Shopping by Phone - A One-Stop Guide to Consumer Protection

The Direct Marketing Association (DMA), the Federal Trade Commission (FTC) and the Federal Communications Commission(FCC) have developed this booklet to help make your telephone shopping experience a pleasant one. The booklet offers easy-to-use tips, and tells you about significant federal laws and regulations that protect your consumer rights and/or combat fraud that can be committed by phone. These federal protections include the Telemarketing Sales Rule, the Telephone Consumer Protection Act, the Mail or Telephone Order Merchandise Rule, and the 900-Number Rule. You may also have other protections under state or local law. Contact your state Attorney General or local consumer protection agency for more information. Additional sources of information are included at the end of this booklet.

Telephone marketing is a convenient way to learn about and buy products and services without leaving the comfort of your home. In fact, nearly 70 million people depend on the telephone to order products and services each year.

Some of the benefits of telephone shopping include:

• Shopping 24 hours per day, seven days a week;
• Buying goods and services with credit;
• Comparison shopping with a variety of merchants;
• Renewing subscriptions to magazines, clubs, or social events, or donating to your favorite causes;
• Locating hard-to-find items—this can be especially convenient for those with unusual hobbies or interests;
• Getting help and information before and after a sale;
• Using toll-free numbers for ordering and customer service calls. Directory assistance for toll-free numbers is 1.800.555.1212.

The Telemarketing Sales Rule

The Telemarketing Sales Rule, which has been in effect since December 31, 1995, enforces a law Congress passed to fight fraudulent activities carried out by telephone. Companies that violate the Rule may be subject to fines of $10,000 per violation, if the FTC takes action against them. The FTC defines telemarketing as any plan, program or campaign to sell goods or services over the telephone. The FTC's Telemarketing Sales Rule prohibits misrepresentations and requires telemarketers to give you certain disclosures. It also gives you the power to stop unwanted telemarketing calls. (There is some overlap with this Rule and the FCC's rules, described later.)

Your Rights

The Rule requires specific disclosures.
For outbound calls, the following prompt (before any sales pitch is given) clear and conspicuous oral disclosures:

• The seller's identity;
• That the purpose of the call is to sell;
• The nature of the goods or services offered;
• That no payment or purchase is necessary to win if a prize promotion is offered.

For all transactions, whether they involve inbound or outbound calls, the following clear and conspicuous written or oral disclosures:

• The cost and quantity of the goods or services offered;
• Any material restrictions, limitations, or conditions;
• Any "no-refund" policy; if a refund policy is mentioned, the material terms and conditions of the refund policy must be disclosed;
• Prize promotion disclosures: the odds of winning, or if the odds can't be calculated, the factors that determine the odds; that no purchase/no payment is necessary to win; a statement of no purchase/no payment method of entry; and any material restrictions or limitations on any offered prize.

A telemarketer cannot:

• Call again once you've asked them not to;
• Call you before 8:00 A.M. or after 9:00 P.M.;
• Withdraw money from your checking account without your express, verifiable authorization;
• Misrepresent the offer or the goods or services offered or make any false statement to get you to pay, no matter what method of payment you use;
• Seek payment for credit repair, recovery room or advance fee loan/credit services until these services have been delivered.

Exceptions to the Rule

The Rule does not cover the following situations:

• Calls placed by consumers in response to general media advertising if the advertising does not relate to: investment opportunities; credit repair services; recovery services; or loans or other extensions of credit, the granting of which is represented to be guaranteed or highly likely;
• Calls placed by consumers in response to direct mail advertising if the advertising discloses all the material information required by the Rule;
• Catalog sales;
• Calls initiated by the consumer that are not made in response to any solicitation;
• Calls involving sales that are not completed, and payment (or authorization of payment) is not required, until after a face-to-face sales presentation;
• Calls seeking charitable donations but not soliciting a purchase of goods or services;
• Business-to-business calls (unless nondurable office or cleaning supplies are being offered);
• Sales of pay-per-call services and sales of franchises.

Other Rules Regarding Unsolicited Telemarketing Calls and Faxes: The Telephone Consumre Protection Act

The Telephone Consumer Protection Act (TCPA), a federal law, imposes restrictions on the use of automatic telephone dialing systems (also called autodialers), artificial or prerecorded voice messages, and fax machines to send unsolicited advertisements. The FCC adopted rules and regulations, effective December 20, 1992, implementing the TCPA. Different rules and regulations apply to calls placed to homes and calls placed to businesses. The rules do not apply to messages sent via e-mail or the Internet. The rules include a prohibition against calling a consumer at home who has asked not to be called again. (As noted earlier, there is some overlap between the "do not call" provisions of the FCC's rules and the FTC's Telemarketing Sales Rule.)

Terms you should know to protect your rights

• An autodialer is equipment that stores and dials numbers in sequential order or at random.
• You have an established /business relationship with a person or entity if you have made an inquiry, application, purchase or transaction regarding products or services offered by that party. You may end this relationship by telling the company that you do not want them to place any more solicitation calls to your home.
• A telephone solicitation is a telephone call or message made for the purpose of encouraging the purchase or rental of, or investment in, property, goods or services. The term does not include a call or message made with your prior permission; a call from a company with which you have an established business relationship; or a call by or on behalf of a tax-exempt nonprofit organization.

Your Rights

During a "live" call placed to your home, a telemarketer must tell you:

• The name of the individual caller;
• The name of the company on whose behalf the call is being made; and
• A telephone number or address at which the company can be contacted.

A telemarketer cannot:

• Call again once you've asked them not to;
• Call you before 8:00 A.M. or after 9:00 PM.

The FCC's Do-Not-Call Rules require companies to keep a record of your request not to receive future sales calls for ten years.

To stop future "live" calls to your home:

Tell the caller that you do not want to receive any more solicitation calls from them and to add you to their do-not-call list. This request should stop all calls from the caller for ten years. It should also stop calls from affiliated entities where, due to the identification of the caller and the product being advertised, you would reasonably expect that the request applies to affiliated entities.

Each time you receive a call from a different company whose calls you do not wish to receive you must request that they don't call you again.

Exceptions to the Do-Not-Call Rule Requirements

• Tax-exempt nonprofit organizations are not required to keep do-not-call lists.
• The do-not-call rules do not apply to calls placed to your business telephone number. However, your state may have laws that apply to business telephone numbers.

Rules That Apply to Computerized Calls

Artificial (computerized) or prerecorded voice calls cannot be placed to your home, except for the following

• Emergency calls;
• When you have given prior consent to such calls;
• Non-commercial calls (for example, calls from charities, polling organizations, political or government agencies);
• Calls by or on behalf of tax-exempt nonprofit organizations;
• Calls which don't have unsolicited advertisements; and
• Calls from companies with which you have an established business relationship.

(Prerecorded calls to business numbers are not prohibited but two or more lines of multi-line businesses cannot be tied up at the same time.)

Information that must be provided for those computerized or prerecorded calls that are not prohibited:

• The company using the autodialer must clearly state its identity at the beginning of the message, and its telephone number or address during or after the message.
• The telephone number provided cannot be the number of the autodialer that placed the call, and cannot be a 900 number or any other number where you'd have to pay a charge higher than local or long distance telephone charges.

Rules That Apply to Autodialed, Artificial or Prerecorded Voice Calls Place to Emergency, Cellular Telephone and Pager Numbers

The FCC's rules prohibit the use of autodialers, artificial or prerecorded voice messages to call numbers assigned to:

• Any emergency telephone line, including any 911 line and any emergency line of a hospital, medical physician or service office, health care facility, poison control center, or fire protection or law enforcement agency;
• The telephone line of any guest or patient room of a hospital, health care facility, elderly home or similar establishment
• Any telephone number assigned to a paging service, cellular telephone service or other radio common carrier services: or
• Services for which you—as the person being called—would be charged for the call.

These prohibitions do not apply in the following situations:

• Emergency calls;
• When you have given prior consent to such calls; or
• Prerecorded messages sent by cellular service providers to their subscribers—for example, to "roamers" leaving the service area—if subscribers are not charged for the call.

Rules That Apply to Unsolicited Faxes

Rules applying to unsolicited fax advertisements sent to your home and business fax machines:

• Advertisements for any goods or services cannot be sent to your fax machine without your prior express permission or invitation.
• Permission to send unsolicited faxes is presumed to exist if you have an established business
• relationship with whomever is sending the message.
• You can end this relationship by telling the company that you do not want to receive any more faxes from them.

Information that must be placed either on the first page or on each page of a fax:

• The date and time the transmission is sent;
• The identity of the business, other entity, or individual sending the message; and
• The telephone number of the sender or of the sending fax machine. The telephone number provided may not be a 900 number or any other number for which charges exceed local or long distance telephone charges.

The Mail or Telephone Order Merchandise Rule

Enforced by the FTC, this Rule covers merchandise you order by mail, telephone, computer and fax machine, and requires companies to have a reasonable basis for claiming they can ship an order within a certain period of time. The Rule was first enacted in October 1975 and amended as of March 1, 1994.

Ship Dates

• By law a company should ship your order within the time stated in its ads. If no time is promised the company should ship your order within 30 days.
• The 30-day "clock" begins when the company receives a "properly completed order" which includes your name, address and payment (check, money order or authorization to charge an existing credit account— whether or not the account is debited at that time).
• If the company doesn't promise a shipping time and you are applying for credit to pay for your purchase, the company has an additional 20 days (50 days total) to establish the account and ship the merchandise.

Delays

If the company is unable to ship within the promised time, it must notify you by mail or telephone, give a revised shipping date and give you the option to cancel for a full refund. The company also must give you some prepaid means to exercise the cancellation option, for example, a prepaid reply card or a toll-free 800 telephone number to call.

• If you ignore the option notice, and the delay is 30 days or less, it's assumed that you accept the delay and are willing to wait for the merchandise.
• If you do not respond—and the delay is more than 30 days—the order must be canceled by the 30th day of the delay period and a refund issued.

If the company finds it cannot meet the revised l shipping date, it must then again notify you by mail or telephone and give you a new shipping date or cancel your order and give you a refund.

• The order will be canceled and a refund issued promptly unless you indicate by the revised shipping date that you are willing to wait.
• If you do not respond at all to the second notice, it's assumed that you are not willing to wait, and a refund should be issued promptly.

Refunds

• If payment is made by check or money order, the company must issue you a refund within seven business days.
• If you authorized a charge to a credit card account, the company must credit the account within one billing cycle—not give credit toward a future purchase.

The 900-Number Rule

This Rule was implemented by the FTC to fight abuses regarding the advertising and use of 900 numbers by services selling information or entertainment programs delivered over the phone, and billed to the caller's phone bill. Effective since November 1, 1993, it applies to interstate calls to such services. Companies that violate this Rule may be subject to fines of $10,000 per violation, if the FTC takes action against them.

Your Rights

The phone company cannot disconnect your regular or long distance service if you don't pay a 900-number charge. However, you could be blocked from making future calls to 900 numbers if you don't pay legitimate 900-number charges. Blocking is available from the phone company if you want to make sure no one using your phone can call a 900-number service—charges for which would appear onyourphone bill.

900-Number Advertisements

All print, radio, and television ads for 900-number services must include:

• The total cost of the call if there is a flat fee;
• The per-minute rate if the call is charged by the minute, as well as any minimum charge; if the length of the program is known in advance, the ad must also state the total cost of the complete program;
• The range of fees if there are different rates for different options; the ad must also state the initial cost of the call and any minimum charges;
• The cost of any other 900 number to which the caller may be transferred; and
• Any other fees that the service might charge.

This information cannot be hidden in small print: The cost of the call must be next to the 900 number and printed in a size that's at least half the size of the 900 number. In a television ad, an audio cost disclosure also must be made.

The Preamble

When you dial a 900 number that costs more than $2 per call, before the information or entertainment program begins, you should hear an introductory message or "preamble." You can't be charged for this message. It must:

• briefly describe the information or entertainment service that is about to begin;
• give the name of the company providing the service;
• state the cost of the call; and
• state that anyone younger than 18 needs parental permission to complete the call.
• Once this information is provided, you must be given three seconds to hang up without incurring a charge.

Exceptions to the Rule

The 900-Number Rule doesn't apply to calls you make to information and entertainment services over the phone if:

• you have a pre-existing contractual agreement with the information or entertainment service you are calling. (Entering into such an arrangement means that this Rule and its protections will not apply); or
• you authorize charges to your credit card for calls to an information or entertainment service. (As with any other credit card purchase, bills for these calls would be covered by the dispute resolution procedures of the FTC's Fair Credit Billing Act, discussed later.)

Sweepstakes

The Rule also covers 900-number services that promote sweepstakes. For example, some services offer the chance to win a prize by dialing a 900 number and, in some cases, entering a code. The Rule requires ads for sweepstakes to state the odds of winning or how the odds will be calculated. In addition, the ad or preamble must tell you there's a free way to enter the sweepstakes, how to enter, or how to get that information.

You must not be required to call—and incur a charge—to enter. This provision doesn't apply to contests where you have to demonstrate a skill, such as answer a question correctly. Think twice before calling a 900 number for a "free" gift—the cost of your call may exceed the value of the free gift. And you will incur charges just by completing the call and staying on the line after the preamble.

Toll-Free Numbers

The 900-Number Rule generally prohibits:

• using 800, 888 or other toll-free numbers for pay per-call services, unless either the information or entertainment service has a pre-existing agreement with you, or you pay for the service by credit card;
• connecting you directly to a 900 number from an 800, 888 or other toll-free number; and
• calling you back collect if you've dialed an 800, 888 or other toll-free number.

Be aware that not all numbers beginning with "8" are toll-free. For example, the area code "809" serves parts of the Caribbean. If you dial this area code, you'll be charged international long-distance rates.

Billing Errors and Disputes

The 900-Number Rule has procedures for resolving billing disputes.

• Always check your telephone bill for 900 number or other pay-per-call charges. They must be listed separately on your phone bill.
• For each pay-per-call, your bill should include the date, time, and length of the call (if charged per minute).
• Your billing statement must include a local or toll-free number you can call for answers to questions about charges to 900-number services.

If you find an error on your bill, follow the instructions on your statement as to whom to contact to dispute the charge. In most cases, it will be your local or long distance telephone company. You must notify the company listed on your bill within 60 days from the date the first statement containing the error was sent. The company must acknowledge your notice in writing within 40 days unless it has resolved the dispute by that time. Within two billing cycles, but no longer than 90 days, the company must:

• correct the billing error and notify you of the correction; or
• investigate the matter and either correct the error or explain the reason for not doing so.

Minimize Your Risk

Common Frauds

Some of the most common frauds against consumers include:

• deceptive contests, prizes and sweepstakes;
• charitable solicitations;
• "recovery" services;
• travel scams; and
• phony business opportunities.

Precautions

Take the following precautions when you buy or contribute by phone:

• Don'teverdivulge your credit card number or your checking account number for any reason other than to make a purchase.
• Know whom you're dealing with. If you have doubts about a company, check with your state or local consumer protection office or the Better Business Bureau where the company is located beforeyou do business with them.
• Keep a record of the companies you deal with over the phone. Include their names, addresses, telephone numbers and any payments made, including credit card information given.
• Ask whether there are additional fees for shipping and handling, state sales tax, insurance or restocking, and if so, the amounts.
• Ask about refund and exchange policies.
• Know the total cost of the merchandise and any material restrictions on obtaining or using it.
• Ask for and wait until you get written material about an offer or charity you're not familiar with or have doubts about before sending money or making a donation.
• Refuse prize offers where you have to pay or make a purchase in order to be eligible for a prize That's illegal.
• Don't be pressured or act on impulse. Take the time to understand an offer and talk it over with someone you trust.
• Use common sense. If an offer sounds too good to be true, it probably is.

Credit Card Purchases

You are protected by the FTC's Fair Credit Billing Act from billing errors when you use your credit card to pay for purchases. If you find an error on your credit or charge card statement, you may dispute the charge and withhold payment on the disputed amount while the charge is in dispute. The error might be a charge for the wrong amount, for something you did not accept, or for an item that was not delivered as agreed. Of course, you still must pay any part of the bill that is not in dispute, including finance charges on the undisputed amount.

If you decide to dispute a charge:

• Write to the creditor at the address indicated on the monthly billing statement for "billing inquiries." Include your name, address, credit card number, and a description of the billing errors.
• Send your letter soon. It must reach the creditor within 60 days after the first bill containing the error was mailed to you.

The creditor must acknowledge your complaint in writing within 30 days after receiving it, unless the problem has been resolved. The creditor must resolve the dispute within two billing cycles (but not more than 90 days) after getting your letter.

Where to Complain and Get Help

Several organizations can provide additional information and help you with complaints:

• Your state Attorney General probably has a division that deals with consumer protection issues; other state or local consumer protection offices can also be contacted;
• Your state public utilities commission;
• Your local Postal Inspector in Charge, or Postal Inspection Service Headquarters at: 475 L'Enfant Plaza, SW, Washington, D.C. 20260-2181;
• The Better Business Bureau where the company is located (checkwww.bbb.orgon the World Wide Web for listing of local BBBs);

Violations of the Telephone Consumer Protection Act and the FCC's Rules

Actions You Can Take:

• Ask the solicitor to stop calling your telephone number or sending unsolicited ads to your fax machine;
• Contact your local or state consumer protection of office to find out if your state permits you to file suit to stop solicitation calls or faxes and/or to file suit for actual monetary loss. The penalty for violations is generally $500 in damages or actual monetary losses, whichever is greater.
• Send a letter to the FCC at the following address:

Federal Communications Commission
Common Carrier Bureau
Consumer Complaints
Mail Stop Code 1600A2
Washington, D.C. 20554

Your letter should include:

• Your name. address and daytime telephone number;
• The action you are requesting, such as asking a person or business to: stop calling your home telephone number; add your name to their do not-call list; or stop sending unsolicited ads to your fax machine;
• The number the solicitor called;
• The name, address and telephone number of the organization making the calls;
• The date you asked to be added to the do-not-call list, and the name of the person you spoke with;
• The dates and times of the calls or faxes;
• The fax number receiving the unsolicited ads, and copies of the ads; and
• Whether you have filed suit in state court, and if so, in what state.

To learn more about your rights under the TCPA and FCC's rules, you should read the FCC's free brochure:What You Can Do About Unsolicited Telephone Marketing Calls and Faxes. To obtain a copy, call the FCC's National Call Center at 1-888-225-5322 (TTY 1.888.835.5322).

Violations of the Telemarketing Sales Rule, the Mail or Telephone Order Merchandise Rule, the 900-Number Rule, and the Fair Credit Billing Act should be reported to the Federal Trade Commission.

The DMA also has brochures and services available to assist you:

Sweepstakes Advertising—A Consumers Guide
Make Knowledge Your Partner in Mail or Telephone Order Shopping
       (also available in Spanish)

To receive a free copy of either brochure, mail your request, along with a self-addressed stamped envelope to:

Consumer Services Department
Direct Marketing Association
1111 19th Street, NW, Suite 1100
Washington, D.C. 20036

Mail Order Action Line
If you have a dispute with a company when shopping by phone, mail or online, try to resolve the problem directly with the company. If your attempt is unsuccessful, the Direct Marketing Association's Mail Order Action Line (MOAL), a free consumer service, will contact the company on your behalf. Send a letter stating the details of the problem as well as the item ordered, order date, method of payment, company name, address and telephone number, along with photocopies of your canceled check, credit card invoice, and/or order form to:

Mail Order Action Line
Direct Marketing Association
1111 19th St., NW, Suite 1100
Washington, D.C. 20036

What else can you do to prevent unwanted telephone solicitations?

As stated earlier, tell the caller not to call you again. According to the Telephone Consumer Protection Act and the FCC's rules, and the FTC's Telemarketing Sales Rule, the telemarketing company may not call you again at home after your request.

Additionally, The DMA offers a free service for consumers called the Telephone Preference Service (TPS) which enables you to receive fewer telephone sales calls at home by removing your name from many national telephone calling lists. Local telephone marketers generally do not participate in national name-removal programs; when a local company calls, ask that your name be deleted from that company's list.

When consumers register with TPS, their names are placed on a name-removal file which is made available to participating marketers on a monthly or quarterly basis. It may take a few months before there is a noticeable decrease in the telephone marketing calls received. Names remain on TPS for five years.

To register, simply provide your complete name, home address, including apartment number if any, and ZIP code, along with your telephone number including area code and send it to:

Telephone Preference Service
c/o Direct Marketing Association
P.O. Box 9014
Farmingdale, NY 11735-9014

For more information on shopping by phone, mail or online, contact The DMA.

Federal Trade Commission
Consumer Response Center
600 Pennsylvania Avenue, NW
Washington, DC 20580
202.FTC-HELP

Federal Communications Commission
Consumer Protection Branch
Common Carrier Bureau
Washington, DC 20554

Direct Marketing Association, Inc.
Headquarters:
1120 Avenue of the Americas
New York, New York 10036-6700
212.768.7277
Fax: 212.302.6714

Washington, D.C. office:
1111 19th Street, NW, Suite 1100
Washington, D.C. 20036-3603
202.955.5030
Fax: 202.955.0085

Courtesy of theFTC