Telemarketing Sales Rule requires clarity on charity

Some people say charity begins at home. But for telemarketers, truthful information about charity begins on the phone. That’s the message of an FTC settlement with InfoCision, an Ohio-based for-profit telemarketer that solicits contributions on behalf of well-known charities. If you represent professional charity fundraisers or have an affiliation with charitable organizations that ask for money by phone, it could be time for a Telemarketing Sales Rule review.

A bit of background about charities and telemarketing. The 2001 USA Patriot Act expanded the FTC’s Telemarketing Sales Rule to cover calls made to solicit charitable contributions. At Congress’ direction, the FTC modified the TSR to: 1) apply to interstate calls made by for-profit telemarketers to solicit charitable contributions; 2) require for-profit telemarketers to promptly disclose the name of the group making the request and that the purpose of the call is to ask for a donation; and 3) prohibit for-profit telemarketers from making false or misleading statements to induce a person to contribute.

Why the change? To make sure that telemarketers are truthful about why they’re calling so consumers can make informed choices about whether to engage with the telemarketer and contribute to the charity.

As a telemarketer, InfoCision places millions of calls to consumers on behalf of hundreds of charities. At the outset of many of those calls, InfoCision employees made scripted pitches that included statements to the effect that they weren’t calling for a donation.

A for-profit telemarketer calling on behalf of a charity and not asking for money? According to the FTC, that’s how the call started, but it’s not how it finished. The complaint – which is limited to allegations regarding the company’s charitable fundraising – alleges that in many cases InfoCision telemarketers began with a “soft sell,” just asking consumers to mail or hand-deliver materials from the charity to their family, friends, and neighbors. But by the end of the call (and contrary to what the telemarketers had said up front) InfoCision asked consumers to make a contribution themselves.

The complaint alleges that InfoCision violated the TSR by making false or misleading statements to induce a charitable contribution. To settle the case, the company will pay a $250,000 civil penalty and agreed to court-enforceable provisions requiring future TSR compliance. Among other things, the order prohibits misleading statements to induce a charitable contribution and specifically requires InfoCision to clearly and promptly disclose the name of the charity upon whose behalf they’re calling and that the purpose of the call is to ask for a contribution.

What can telemarketers take from the settlement with InfoCision? Don’t make false or misleading statements when soliciting charitable contributions.

But apart from the complaint allegations in that particular case, there are other TSR compliance pointers worthy of a recap. For example, while it’s true that the National Do Not Call Registry doesn’t apply to telemarketers soliciting charitable donations, there are specific Telemarketing Sales Rule provisions that do apply. To name just a few:

• Telemarketers must promptly tell consumers the charity they’re calling for and truthfully disclose if one purpose of the call is to ask for a donation.
• Telemarketers can’t make misleading statements to persuade people to donate. That includes misrepresentations about the charitable purpose, how much money goes to the charity, whether donations are deductible, how the money will be used, or the telemarketer’s connection to the charity.
• Telemarketers can’t use robocalls or prerecorded messages to reach consumers unless the person is a current member of the charity or has donated to the charity in the past. And even if the consumer has donated to that charity before, robocalls from a telemarketer must promptly offer a way to opt out of future calls.
• If the consumer tells the telemarketer they don’t want to be called by that charity again, the telemarketer must maintain a Do Not Call list for that charity and stop calling that person on behalf of that charity.
• Telemarketers can’t call before 8AM or after 9PM.
• Telemarketers must keep certain records, like scripts and promotional materials, for two years.

Of course, many business executives serve in leadership positions with charities in their community. Remember that when a charity hires any contractor – including a for-profit telemarketer – it’s wise to monitor what they’re doing on the charity’s behalf. It’s a prudent step toward sound stewardship. The FTC has advice for charities thinking about hiring a professional fundraiser. And don’t forget to check with your state’s charity regulator. Most states have specific laws governing the conduct of charitable solicitations.