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On Small Business
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Posted at 09:35 AM ET, 11/06/2013

Small business advice: What you need to know about new telemarketing regulations

The Federal Communications Commission (FCC) recently started enforcing new rules requiring businesses to obtain “prior express written consent” before calling or texting consumers for solicitation purposes. The change creates new challenges for small firms already struggling to adapt to evolving technologies and a still-uncertain economic outlook.


Customers gave you their cell phone numbers? Due to new FCC regulatios, that no longer gives you the green light to call or text. (Daniel Acker - Bloomberg)
The Telephone Consumer Protection Act (TCPA) represents a significant challenge for small businesses that undertake or outsource what is known as “lead generation” among either existing customers or potential new ones.

It also impacts firms that utilize prerecorded message technology to market to their current customers – like a bank texting its customers about lower mortgage rates, a vacation rental group advertising new availabilities to its members, and more.

Until last month, companies have been allowed to contact customers who have provided cell phone numbers — the assumption being that if a customer provides his cell phone number, he has given the company the green light to contact him.

However, starting on Oct. 16, companies must now collect “prior express written consent” from consumers in order to contact them for solicitation purposes on their mobile phone, or to deliver pre-recorded messages to their mobile phone or landline for marketing purposes.

The good news for companies that rely on this type of marketing is that the restriction is limited to companies that employ automated dialing technology, broadly defined as any call generated by a computer that does not require human intervention.

The bad news is that small businesses are particularly vulnerable, as they lack the talent and infrastructure large organizations are dedicating to awareness and compliance. Lead generation via the telephone requires a high volume of calls; moving away from an efficient computer-based process to a manual process could be too costly for small businesses to manage and will impact the overall number of leads for all businesses.

Nearly 90 percent of Americans use a cell phone, according to the Pew Internet and American Life project, and the Centers for Disease Control and Prevention (CDC) estimate that more than a third of U.S. households are completely without landlines. According to that second survey, an additional 15.9 percent own a landline but never use it. That means more than half of all U.S. households are effectively wireless-only.

The current trend in U.S. telecommunication policy is toward a European-style “opt-in” system, largely thanks to Americans’ increasing desire to control the communications they receive. Most large businesses have internal compliance departments with these changes, but lack a system that centralizes this “opt-in” preference across their enterprise.

Every business owner, small or large, who uses these communication and marketing tools should be asking at least four questions about the new rules to ensure his or her company is prepared:

1. What constitutes written consent?

It’s an agreement between company and consumer that includes the identity of the company seeking consent, the telephone number to be used and some type of affirmative action on the part of the consumer to confirm consent (signature or e-signature).

It must also explain that an automated dialer will be used for the calls and/or text messages, and it must inform the consumer that consent is not required in order to make a purchase.

2. How do I obtain express written consent?

Ask customers nicely in writing, over the phone, via email or through an online form. Companies will likely employ a combination of these methods during the transition period as they seek to on-board large numbers of customers in a short time.

However, online consent in the context of attempting to learn more about your customer will be the most efficient and sustainable method.

For example, a financial services firm could obtain consent to call through a Web site preference center that also collects data on billing date preferences, preferred communication channels and preferences for certain types of content.

Keep in mind, collecting for a non-specific and broad permission to call will easily result in a consumer “no,” while asking for “preferences” instead can result in “yes.” Make sure the consent data are collected in a manner that is verifiable, recorded and safely stored – for at least five years from the last date the consent is relied upon to place a call.

3. What happens if I (or a vendor I hired) call a consumer who hasn’t provided express written consent?

You’ll be in violation of FCC rules and could be fined or subjected to Civil Investigative Demand. In addition – and perhaps much worse – you would be vulnerable to consumer and class action lawsuits allowed under the TCPA’s private right of action provision. Yikes.

4. When should I take action to convert my customers to express written consent?

Right now. The more time and effort you put into your conversion process, the better. Consumers are far more likely to provide consent for cell phone or pre-recorded communication when the request is made through a trusted channel — for instance, inbound calls, a service inquiry, a sales process or as part of a broader effort to listen to and learn from their unique preferences.

Some believe these enhanced consumer protection rules for cell phone users will pose problems for firms, because they will hamper marketing efforts and lead to increased overhead, liability and hassle.

Others see the rules merely as further confirmation of a broad and positive trend toward permission-based marketing and opt-in relationships between companies and consumers. Mountains of research show that relationship marketing informed by consumer preferences is exponentially more effective than the spray-and-pray model of interruption marketing.

I know this from my work and I certainly feel it as a consumer. So make sure you are prepared and embrace this new change – your customers will reward you for it.

Eric Holtzclaw is the founder and chief executive of Laddering Works, a marketing and product strategy firm based in Atlanta, Georgia.

Follow Eric and On Small Business on Twitter.

By Eric Holtzclaw  |  09:35 AM ET, 11/06/2013

Tags:  small business, business, fcc, regulations, government, small business advice

 
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