM
- Failing to display accurate caller identification information (caller’s name and telephone number)
- Abandoning more than 3% of calls per campaign per month
- Any violations of the CAN-SPAM Act
If you have any questions about this penalty increase or how to implement policies and procedures to ensure your business does not put itself at risk for this now more than doubled fine amount, please contact us at firstname.lastname@example.org.
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