We Regulate You. We Regulate You Not

When you’re an observer of Federal Trade Commission (FTC), you can sometimes feel like the familiar character in old cartoons, the love-struck male who plucks petal off a flower, saying, "She loves me; she loves me not," as he tries to fathom the true feelings of his ladylove. Only with the FTC, you say, "They regulate me, they regulate me not."

Recently, the FTC announced it would hold a public workshop in October to explore how certain state regulations may be protecting brick-and-mortar merchants and stifling competition from Internet-based competitors. FTC Chairman Tim Muris was a high-level FTC staffer during the Ronald Reagan era, when the agency spent a considerable amount of time and effort criticizing protectionist laws and regulations at the federal and state level, so it’s not surprising that the FTC is holding such a workshop. While the FTC’s ability to do much about these laws is limited, the evidence it gathers may persuade state legislatures and regulatory agencies to clean up their act.

That’s the "regulate me not" part of this story. The "regulate me" news pertains to the FTC’s proposed revisions to its Telemarketing Sales Rule (TSR), which were published earlier this year. The FTC’s announcement it was considering the establishment of a national "Do Not Call" list got most of the headlines when the revised rule was proposed. The Electronic Retailing Association (ERA) and many other industry groups have questioned the FTC’s authority to create, maintain, and enforce a national "Do Not Call" list, as well as the need for such a list.

But the proposed rule revision also includes some other changes that are opposed by ERA and others. The FTC proposed banning all transfers of consumer billing information provided during telemarketing transactions (including credit card numbers) to third parties. The ERA argued in its comments that the FTC’s concerns about such transfers would be better addressed by requiring telemarketers to obtain expressed and verifiable consumer consent to the transfer of his or her billing information.

One issue on which industry opposition may have had a positive impact is whether the "Do Not Call" requirement would apply to a business’ existing customers. For example, a consumer who has put his or her name on the "Do Not Call" list calls a direct marketer to order a product — say a 30-day supply of a dietary supplement. If the FTC’s initial "Do Not Call" proposal were to become law, the marketer could not call the customer back at the end of 30 days to see if he or she wanted to re-order the product.

The ERA has suggested the "Do Not Call" list provision of the rule should exempt calls to consumers with whom the telemarketer has an existing business relationship. That way, telemarketers could continue to solicit business from their own customers even if those customers had asked to be added to the national "Do Not Call" list. Of course, if the customer asked that company directly to stop calling him or her, the company would be required to do so.

The TSR provisions are on a fast track. FTC staff have told Congressional staffers they expect the Commission to vote out a rule by the end of October. There’s a good chance the FTC will listen to the industry’s objections and allow calls to existing customers under at least some, if not all, circumstances. But the rest of the new rule provisions could leave the direct response industry wishing the FTC would regulate them not.