Do Not Call Compliance How to Ensure Your Business Compliance

The Rule requires sellers and telemarketers, whether making outbound calls to consumers or receiving inbound calls from consumers, to provide certain material information before the consumer pays for the goods or services that are the subject of the sales offer. Material information is information that would likely affect a person’s choice of goods or services or the person’s decision to make a charitable contribution. More simply, it is information a consumer needs to make an informed decision about whether to purchase goods or services or make a donation. Sellers and telemarketers may provide the material information either orally or in writing. Failure to provide any of the required information truthfully and in a “clear and conspicuous” manner, before the consumer pays for the goods or services offered, is a deceptive telemarketing act or practice that violates the Rule and subjects a seller or telemarketer to a civil penalty of $11,000 for each violation.

When making outbound calls, a telemarketer must promptly disclose certain types of information to consumers orally in the sales presentation.

Before a Consumer Pays: Before sellers and telemarketers get a consumer’s consent to purchase—or persuade a consumer to send full or partial payment by check, money order, wire, cash, or any other means —they must provide the consumer with the information required by Section 310.3(a)(1) of the Rule. Sellers and telemarketers also must provide the required information before asking for any credit card, bank account, or other information that they will or could use to obtain payment. In addition, sellers and telemarketers must provide the required information before requesting, arranging for, or asking a consumer to request or arrange for a courier to pick up payment for the goods or services offered. Couriers include Federal Express, DHL, UPS, agents of the seller or telemarketer, or any other person who will go to a consumer’s home or other location to pick up payment for the goods or services being offered.

When sellers and telemarketers have pre-acquired account information, they must provide the required disclosures before the customer provides express informed consent. Pre-acquired account information is any information that enables you to cause a charge against a consumer’s account without obtaining the account number directly from the consumer during the transaction for which the consumer will be charged.

Clear and Conspicuous: Clear and conspicuous means that information is presented in a way that a consumer will notice and understand. The goal is that disclosures be communicated as effectively as the sales message. When written, clear and conspicuous information generally is printed in a type size that a consumer can readily see and understand; that has the same emphasis and degree of contrast with the background as the sales offer; and that is not buried on the back or bottom, or in unrelated information that a person wouldn’t think important enough to read. When a seller or telemarketer makes required disclosures in a written document that is sent to a consumer and follows up with an outbound sales call to the consumer, the disclosures are considered clear and conspicuous only if they are sent close enough in time to the call so that the consumer associates the call with the written disclosures.When disclosures are oral, clear and conspicuous means at an understandable speed and pace and in the same tone and volume as the sales offer.

The law requires that when sellers and telemarketers offer to sell goods or services, they must provide the consumer with material
information about the offered goods or services necessary to avoid misleading consumers. The term material means likely to affect someone’s choice of goods or services or decision to make a charitable contribution, or someone’s conduct with regard to a purchase or donation.

The Rule specifies six broad categories of material information that sellers and telemarketers must provide to consumers:

The Rule requires sellers and telemarketers to disclose the total costs to purchase, receive, or use the offered goods or services. While disclosing the total number of installment payments and the amount of each payment satisfies this requirement, the number and amount of such payments must correlate to the billing schedule that will be implemented. For example, the Rule’s requirements would not be met if you were to state the product’s cost per week if the consumer has to pay installments on a monthly or quarterly basis. The Rule also requires you to tell a consumer the total quantity of goods the consumer must pay for and receive. You must provide both these items of material information to the consumer before the consumer pays for the goods or services that are the subject of the sales offer. You may provide this material information orally or in writing, as long as the information is
clear and conspicuous.

Sometimes, though, the total cost and quantity are not fixed when the initial transaction takes place, but, instead, are determined over time. For example, in a negative option plan, like those offered by some record or book clubs, the consumer may agree to purchase a specific number of items over a specified time period. The consumer receives periodic announcements of the selections; each announcement describes the selection, which will be sent automatically and billed to the consumer unless the consumer tells the company not to send it. Similarly, a continuity plan offers subscriptions to collections of goods. During the course of the plan, the consumer can choose to purchase some or all the items offered in the collection. Consumers who agree to buy an introductory selection also agree to receive additional selections on a regular schedule until they cancel their subscription to the plan.

Both negative option and continuity plans are structured to provide consumers the opportunity to purchase a series of products over time. The cost of the plan as a whole is determined by the number and type of items in the series the consumer decides to accept, and at the time of the initial sales offer, neither the seller nor the consumer necessarily knows how much product the consumer will purchase, or the total cost of the products.

To comply with the Rule, a seller or telemarketer offering a negative option or a continuity plan must disclose the total costs and quantity of goods or services that are part of the initial offer; the total quantity of additional goods or services that a consumer must purchase over the duration of the plan; and the cost, or range of costs, to purchase each additional good or service separately. Some negative option plans are subject to the FTC’s Negative Option Rule.

The Rule requires sellers and telemarketers to disclose all material restrictions, limitations, or conditions to purchase, receive, or use goods or services that they are offering to the consumer. Material information is information that a consumer needs to make an informed purchasing decision. A material restriction, limitation, or condition is one that, if known to the consumer, would likely affect the decision to purchase the goods or services offered; to purchase them at the offered price; to purchase them from that particular seller; or to make a charitable contribution. Examples of material information that must be disclosed include:

a requirement that a consumer pay for offered goods or services by cashier’s check, money order, or in cash.
in the case of an offer of a credit card, a requirement that a consumer make a deposit in order to receive and use the card offered (that is, that the credit card is a secured card).
in the case of a vacation certificate, a restriction, limitation, or condition that prevents a purchaser from using the certificate during the summer; or that requires a purchaser to make reservations a year in advance to travel using the certificate; or that requires the consumer to incur expenses beyond the price of the certificate to redeem the certificate for a vacation.
the underlying illegality of goods or services, such as the illegality of foreign lottery chances.

Sellers and telemarketers may disclose orally or in writing information about material restrictions, limitations, or conditions to purchase, receive, or use the goods or services being offered, as long as the information is clear and conspicuous and disclosed before the consumer pays.

If there’s a policy of honoring requests for refunds, cancellations of sales or orders, exchanges, or re-purchases, sellers and
telemarketers must disclose information about the policy only if they make a statement about the policy during the sales presentation. If the sales presentation includes a statement about such a policy, it must also include a clear and conspicuous disclosure of all terms and conditions of the policy that are likely to affect a consumer’s decision on whether to purchase the goods or services offered.

If the seller’s policy is that “all sales are final” — that is, no refunds, cancellations of sales or orders, or exchanges or re-purchases are allowed —the Rule requires you to let consumers know before they pay for the goods or services being offered. You may give this information to consumers orally or in writing, and the information must be clear and conspicuous.

A prize promotion includes (1) any sweepstakes or other game of chance, and (2) any representation that someone has won, has been selected to receive, or may be eligible to receive a prize or purported prize. A prize is anything offered and given to a consumer by chance.

For the element of chance to be present, all that is necessary under the Rule is that the consumer is guaranteed to receive an item, and, at the time of the offer, the telemarketer does not identify the specific item that the person will receive. For example, say you send a solicitation promising recipients that they will receive one of four or five listed items but you do not tell recipients which of the listed items they will receive. In that case, any item the consumer receives is a prize, and the solicitation is a prize promotion.

A seller or telemarketer that offers a prize promotion must provide consumers with several items of information before the consumer pays for any goods or services being offered. This information may be given to consumers orally or in writing, and the information must be clear and conspicuous. You must tell consumers:

the odds of winning the prize(s). If the odds can’t be calculated in advance because they depend on the number of people who enter the promotion, for example, you must tell that to consumers, along with any other factors used to calculate the odds.
that they can participate in the prize promotion or win a prize without buying anything or making any payment, and that any purchase or payment will not increase the chances of winning. When offering a prize promotion in outbound calls, you must
disclose this information orally and promptly. A legitimate prize promotion does not require any purchase or payment of money for a consumer to participate or win. If a purchase or payment of money is required for eligibility for a prize, it is not a prize promotion; it is a lottery, which is generally unlawful under federal and state lottery laws.
how they can enter the prize promotion without paying any money or purchasing any goods or services. This disclosure must include instructions on how to enter, or an address or local or toll-free telephone number where consumers can get the no-purchase/no-payment entry information.
about any material costs or conditions to receive or redeem any prize. For example, if one of the offered prizes is a "vacation,” but the recipient must pay for her own accommodations, that’s a cost or condition that is likely to affect the consumer’s response to the offer and therefore, must be disclosed.

A seller or telemarketer offering a credit card loss protection plan—one that claims to protect, insure, or otherwise limit a consumer’s liability in the event of unauthorized use of a customer’s credit card—must disclose the limits on a cardholder’s liability under federal law for unauthorized use of a credit card (15 U.S.C. § 1643). Since the law limits cardholder liability for unauthorized use—for example, when a credit card is lost or stolen—to no more than $50, disclosure of this information to consumers will help ensure that they have the material information necessary to decide whether the protection plan offered is worth the cost.

The term “negative option feature” is used in the Rule. It is when the seller interprets the consumer’s silence, or failure to take an affirmative action to reject goods or services or cancel an agreement as acceptance of the offer. One type of negative option offer is a “free-to-pay conversion” offer (also known as a “free-trial offer”), where customers receive a product or service for free for an initial period and then have to pay for it if they don’t take some affirmative action to cancel before the end of the period. Other types of negative option features include continuity plans and other arrangements where consumers automatically receive and incur charges for shipments in an ongoing series unless they take affirmative action to stop the shipment.

Under the TSR, any seller or telemarketer whose offer of a product or service involves a negative option feature must truthfully, clearly, and conspicuously disclose three pieces of information:

While the best practice is to provide an actual date on which payment will be submitted, it is acceptable to disclose an approximate date if you don’t—or can’t—know the actual date, provided the approximate date gives the consumer reasonable notice of when to expect the debit or charge. As for disclosing how the consumer can avoid charges, it is not sufficient under the Rule to disclose that a consumer would have to call a toll-free number to cancel without disclosing the number.

An outbound call is a call initiated by a telemarketer to a consumer. The Rule requires that a telemarketer making an outbound sales call promptly disclose the following four items of information truthfully, clearly, and conspicuously:

The identity of the seller. The seller is the entity that provides goods or services to the consumer in exchange for payment. The identity of the telemarketer, or person making the call, need not be disclosed if it is different from the identity of the seller. If the seller commonly uses a fictitious name that is registered with appropriate state authorities, it is fine to use that name instead of the seller’s legal name.

That the purpose of the call is to sell goods or services. The Rule requires that the purpose of the call be disclosed truthfully and promptly to consumers. How you describe or explain the purpose of the call is up to you, as long as your description is not likely to mislead consumers. For example, it would be untruthful to state that a call is a “courtesy call,” if it’s a sales call.

The nature of the goods or services being offered. This is a brief description of items you are offering for sale.

In the case of a prize promotion, that no purchase or payment is necessary to participate or win, and that a purchase or payment does not increase the chances of winning. If the consumer asks, you must disclose—without delay— instructions on how to enter the prize promotion without paying any money or purchasing any goods or services.

These same disclosures must be made in an upselling transaction if any of the information in these disclosures is different from the initial disclosures (if the initial transaction was an outbound call subject to the Rule) or if no disclosures were required in the initial transaction, such as a non-sales customer service call. For example, in an external upsell, where the second transaction in a single telephone call involves a second seller, you must tell the consumer the identity of the second seller—the one on whose behalf the upsell offer is being made. On the other hand, in an internal upsell, where additional goods or services are offered by the same seller as the initial transaction, no new disclosure of the seller’s identity is necessary because the information is the same as that provided in the initial transaction.

Multiple Purpose Calls. Some calls have more than one purpose. They may involve the sale of goods or services and another objective, like conducting a prize promotion or determining customer satisfaction. They may involve a charitable solicitation combined with a prize promotion. In any multiple purpose call where the seller or telemarketer is planning to sell goods or services in at least some of the calls, four disclosures must be made promptly—that is, during the first part of the call before the non-sales portion of the call. Similarly, in any multiple purpose call where the telemarketer is planning to solicit charitable contributions in at least some of the calls, two disclosures must be made promptly—that is, during the first part of the call, before the noncharitable solicitation part of the call.

Example

Say a seller calls a consumer to determine whether he or she is satisfied with a previous purchase and then plans to move into a sales presentation if the consumer is satisfied. Since the seller plans to make a sales presentation in at least some of the calls (the seller plans to end the call if the consumer is not satisfied), four disclosures must be made promptly during the initial portion of the call and before inquiring about customer satisfaction.

However, a seller may make calls to welcome new customers and ask whether they are satisfied with goods or services they recently purchased. If the seller doesn’t plan to sell anything to these customers during any of these calls, the four oral disclosures are not required. That’s the case even if customers ask about the sellers’ other goods or services, and the seller responds by describing the goods or services. Because the seller has no plans to sell goods or services during these calls, the disclosures are not required.

The identity of the charitable organization on whose behalf the solicitation is being made. The charitable organization is the entity on whose behalf a charitable contribution is sought. The identity of the telemarketer, or person making the call, need not be disclosed. If the charitable organization commonly uses a fictitious name that is registered with appropriate state authorities, that name may be disclosed instead of the charitable organization’s legal name.

That the purpose of the call is to solicit a charitable contribution. The Rule requires that the purpose of the call be disclosed promptly to consumers. How the purpose of the call is described or explained is up to you, as long as your description or explanation is not likely to mislead consumers.

How does a for-profit company that telemarkets for a non-profit organization make the required oral disclosures? When a for-profit company makes interstate calls to solicit charitable contributions for a non-profit organization, the for-profit telemarketer must make the required prompt disclosures for charitable solicitation calls. The company must identify the entity on behalf of whom the charitable solicitation is made and state that the purpose of the call is to solicit a charitable contribution. However, if a for-profit company solicits charitable contributions on behalf of a charity and offers goods or services that are of more than nominal value — a book, magazine subscription, or perhaps a membership — to induce donations, the required oral disclosures for both sales and charitable contributions must be made. “Nominal” means a value less than the amount of any contribution being solicited. In a situation where the goods or services offered are of more than nominal value, stating the name of the non-profit organization on whose behalf the call is being made is sufficient. This disclosure also would satisfy the requirement that the entity on whose behalf a charitable contribution is being solicited be identified.

Examples:

“I am calling on behalf of [name of non-profit organization] to offer you a subscription to the organization’s newsletter, which [description of newsletter] and to ask for a donation to help support the work of [name of non-profit organization].”

“I am calling for [name of non-profit organization] to seek your support. For a donation of $25 or more, [name of non-profit organization] will extend to you a one-year membership, which entitles you to [description of the membership]. Your donation will help us to continue the [non-profit organization’s] important work . . .”

The Rule prohibits sellers and telemarketers from making false or misleading statements to induce anyone to pay for goods or services or make a charitable contribution. For example:

In addition, the Rule prohibits sellers and telemarketers from misrepresenting specific categories of information about a telemarketing transaction that are likely to affect a consumer’s decision to purchase the goods or services offered. The Rule also prohibits both express and implied misrepresentations. Sellers and telemarketers cannot circumvent the Rule by creating a false
impression in a consumer’s mind through the artful use of half-truths or misleading or incomplete information.

In sales transactions, the Rule prohibits misrepresentations about the following:

The Rule prohibits sellers and telemarketers from misrepresenting the total costs to purchase, receive, or use the goods or services offered, or the quantity of goods or services offered at the stated price. For example, you may not tell consumers that they may purchase a magazine subscription for three years at $1.50 a month, when the subscription is available at that price for
one year only.

The Rule prohibits sellers and telemarketers from misrepresenting any material restriction, limitation, or condition to purchase, receive, or use goods or services offered to the consumer. For example, you may not falsely claim that a hotel certificate may be used any time at any major hotel chain in the country, when it can be used only at certain times or at a limited number of hotels.

The Rule prohibits sellers and telemarketers from misrepresenting any material aspect of the performance, efficacy, nature, or central characteristics of the goods or services offered to the consumer. For example, it is a violation of the Rule to claim falsely that:

The Rule prohibits sellers and telemarketers from misrepresenting any material aspect—one that likely would have an effect on the onsumer’s purchasing decision—of the nature or terms of the seller’s refund, cancellation, exchange, or repurchase policies. For example, the Rule prohibits you from claiming that “our policy is to make our customers happy—if at any time you’re not absolutely delighted, just send the merchandise back,” if there are time limits, “restocking” charges, or other important restrictions on the return of the goods. It also prohibits sellers and telemarketers from claiming that tickets may be cancelled any time up to the date of an event when cancellation requests like that would not be honored.

The Rule prohibits sellers and telemarketers from misrepresenting any material aspect of a prize promotion: you may not lie about any aspect of a prize promotion that is likely to affect a consumer’s decision to buy any goods or services offered in conjunction with a prize promotion, to buy them at the offered price, or to buy them from you. For example, you may not misrepresent:

The Rule prohibits sellers and telemarketers from misrepresenting any material aspect of an investment opportunity. You may not make any false or misleading statements about an investment opportunity that are likely to affect a prospective purchaser’s decision to invest. You may not misrepresent any information needed to make an informed investment decision. Examples of material aspects of an investment opportunity include: the risk involved in the investment, the liquidity of the investment, or the earnings potential or profitability of the investment. Depending on the nature of the investment opportunity, other material aspects may include markup over acquisition costs; past performance, marketability, or value of an investment; or fees charged in credit-financed purchases of precious metals.

The Rule prohibits sellers and telemarketers from misrepresenting affiliations with—or endorsements or sponsorships by—any person, organization, or government entity. For example, you cannot falsely claim that you’re a member of the Better Business Bureau or the local chamber of commerce, or that you’re affiliated with the local police or some national charity. Neither can you create the impression in a consumer’s mind that the postal permit number displayed on a mail solicitation is a sign that the U.S. Postal Service has approved a promotion. In addition, sellers and telemarketers cannot falsely claim or create the impression in a consumer’s mind that they are related to or affiliated with a company with which the consumer usually does business.

The Rule prohibits sellers and telemarketers from misrepresenting that any customer needs offered goods or services to receive protection against unauthorized charges that he or she already has under federal law (15 U.S.C. § 1643). For example, you cannot falsely claim that a consumer who doesn’t purchase the credit card loss protection you’re offering might be liable for thousands of dollars in unauthorized charges should a credit card be stolen. In fact, the law caps a customer’s liability for unauthorized charges on her credit card at $50.

The Rule prohibits sellers and telemarketers from misrepresenting any material aspect of a negative option feature of an offer, including: the fact that the consumer’s account will be charged unless the consumer takes an affirmative action to avoid the charges, the dates the charges will be submitted for payment, and the specific steps the customer must take to avoid the charges. For example, the Rule prohibits you from representing that to avoid being charged, the consumer need only call a tollfree number to cancel if, in fact, the number is never answered. In this case, you would be misrepresenting the specific steps the customer must take to avoid the charge, because the steps described wouldn’t achieve that purpose.

In charitable solicitation calls, the Rule prohibits misrepresentations about:

1. The Nature, Purpose, or Mission of the Entity on Whose Behalf the Solicitation is Made

The Rule prohibits telefunders from misrepresenting the nature, purpose, or mission of any entity on whose behalf a charitable contribution is being solicited. It would violate the Rule for a telefunder to claim, expressly or by implication, that a charitable contribution is being requested on behalf of a charity that seeks to protect endangered species if the purpose of the charity is to support a local petting zoo of barnyard animals. And a telefunder may not represent that a charitable organization engages in cancer research if the organization simply educates the public about cancer through its fundraising calls.

Whether a contribution is tax deductible—or an organization is tax exempt—may be an important consideration when potential donors are deciding whether or how much to contribute. The Rule therefore prohibits telefunders from misrepresenting, expressly or by implication, that any charitable contribution is partly or fully tax deductible, or falsely implying that an organization on whose behalf a contribution is solicited is “tax exempt.”

The Rule prohibits telefunders from misrepresenting how the requested contribution will be used. This includes not only how a donation will be spent, but also the locality where the direct effect of the donation will be felt. The purpose for which a contribution is sought usually is important to a donor, and any misrepresentations about that would be likely to mislead a consumer. It would violate the Rule for you to state or imply that a donation will benefit sick children in the local area if the money collected is not spent to benefit sick children or is not spent to benefit sick kids in the donor’s local area. You also cannot claim that a donation will be used to pay for bullet-proof vests for local law enforcement officers if the money goes to some other purpose. The charitable purpose described to potential donors may not be peripheral or incidental to the primary purpose for which the donation will be used.

4. Percentage or Amount of Contribution that Goes to the Charitable Organization or Program

The Rule prohibits telefunders from misrepresenting the percentage or amount of the contribution that goes to a charitable
organization or program. This prohibition covers statements made in response to the questions of potential donors, as well as unprompted standalone statements. Even though the TSR does not require you to affirmatively disclose the percentage or amount of the contribution that goes to a charitable organization or program, if a potential donor raises the question, you must answer truthfully and must not misrepresent this information in any way.

The Rule prohibits telefunders from misrepresenting any material aspects of a prize promotion in conjunction with a charitable solicitation. You may not make a false statement about any aspect of a prize promotion that could affect a donor’s decision to make a charitable contribution in conjunction with the prize promotion.

The Rule prohibits telefunders from misrepresenting their own or a charitable organization’s affiliation with, or endorsement or sponsorship by, any person, organizations, or government entity. For example, you cannot falsely claim that the organization on whose behalf you are calling is affiliated with, sponsored by, endorsed by, or otherwise approved by any other entity or organization. Nor could you falsely claim to be endorsed or “approved by” the local police. In addition, you cannot falsely claim — or create the impression—that you are related to or affiliated with a charity that the donor has heard of or contributed to in the past.

The Rule requires “express verifiable authorization” when the payment is made by a method other than a credit card (subject to the Truth in Lending Act and Regulation Z), or a debit card (subject to the Electronic Fund Transfer Act and Regulation E). Because many novel payment methods lack protection against unauthorized charges and dispute resolution rights should the customer be unhappy with the goods or services, the Rule requires that when customers in telemarketing transactions pay by such methods, sellers and telemarketers must meet a higher standard for proving authorization. This provision, the prohibition on sharing unencrypted account numbers, and the requirement that a consumer’s express informed consent be obtained in every telemarketing transaction, are in place to protect consumers from unauthorized charges.

What about cash, checks, and money orders? The “express verifiable authorization” requirement does not apply to conventional checks that the consumer writes, signs, and mails, or to payments by money order, cash, gift certificates, or direct billing (where the customer or donor receives a written bill or statement before having to pay). These payment methods have been used for years, and consumers are familiar with the advantages and relative risks of each. But there are payment methods that consumers may be unfamiliar with and that lack fundamental protections. In the latter instance, the Rule requires more proof of authorization to protect consumers from unauthorized charges: If payment is made by demand draft or “phone check,”mortgage or utility billing (where goods or services other than the mortgage or utility payment is billed on these accounts), or a similar unconventional method, a telemarketer must obtain the customer or donor’s “express verifiable authorization.”

Who is responsible for obtaining verifiable authorization? Under the Rule, sellers and telemarketers that receive payment by methods other than credit or debit cards are responsible for obtaining verifiable authorization in those transactions. Even if you use the services of a third party to process or submit billing information other than credit or debit card information, you are responsible for ensuring that the disclosure requirements of the Rule for verifying authorization are met. Under the Rule, a third party also can be held liable for violating the Rule if the third party substantially assists a seller or telemarketer and knows—or consciously avoids knowing—that the seller or telemarketer is violating the Rule by failing to obtain verifiable authorization.

Processing and submitting account information constitutes substantial assistance to a seller or telemarketer. Therefore, if a third party is processing account information for a seller or telemarketer, the third party should ensure that whoever is obtaining consumers’ account information obtains verifiable authorization in accordance with the Rule’s requirements. A third party who processes and submits bank account information cannot avoid liability by not asking questions about whether authorization procedures comply with the Rule. Indeed, a third party can be held liable under the Rule if it knows that the authorization procedures do not comply with the Rule and it processes or submits account information for payment anyway.

Does the Rule apply if I only supply the software to process or submit bank account information for payment? Maybe. Providing the means to submit a consumer’s account information for payment constitutes substantial assistance to a seller or telemarketer. If the seller or telemarketer who is using the software is violating the Rule, a law enforcement agency may ask about the extent to which the software provider ensured that authorization procedures were in place to comply with the Rule. A software provider cannot sell its product with its “eyes closed” to the business practices used by the software purchaser, consciously avoiding any knowledge of the wrongdoing. Deceptive telemarketers favor novel payment methods, such as demand drafts. Therefore, third parties should know who they’re doing business with — and whether the people they do business with are complying with the Rule.

Under the Rule, authorization is considered verifiable if it is obtained in one of three ways:

Any form of written authorization from a consumer is acceptable, as long as it has the consumer’s signature. For example, a consumer may transmit written authorization to the seller or telemarketer by facsimile or may send a “voided” signed check as written authorization. An electronic signature also is valid, provided it would be recognized as a valid signature under applicable federal or state contract law.

Any audio recording of an oral authorization3 for payment must clearly demonstrate that the consumer has received each of seven specific pieces of information about the transaction and that the consumer has authorized that funds be taken from (or charged to) his or her account based on the required disclosures by the seller or telemarketer. A general question like, “Do you understand all the terms of the sale?” followed by a consumer’s “uh-huh” or “yeah” is not enough to demonstrate authorization. The tape recording must show that the consumer received each piece of information below and that, based on this information, the consumer understood and acknowledged each term of the transaction and authorized the transaction.

The Rule also requires that audiorecorded oral authorization be made available upon request to the customer or donor, as well as to the customer or donor’s bank or other billing entity.

If sellers and telemarketers choose verifiable authorization through written confirmation, they must send the confirmation to the consumer via first class mail—and identify it clearly and conspicuously as confirmation of payment— before submitting the consumer’s billing information for payment. That does not mean that you must wait to submit this information until a consumer receives the confirmation: The Rule requires only that you send it before you submit the billing information for payment.

The Rule leaves it to sellers and telemarketers to determine what procedures are necessary to ensure that confirmations are sent prior to submission, to put these procedures in place, and to ensure that records are generated and maintained to document that confirmations are sent at the appropriate time and required refunds are provided.

The written confirmation must contain all the information required in a tape recorded authorization. In addition, if you choose to use the written confirmation method of authorization, you must have a refund policy in place and must disclose in the written confirmation how to obtain a refund if the consumer disputes the written confirmation. The Rule’s prohibition on misrepresenting a refund policy applies in the context of obtaining verifiable authorization by means of written confirmation. Note: In transactions involving pre-acquired account information combined with a free-to-pay conversion, sellers and telemarketers may not use the written confirmation method of obtaining authorization. In these transactions, written confirmation does not constitute “express verifiable authorization.”

Date the debit, charge, or payment will be submitted for payment
This disclosure ensures that consumers know when to expect the charge or debit. To comply with this requirement, it makes good sense to provide an actual date on which payment will be submitted: “This debit from your checking account will occur on April 14, 2004.” However, it is acceptable for you to disclose an approximate date if you don’t—or can’t—know the actual date, provided the approximate date gives the consumer reasonable notice of when to expect the debit or charge. For example, you could tell a consumer, “The charge will appear on your next mortgage statement,” or “Your account will be charged within two weeks from today.”

Similarly, in a transaction involving a continuity plan, it would be sufficient for you to note when any initial charge will be submitted for payment, and then at what intervals each successive payment would be submitted, should the customer opt not to decline to purchase additional goods or services. For example, in a book club plan, you could tell a customer that the initial $4.95 charge would be debited from his or her bank account on May 15, and that each month after that, his or her account will be billed one week from the date of each successive shipment.

Billing information in specific enough terms that the consumer understands what account will be used to collect payment for the transaction
To identify the account with sufficient specificity for the customer or donor to understand what account will be charged, you must state the name of the account and enough other distinguishing information about the account to ensure that the customer understands which account will be charged.

For example, telling the consumer that the charge will be placed on his mortgage account is not specific enough information. It would be necessary to identify the account further, perhaps by the name of the lender and the property address, or a reference to some portion of the account number or expiration date. It is your obligation to ensure that the consumer knows specifically what account will be charged for the goods or services.

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