On April 27, 2010, the Federal Trade Commission announced separate settlements with women’s clothing retailer Talbots and its telemarketer SmartReply, Inc. for violations of the Telemarketing Sales Rule (“TSR”). In two separate complaints filed in the U.S. District Courts for the District of Massachusetts (Talbots) and the Central District of California (SmartReply), the FTC alleged that the companies violated the TSR’s prerecorded message requirements in connection with seven advertising campaigns between February and July 2009. Specifically, the FTC alleged that SmartReply’s robocalls on behalf of Talbots (and J. Jill) did not allow consumers to opt out of future calls until they had listened to almost all of the prerecorded solicitation or failed to provide instructions to consumers about how to be added to the do-not-call list; did not immediately disconnect consumers that chose to opt out and instead connected them to another prerecorded advertisement before allowing them to opt out by pressing an additional prompt; and failed to notify live call recipients of their right to opt out at any time during the call.
As part of their proposed final settlements, filed concurrently with the complaints in Massachusetts and California, both Talbots and SmartReply agreed to orders that prohibit further violations of the TSR. As we previously wrote, according to regulations that became effective on September 1, 2009, this includes delivering prerecorded messages without consumers’ written authorization. In addition, the companies each are subject to a $112,000 civil penalty, although all but $49,000 of SmartReply’s penalty has been stayed due to its inability to pay. The proposed final settlements, which continue the FTC’s recent work in this area, are an important reminder to consult applicable laws and regulations before deploying new marketing strategies or technologies.