It is a violation of the Rule to cause billing information to be submitted for payment— directly or indirectly—without the express
informed consent of the customer or donor. The Rule requires that in any telemarketing transaction, sellers and telemarketers obtain the express informed consent of the customer or donor to be charged a specific amount on a particular identified account, to pay for the goods or services offered, or to make a charitable contribution.
Express Informed Consent Is Required in Every Telemarketing Transaction
The Rule contains no specific requirements for how sellers and telemarketers must obtain express informed consent in transactions where they do not use pre-acquired account information. As a practical matter, however, in these transactions it would be necessary for you to get the account number to be charged from the consumer, because the information isn’t available any other way. In obtaining this information from the consumer, you must get his express agreement to be charged for the goods or services being offered and to be charged using the account number he or she provides. Any false or misleading statement to induce someone to divulge his or her account information to pay for goods or services or to make a charitable contribution is an additional
Rule violation.
What is express informed consent? Under the Rule, consent is express if it is affirmatively and unambiguously articulated by the consumer. Silence is not express consent, nor is an ambivalent response like, “Well, maybe . . .,” “Gee, I don’t know about that . . .,” or a noncommital “uh-huh.” For consent to be informed, a consumer, prior to giving consent, must receive all the disclosures required by the Rule.
For example, consent would not meet the requirement that it be “informed” if the consumer does not receive all the Rule’s required material disclosures—both the prompt oral disclosures for outbound calls and the disclosures of all material information required in all telemarketing transactions. Consent is an affirmative statement that the consumer agrees to purchase the goods or services (or to make the charitable contribution) and is aware that the charges will be billed to a particular account. |
Obtaining Express Informed Consent in Telemarketing Transactions Involving Pre-acquired Account Information
Pre-acquired account information is any information that enables sellers and telemarketers to place a charge against a consumer’s account without getting the account information directly from the consumer during the transaction for which the account will be charged. The use of pre-acquired account information radically changes the usual dynamic in sales transactions, which requires that a telemarketer obtain the customer’s acceptance of the offer, as well as the customer’s account number to be charged. Telemarketers using pre-acquired account information are able to cause a charge to a consumer’s account without getting the account number from the consumer during the transaction. The Rule establishes safeguards to protect consumers in all telemarketing transactions in which sellers and telemarketers have pre-acquired account information.
The Rule establishes separate requirements for pre-acquired account information transactions involving “free-to-pay conversion” offers.
| Free-to-pay conversion offers, sometimes known as “free-trial offers,” are offers or agreements where customers receive a product or service for free for an initial period and then incur an obligation to pay unless they take affirmative action to cancel before the end of the period. |
That’s because when used together with free-to-pay conversion offers, pre-acquired account information has resulted in significant numbers of unauthorized charges to consumers who think they can’t be charged at the end of a free trial because they haven’t provided their account information. The Rule specifies what sellers and telemarketers must do to prevent this from occurring and to get a consumer’s express informed consent.
When pre-acquired account information is used and the offer includes a free-to-pay conversion feature, telemarketers must:
- obtain from the customer at least the last four digits of the account number to be charged.
- obtain the customer’s express agreement to be charged for the goods or services and to be charged using the account number for which the customer has provided at least the last four digits.
- make and maintain an audio recording of the entire telemarketing transaction.
Obtaining the last four digits from the customer: To meet the requirement that sellers and telemarketers “obtain from the customer” at least the last four digits of the account number to be charged, you must ask the customer to provide this information, and the customer must provide it to demonstrate an understanding that by doing so, he or she is agreeing to make a purchase. You must inform the customer that you have the customer’s account number or the ability to charge the account without getting the full account number from the consumer. Reading the information to the customer and asking for confirmation of the digits is not complying with the Rule. Neither is it sufficient to read the digits to the customer, and then ask the customer to recite them back. In addition, it is not adequate to reuse digits that a customer may have provided for identification purposes during another portion of the call—such as in an inbound call where you ask the customer to provide his or her account number by pressing digits on the telephone keypad.
Express Agreement to be Charged: To meet the requirement that telemarketers get a customer’s express agreement to be charged for the goods and services—and to be charged using the account number for which he or she has provided at least four digits—you must ensure that the consumer expressly and unambiguously agrees to both the purchase and the means of payment. The four digits the customer provides must actually be the last four digits of the account to be charged. If the four digits the customer provides aren’t the last four digits of the account, the customer hasn’t expressly agreed to be charged, and the transaction is void for lack of express verifiable authorization.
This is not to be interpreted as mandating that a seller or telemarketer have the unencrypted last four digits of a customer’s account number to compare the digits the customer provided to the actual account number. Rather, the agencies that issued rules under the Gramm-Leach-Bliley Act caution financial institutions against sharing the unencrypted last four digits of a customer’s account with a telemarketer, even to ensure that the customer has provided these digits accurately in giving express informed consent. The meaning here is simply that a charge cannot be processed unless the four digits provided by the customer are in fact the last four digits of the account to be charged. One way to ensure that the four digits match is to perform a real-time inquiry to verify that the leading digits of the pre-acquired account number plus the four provided by the customer are a valid account. There are other ways to do this; the Rule does not require any particular method.
Audio Recording of the Transaction: In a transaction where sellers and telemarketers have pre-acquired account information and are offering goods or services on a free-to-pay conversion basis, the entire telemarketing transaction must be recorded on audio. The audio recording must capture the material terms provided to the consumer, as well as the context and manner in which the offer is presented, because this can be critical to demonstrate that a consumer’s consent is both express and informed. In a single-transaction call, this means taping the entire call; in a multi-purpose call it means recording the entirety of each transaction using pre-acquired account information coupled with a free-to-pay conversion offer.
In a situation where telemarketers are bound by state law to obtain consent to record the transaction, they may ask permission to tape before beginning to record; this is the only portion of the call that may be conducted without recording. If it is necessary to explain the purpose of the call or to identify the seller to obtain the customer’s permission to record, telemarketers must reiterate this information once the recording begins to demonstrate that the required prompt disclosures were made in the outbound call.
When pre-acquired account information is used but the offer does not include a free-to-pay conversion feature, telemarketers must:
- at a minimum, identify the account to be charged with enough specificity for the customer or donor to understand.
- obtain the customer or donor’s express agreement to be charged for the goods or services and to be charged using the account number the seller or telemarketer has identified.
The Rule’s requirements for obtaining express informed consent in these transactions are less strict than when a free-to-pay conversion feature is involved. That’s because while pre-acquired account information itself can lead to unauthorized billing, the record shows this is less likely when there’s no free-to-pay conversion offer.
Identifying the Account with Sufficient Specificity: A telemarketer 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, it is not good enough to tell the consumer only that a charge will be placed on his Visa credit card. You must identify the card more precisely, either by stating the name of the issuing bank, or some portion of the account number. As the telemarketer, you are obligated to ensure that the consumer knows exactly which account will be charged for the goods or services. The underlying intention of the Rule is that the telemarketer expressly inform the customer that the seller or telemarketer already has the number of the customer’s specifically identified account or has the ability to charge that account without getting the account number from the consumer.
Express Agreement to be Charged: The Rule does not specify a particular procedure for sellers and telemarketers to follow when using pre-acquired account information without a free-to-pay conversion so you can demonstrate that the customer has expressly agreed to be charged. To comply with this requirement, you must elicit an affirmative and unambiguous statement from the consumer that demonstrates his intention to agree to be charged, and to be charged on a specific account. Silence is not a substitute for such a statement, nor are ambivalent or noncommital responses like, “Well, maybe . . .” or “uh-huh.”
|
