Challenge to FTC’s Ban of Soundboard Technology As Part of a Telemarketing Phone Call

Challenge to FTC’s Ban of Soundboard Technology As Part of a Telemarketing Phone Call

June 30, 2017

The FTC’s determination that the use of sound board technology during a live telemarketer to consumer phone call is prohibited under its Telemarketing Sales Rule has been challenged in D.C. Circuit Court. In Soundboard Association v. Federal Trade Commission, suit number 17-5093, the petitioner argues that the FTC’s ban on the use of this technology violates Constitutional protections of free speech and was implemented without the FTC complying with the Administrative Procedures Act.

Soundboard technology involves two-way communication between a telemarketer and a consumer in which the telemarketer plays prerecorded sound files in response to the consumer’s statements. This type of call is different from traditional robocalls because a human being is on the line and sometimes reveals that fact to the consumer and sometimes does not. The Soundboard Association argues that the FTC’s ban is a content based restriction because it is based on subject matter and the substantive message. The band has been upheld by a single US District Court Judge based on his findings that, to the contrary, the prohibition is content neutral as it only focuses on the technology and the manner in which this technology permits the telemarketer to express its sales message. The industry group argues that the 2016 rule expanding the TSR’s robocall prohibition to certain soundboard calls was an about-face from the FTC’s earlier position, which it laid out in an informal opinion letter in 2009, saying the ban didn’t apply to calls made using the technology. Seven years later, the agency issued a second opinion letter saying telemarketing calls made using soundboard technology were subject to the general ban against traditional robocalls, giving the telemarketing industry until May 12 to bring itself into compliance, according to court filings.

We will keep you updated as soon as the D.C. Circuit issues its decision.

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