December 6, 1991
TO: BOARD OF GOVERNORS NO. 86-91
BROKER/DEALER ADVISORY COMMITTEE NO. 43-91
DIRECT MARKETING COMMITTEE NO. 40-91
MARKETING COMMITTEE NO. 44-91
OPERATIONS COMMITTEE NO. 38-91
SALES FORCE MARKETING COMMITTEE NO. 38-91
SEC RULES MEMBERS NO. 58-91
SHAREHOLDER COMMUNICATIONS COMMITTEE NO. 35-91
UNIT INVESTMENT TRUST COMMITTEE NO. 44-91
RE: THE "TELEPHONE CONSUMER PROTECTION ACT OF 1991"
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Last week, Congress passed S.1462, the "Telephone Consumer
Protection Act of 1991," which regulates certain telemarketing
activities. President Bush is expected to sign the legislation
in the near future. A copy of the bill is attached; its main
provisions are summarized below.
Telemarketing Calls Made by Live Persons
The legislation directs the Federal Communications
Commission ("FCC") to hold a rulemaking proceeding concerning the
need to protect residential telephone subscribers' privacy rights
from unwanted telephone solicitations, and to adopt regulations
to implement methods and procedures to protect such privacy
rights. One such method which the bill requires the FCC to
consider is the establishment of a national "do not call"
database. The legislation provides that if the FCC determines to
require such a database, regulations must be adopted to, among
other things, "prohibit any person from making or transmitting a
telephone solicitation to the telephone number of any subscriber
included in such database."
The term "telephone solicitation" is defined in the bill as
"the initiation of a telephone call or message for the purpose of
encouraging the purchase or rental of, or investment in,
property, goods, or services, which is transmitted to any
person." Expressly excluded from the definition of "telephone
solicitation" are calls (1) to any person with that person's
prior express invitation or permission or (2) to any person with
whom the caller has an established business relationship.
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Although the bill does not define the term "established
business relationship," the report of the House Committee on
Energy and Commerce on the version of the legislation reported by
the Committee contains an extensive discussion of this concept.
Based on the Institute's efforts, that report specifically states
that "[i]n the case of mutual funds, calls by the fund's manager
to existing shareholders would not be covered. In addition, if
an investor had written to a mutual fund or responded to an ad
requesting additional information, the fund's manager could make
follow-up calls, which would not be subject to [the bill's]
restrictions." A copy of the relevant excerpt from the House
Committee report is attached.
Automated Calls and Facsimile Advertisements
The bill prohibits calls using an automatic telephone
dialing system or an artificial or prerecorded voice to emergency
telephone lines, hospitals, nursing homes, pagers and cellular
phones. Such calls also may not be made to any residential
telephone line, except: 1) with the prior express consent of the
called party, 2) for emergency purposes or 3) pursuant to an
exemption by rule or order of the FCC. The bill prohibits
unsolicited facsimile advertisements.
Frances M. Stadler
Assistant General Counsel