ROTH: Inbound marketers need to be aware of the rules and regulations contained in the amended TSR with respect to upselling. Additionally, they need to keep aware of pending legislation, as states are beginning to propose laws which will require them to make certain disclosures and, if offshore, transfer calls to the U.S.

LYONS: Inbound marketers should be primarily concerned with inbound solicitations for the sale of goods and services and efforts to obtain charitable contributions. These two areas have experienced the strongest regulatory action within the past five years. The most prominent regulation to date is the amended Telemarketing Sales Rule (Rule). The Rule has hit Inbound marketers with new provisions imposing tougher standards for upsells, limits on the use of pre-acquired account information, requirements for expanded disclosure statements, restrictions on the trafficking of data, new or additional record keeping requirements, and heavy fines for unlawful activity.

An Inbound marketer should also understand that complying with the Rule, or any other regulation is dependant upon specific criteria therefore it is important that every Inbound marketer seek professional guidance. Any blunder that could have been avoided could cripple your marketing effort, generate profit-gouging fines, and leave your customers with a substandard brand experience.

SANSCRAINTE: There are three areas of concern- first and foremost, the new "upsell" requirements of the amended Telemarketing Sales Rule ("TSR"). The FTC has made the determination that "upsells" (and "cross-sells") off an inbound call (which would normally be exempt from the TSR) are to be treated for all intents and purposes as an "outbound" call. Second, although the TSR specifically exempts from its coverage the vast majority of inbound calls, there are still certain types of calls that are covered (and there have been enforcement actions with regard to these.) The third concern for telemarketers? The future. Now that the FTC has expanded its concept of "outbound" calls, how else will this definition be expanded, and what other types of regulations will be enacted to cover upsells? While the TSR currently exempts the majority of inbound calls, it's possible that coverage will be extended to these calls, resulting in disclosure, billing, and other requirements. The States are also active when it comes to new telemarketing regulations; expect new developments regarding inbound calls at the State level as well.

Which companies are covered and which are exempt?

LYONS: An exemption status is as unique as the company that seeks to claim it. The ability to claim an exemption will generally reside in the way the company's business model is structured. By looking closely at the business model and comparing it to the regulation(s) at issue, each company should then be able to reach a decision about their exemption status. Most state regulations are geared toward outbound solicitations and will either explicitly declare that inbound efforts are exempt or a reasonable legal opinion can be formulated to support your exemption. The federal laws are a little more sophisticated. In either case, claims of exemption should be professionally reviewed.

SANSCRAINTE: Believe it or not, perhaps the most frustrating aspect of the TSR is trying to understand what is, and is not, covered. The first step when looking at any TSR exemption question is to take a look at what types of industries are not under the FTC's jurisdiction. These are: banking, common carriers, insurance companies, and non-profits. If your company falls under any of these categories, and you do not outsource to a for-profit call center, then you do not fall under the jurisdiction of the FTC. The next question has to do with the type of call being made - before the new amendments to the TSR came out, the vast majority of inbound calls (calls resulting from sending out a qualified catalog, or from general media/direct mail advertising, or general unsolicited calls from consumers) were completely exempted. With the new "upsell" rules, however, any entity that processes inbound calls where there is a possibility of an additional sale needs to be concerned about many aspects of the TSR.

Are new restrictions coming down the road? If so, which companies need to be concerned about them?

LYONS: Telemarketing, for which Inbound marketing is included, has an image problem that allows regulatory initiatives against it to quickly gain support. Yes, there will be more restrictions down the road. Currently, the Federal Communications Commission is reviewing the Telephone Consumer Protection Act to maximize consistency with existing laws and keep pace with technology. The end result of that review could impact Inbound marketers. However, there is no telling where consumer and privacy advocates will focus their energies but additional restrictions will most likely appear in one form or another as technology advances. That is not to say that the all restrictions will remain. Currently, there are court challenges to the amended Telemarketing Sales Rule, which may reduce some of the regulations imposed on Inbound marketers. Stay vigilant and stay informed.

SANSCRAINTE: When it comes to government regulation, when was the last time you heard an agency say "This is it! This is our last word on this topic and you can set this in stone forever!" The fact is, telemarketing law is probably the most fluid area of practice out there today. The only certainty when it comes to telemarketing rules and regulations is that they will change, and that they will become more restrictive over time. Which companies need to be concerned? All companies involved in any aspect of teleservices.

Are Inbound marketers generally clear on these issues?

ROTH: For now it appears so, however we are beginning to see a growing trend of states, which are seeking to regulate inbound calling.

LYONS: Yes and no. Yes, inbound marketers probably have a good understanding of the issues that directly affect the inbound arena. No, they probably do not understand how peripheral issues affect them directly. Essentially, there is a failure on the part of the Inbound marketer to connect all the dots and get the root causes affecting the industry. Hopefully, through discussions such as this and others the ATA sponsors, the knowledge gap can be bridged.

SANSCRAINTE: In-bound marketers have enjoyed insulation from telemarketing regulations for a long time, much like non-profits. With the new TSR, the FTC has put all formerly exempt industries on notice that they might be next. Inbound marketers may have been caught off guard with these new rules (which took effect on March 31, 2003), and they need to make sure that they are in compliance with them. Virtually every element of the TSR poses complexities and interpretive issues, and the rules regarding "upsells" are no exception.

What steps need to be taken to protect ones operation against fines?

LYONS: Call Optima! Seriously, companies must take action! Don't wait to find out about fines once you receive them. A simple way to develop your workforces' awareness of the impact fines could have on their jobs would be to follow the 6 R's--

Read, Reach, Require, Reconcile, Relate, and Reinforce.
• Read up and stay informed about regulations and fines so you are not caught off guard.
• Reach out to your clients and assess their compliance service level.
• Require compliance with all applicable laws across all service levels.
• Reconcile your efforts with those of you customers.
• Relate the laws to current projects with your team.
• Reinforce compliance through regular updates and training.

SANSCRAINTE: The first step is to ensure that you understand the rules as they apply to your operation. This could mean relying on your in-house legal team, or compliance officer, or outside counsel to develop best practices within your organization to maintain compliance. (Sadly, however, many telemarketing organizations lack such resources, and they will need to develop them as soon as possible.) Second, your personnel need to be trained on the upsell rules to make sure that everyone understands that the rules of the game have changed. Third, the rules regarding record-keeping under the TSR now apply to upsells; the processes for maintaining such records need to be developed and implemented. Fourth, the TSR billing and misrepresentation rules now apply to upsells, and these need to be incorporated into your everyday practices. Fifth, relax! Why? Because the rules regarding in-house and the national Do Not Call lists do not apply to upsells, nor do the time restriction rules.

How about script compliance?

LYONS: Seek professional guidance and work to develop a compliance checklist or platform for script development. This will help ensure that all scripts, including price points and customer contact numbers, correspond to your outbound, mail, or web efforts.

SANSCRAINTE: The TSR sets up different rules for what it calls "internal" and "external" upsells, each requiring a different approach. An internal upsell is a solicitation made by or on behalf of the same seller; an external upsell is a solicitation by or on behalf of a different seller. Certainly, for internal upsells, your organization will need to develop the scripting to handle this transition. This will mean generating how the solicitation and billing disclosures will be handled, and ensuring that no misrepresentations are made. This could also mean coordinating with outside companies to make sure that the external upsell "hand-off" is managed in a way to ensure compliance with the TSR.

How about offer structure and creative compliance?

ROTH: Compliance analysts and/or legal counsel should review all scripts to ensure they comply with the laws of the applicable states.

LYONS: Seek professional guidance and work to develop a compliance checklist or platform for script development. This will help ensure that all scripts, including price points and customer contact numbers, correspond to your outbound, mail, or web efforts. Also, you may want to indicate to your creative team which inbound marketing areas are potentially troublesome. For instance, "prize" offers of any kind usually require a high level of scrutiny. Finally, make sure to save all necessary creative and production materials according to law.

How about Data and Privacy concerns?

ROTH: The amended TSR makes it illegal to trade unencrypted account information. Additionally, new pending legislation appears to be targeting the dissemination of account information offshore. Stay tuned, as this will continue to be a growing issue.

What can ATA members do to comply with these issues?

SANSCRAINTE: The best resource available today to give you the ground-floor understanding necessary to operate a telemarketing operation today is the online ATA Regulatory Guide (available to ATA members at a discount.) This Guide provides information on all State and Federal rules governing telemarketing. In addition, best practices need to be developed across your operation to ensure compliance.

ROTH: All Contracts should be written with a thought on compliance, especially with respect to record keeping requirements, etc. Additionally, all procedures should be periodically reviewed to ensure that they comply with new rules and regulations as they are promulgated.

What is the ATA doing to combat these issues?

SANSCRAINTE: With regard to inbound rules, and the new TSR "upsell" rules in particular, the ATA provides educational services to its members (in the form of compliance seminars held around the country, and the online regulatory guide). In addition, the ATA will continue its efforts to ensure that as inbound rules develop and change over time, they are consistent with commercial free speech rights, and are based upon sophisticated understanding of real-world practices of the industry.

ROTH: The ATA is monitoring all state and federal legislation and lobbies at the legislative levels to influence legislation.

I am already a member of several other associations, as an inbound marketer, what does the ATA do for me?

SANSCRAINTE: From lobbying efforts at both the State and Federal level, to generation of grass-roots appeals to politicians to raise awareness about the importance of the teleservices industry, to educating the industry, and to fighting unfair laws in court, the ATA has always been at the front-lines when it comes to protecting all aspects of the teleservices industry. Now that inbound calling has made its way onto the regulatory radar screen, you can be assured that the ATA's efforts with regard to lobbying, education, and protecting the industry will be applied with full force to the inbound world. By becoming a member of ATA, you are joining forces with the true voice of the industry; every membership serves to make this voice more eloquent, and more powerful. In addition, by becoming a member, you are gaining access to a large number of like-minded individuals, all of whom are passionately committed to ensuring the long-term viability and growth of the teleservices industry.

Joseph Sanscrainte

Joseph Sanscrainte is the Director of Regulatory Affairs and General Counsel for Call Compliance, Inc., located in Glen Cove, NY. Mr. Sanscrainte began his involvement with the telemarketing industry over 15 years ago, managing a number of telemarketing campaigns following his undergraduate studies at the State University of New York at Buffalo. Following his graduation from Georgetown Law School in 1988, where he authored the article "The Brave New World of Telecommunications," Mr. Sanscrainte honed his regulatory skills as an attorney advisor to the Federal Judiciary's Equal Employment Opportunity Office (in Washington, DC). In this capacity, he developed EEO regulations, worked in conjunction with members of Congress to fine-tune the Federal Judiciary's EEO program, and instructed federal judiciary employees on their rights and duties under this program. Mr. Sanscrainte also has five years of experience as a trial attorney in New York, NY, where he was responsible for the full range of trial practice for insurance defense and large-scale commercial litigation. Mr. Sanscrainte is an active member of many industry committees, including the American Teleservices Association's Education Committee, the American Resort Development Association's (ARDA) State Legislative Sub-Committee, and the Direct Marketing Association's Teleservices Committee. Mr. Sanscrainte is regularly sought out as a speaker on telemarketing and "do-not-call" issues. Mr. Sanscrainte is a regular contributor to DM News, and is a member of the editorial advisory board for Contact Professional Magazine. Mr. Sanscrainte's telemarketing expertise has been referenced in many publications, including TM Tipline, Compliance Reporter, and Direct Magazine, and he has authored numerous articles for such trade publications as ARDA Developments Magazine, Banking 2000, Contact Center World, and On Wall Street.

Contact: Joe Sanscrainte
Director of Regulatory Affairs/General Counsel
Call Compliance, Inc.
90 Pratt Oval
Glencove, NY 11542
516-674-4545

James F. Lyons

Creating new business opportunities and developing high performance teams are the keys to James' success in the business world. By the age of 26, James was a General Manager of an international trade association where he worked with the Department of Commerce to identify venues for global market penetration.

Recruited by General Electric (Distribution Division), he led the sales and marketing efforts for their National Sales Center (GE's beta e-enabled Call Center) and was responsible for 88 people and a $90 million budget.

James then went on to apply his skills to the service bureau side of the world. James was responsible for the development and execution of new and cutting-edge approaches for companies to maximize and develop business opportunities over the Internet for an international direct marketing and response firm - - Transcom. James served as Vice President and General Manger of Transcom's e-Commerce Division. In that capacity he built the platform for one of the first web-enabled call centers.
James then took the position of Vice President of e-Business and Marketing for Conseco (the insurance and financial services giant), from there he spent time developing the dot.com and emerging markets for marchFirst (formerly US Web/CKS, Whittman-Hart and MMG) just prior to joining the Rapp Collins team as Vice President of e-Care solutions for the Optima Direct and Rapp Digital groups.

Consistently moving his way up the ranks, James is now president of Optima Direct.

From crafting and implementing dynamic solutions to legendary customer service to fulfillment, James' drive and visionary thinking achieve high results for every client.

James is an active member of the AMA and DMA and speaks at many marketing forums. He holds a BA in Advertising and Marketing from Seton Hall University.

Contact: James F. Lyons
President
Optima Direct
8100 Boone Blvd, Suite 300
Vienna, VA 22182
703-918-3000

Mitch Roth

Mitch Roth is a partner in the Business and Immigration Sections at Williams Mullen. He represents domestic and international business entities and advises them on entity formation, governance and general business and transactional issues. Mr. Roth represents business entities in matters before the Immigration and Naturalization Service and the Department of Labor, and secures temporary and permanent employment visas, business visas and citizenship on behalf of his clients' international officers, directors, executives and employees. He also represents owners and operators of domestic and international call centers and advises them on federal and state regulatory compliance issues, as well as on the applicability of various state registration and bonding requirements. In addition, he conducts nationwide state by state registrations of outbound call centers.

Education
George Washington University, J.D. - 1993
State University of New York at Albany, B.A., phi beta kappa, summa cum laude - 1990
Contact: Mitch Roth
Partner
Williams Mullen LLP
8270 Greensboro Dr., Suite 700
McLean, VA 22102
703-760-5200