Direct to Consumer Advertising Regulations

One direct marketing strategy is cold calling or telemarketing.

Direct to consumer advertising, also called direct marketing, is an advertising strategy in which a business solicits consumers directly through emails, mailings or telephone calls. Direct advertising can be an effective business strategy, but the Federal Trade Commission enforces strict guidelines for direct marketers that protect consumers from harassment or false advertising techniques. Failure to adhere to such regulations could result in steep fines and places businesses at risk for lawsuits.

Telemarketing Regulations

Telemarketers use a direct calling approach to sales and marketing. The Federal Communications Commission (FCC) enforces the Telemarketing Sales Rule (TSR) as well as the Telephone Consumer Protection Act (TCPA), two pieces of key legislation that create strict guidelines for telephone sales. One key provision of the legislation says that telemarketers are restricted from billing a consumer without authorization; telemarketers must notify a consumer before they are charged for a good or service. Telemarketers are prohibited from claiming that a sales call is simply an "informational" call; all intents to sell goods or services must be disclosed at the beginning of the call. The FCC also requires that all telemarketing companies keep regular, detailed business records for at least two years after a sale.

One of the most well known regulations regarding telemarketing sales is the National Do Not Call Registry, which was built into the Telephone Consumer Protection Act in 1991. The Do Not Call Registry established an opt-in list of home phone numbers that telemarketers are prohibited from calling. Failure to comply with such regulations can result in steep fines of up to $16,000.

Electronic Mail Regulations

Unsolicited electronic mail correspondence is one of the most popular forms of direct advertising. Electronic mail advertising is used by legitimate marketers as well as by fraudulent scam artists who advertise goods or services that don't exist in an effort to steal money or gather information about bank accounts or passwords.

In 2003, congress passed the Controlling the Assault of Non-Solicited Pornography and Marketing Act (CAN-SPAM). The act was primarily established to prevent the unsolicited reception of sexual images or messages. Several other provisions of the bill established regulations for direct email marketers regarding the identification of the sender as well as clearly marked subject lines that identify the content of the email. All unsolicited direct emails must included a clearly identified opt-out link that will prevent future correspondence. A direct marketer who refuses to adhere to the regulations could face fines up to $900,000.

Direct Mail Regulations

Direct mailing refers to any unsolicited mailing that advertises goods or services or promotes a product. In 1999, the Gramm-Leach-Bliley Act (GLBA) was signed into law. Though the main focus of the bill regarded the consolidation of banks and insurance companies, the law also established regulations regarding mailing regulations from financial groups or credit companies, one of the most common institutions that utilizes direct mailing approaches. Financial institutions may not invade consumer privacy in any way, including placing information on the tag lines of envelopes. Financial institutions who use direct mail may be held accountable if the mailing contributes to a consumer's identity theft.

Like the National Do Not Call Registry, the Do Not Mail Database is an opt-in blacklist of consumers who do not wish to receive direct mailings. However, the database is run by the Direct Marketing Association and is not subject to federal enforcement. Only marketers who are members of the association have access to the list.

References

• Federal Trade Commission: Complying with the Telemarketing Sales Rule
• The University of Arizona: Legal Structure Rules and Regulations for Direct Marketing Enterprises
• Cornell University Law School: United States Code: Title 15,6102
• Federal Trade Commission: The CAN-SPAM Act: A Compliance Guide for Businesses
• Direct Marketers Association: About DMAChoice