Which entities must comply with the Telemarketing Sales Rule?

Which entities must comply with the Telemarketing Sales Rule?
A . For-profit organizations and for-profit telefunders regarding charitable solicitations
B . Nonprofit organizations calling on their own behalf
C . For-profit organizations calling businesses when a binding contract exists between them
D . For-profit and not-for-profit organizations when selling additional services to establish customers

View Answer

Answer: A

Explanation:

The Telemarketing Sales Rule (TSR) is a federal regulation that applies to telemarketing calls, which are defined as "a plan, program, or campaign which is conducted to induce the purchase of goods or services or a charitable contribution, by use of one or more telephones and which involves more than one interstate telephone call."1 The TSR requires telemarketers to make specific disclosures, prohibit misrepresentations, limit the times and number of calls, and set payment restrictions for the sale of certain goods and services. The TSR also gives consumers the right to opt out of receiving telemarketing calls by registering their phone numbers on the National Do Not Call Registry.2

The TSR applies to both for-profit and not-for-profit organizations, but there are some exemptions and partial exemptions for certain types of entities, calls, and transactions. For example, the TSR does not apply to nonprofit organizations calling on their own behalf, as they are not considered to be engaged in telemarketing. However, if a nonprofit organization hires a for-profit telemarketer or telefunder to solicit charitable contributions on its behalf, the for-profit entity must comply with the TSR, as it is engaged in telemarketing. Similarly, the TSR does not apply to for-profit organizations calling businesses when a binding contract exists between them, as they are not considered to be inducing the purchase of goods or services. However, if a for-profit organization calls businesses to sell additional services to established customers, the TSR applies, as it is considered to be inducing the purchase of goods or services.3

Therefore, among the four options, only for-profit organizations and for-profit telefunders regarding charitable solicitations must comply with the TSR, as they are engaged in telemarketing and do not fall under any of the exemptions or partial exemptions.

Reference: 1: eCFR :: 16 CFR Part 310 C Telemarketing Sales Rule3, Section 310.22: Telemarketing Sales Rule | Federal Trade Commission1, Rule Summary3: Complying with the Telemarketing Sales Rule – Federal Trade Commission2, Exemptions to the TSR.