Exam Alert: SEC approves revised FINRA telemarketing rule

The SEC has approved a new consolidated FINRA telemarketing rule. The rule will become effective July 29, 2012. The new rule contains provisions that are similar to FTC standards. Continue reading

The SEC has approved a new consolidated FINRA telemarketing rule.  The rule will become effective July 29, 2012.  The new rule contains provisions that are similar to FTC standards.  Changes to the prior rule include:

-Do-not-call lists: Under the old rule, do-not-call requests were required to be honored for five years.  Under the new rule, do-not-call requests must be honored indefinitely.

-Unencrypted consumer account numbers: Firms may not buy or sell unencrypted consumer account numbers for telemarketing purposes.

-Submission of billing information: Firms must obtain the informed consent of a customer in order to charge them for a telemarketing transaction.  The firm must also identify the account to be charged.  If the transaction involves “pre-acquired account information and a free-to-pay conversion feature,” then the firm must make an audio recording of the telemarketing transaction.

-Abandoned calls: Firms may not abandon outbound calls, unless they meet the following safe harbor provisions:

1. The firm employs technology that drops no more than 3% of answered calls over a 30-day period (or the duration of a single calling campaign that lasts less than 30 days).

2. The firm lets the phone ring for 15 seconds or 4 rings before disconnecting the unanswered call.

3. If there is no associated person available to speak with the person answering the call within 2 seconds of the person’s completed greeting, the firm plays a recording giving the name and number of the firm.

4. The firm retains records of compliance with the safe harbor.

-Prerecorded messages: Except as noted above (under “abandoned calls”), firms may not make outbound calls that deliver prerecorded messages unless they have the written consent of the person receiving the call.  The call must include an opt-out mechanism, as well.

-Credit card laundering: Credit card laundering is prohibited.  Credit card laundering is “the practice of depositing into the credit card system a sales draft that is not the result of a credit card transaction between the cardholder and the firm.”  Soliciting someone else to engage in credit card laundering is prohibited as well.  Obtaining unauthorized access to the credit card system is also prohibited

 

These rules also apply to associated persons of a firm.

 

Source: FINRA Regulatory Notice 12-17

This exam alert applies to the Series 62, Series 6, Series 26, Series 24, Series 7, and Series 82.

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