Telemarketing

The FINRA telemarketing rule's principal-level testable content overlaps significantly with the federal Telephone Consumer Protection Act (TCPA) and the Telemarketing Sales Rule (TSR) administered by the FTC. Violations expose the firm to FINRA discipline, FTC enforcement, and private civil actions under the TCPA. The exam tests the time-of-day restriction, the two DNC layers, and the EBR exception.

Time-of-Day Restrictions

Outbound telephone calls to a person's residence are prohibited:

• Before 8:00 a.m. local time at the called party's location
• After 9:00 p.m. local time at the called party's location

The clock runs by the recipient's location, not the caller's. A New York firm calling Los Angeles must use Pacific local time as the controlling clock.

Time-Window Exceptions

The 8 a.m. to 9 p.m. window does not apply when:

• The called party has given prior express invitation or permission to call outside the window
• The called party is an existing customer of the firm (not a prospect)
• The call is from a broker-dealer following up on a prior request from that consumer

Exam Tip: Gotchas

• The 8 a.m. to 9 p.m. window is local time at the called party's location, not the calling firm's location. A New York firm (Eastern time) calling Los Angeles can call until midnight Eastern (9 p.m. Pacific). The exam will hand you a fact pattern with the firm in one time zone and the consumer in another and test whether you know which clock controls.
• Existing customers are exempt from the time-of-day restriction. A representative can call an existing customer at 7 a.m. local time. A prospect cannot be called at 7 a.m. local time without prior express permission.

Two Required Do-Not-Call Layers

The telemarketing rule requires firms to maintain two independent do-not-call protections:

Think of it this way: The two layers are separate filters. A consumer can be on the national registry (no firm can call) or on the firm's list (this firm cannot call) or both. A consumer who is an existing customer of the firm is exempt from the national-registry filter but not from the firm-specific list (the customer can always tell the firm "stop calling me").

Firm-Specific DNC List Requirements

For the firm-specific list, the firm must:

• Maintain written policies for adding names to and managing the list
• Train all personnel involved in any telemarketing on the list's existence and use
• Honor DNC requests within a reasonable time (industry practice: within 30 days)
• Document every DNC request received

National DNC Registry Scrubbing

For the national registry, the firm must:

• Subscribe to or obtain access to the FTC's national DNC registry
• Scrub outbound calls against the registry version obtained no more than 31 days before the call
• Document the scrubbing process and date
• Maintain records sufficient to demonstrate compliance

Exam Tip: Gotchas

• The national-registry scrub uses a copy obtained within 31 days, not the most current version. A scrub done with a 32-day-old copy violates the telemarketing rule. The exam tests this number; do not confuse it with the 30-day DNC honor period.
• An existing customer can still be on the firm's own DNC list even if they do not qualify for federal-registry protection. The two layers operate independently.

The Existing Business Relationship (EBR) Exception

The EBR exception carves existing customers out of the national DNC registry filter. An EBR exists if:

• The consumer has purchased, rented, or leased goods or services from the firm within 18 months before the call (transaction-based EBR), OR
• The consumer has inquired about goods or services within 3 months before the call (inquiry-based EBR)

EBR-eligible calls are not subject to the national-registry filter and are not subject to the time-of-day restriction. They remain subject to the firm-specific DNC list: a customer who tells the firm "stop calling me" must be added to the firm's list and respected.

Exam Tip: Gotchas

• The transaction-based EBR is 18 months from the last transaction; the inquiry-based EBR is 3 months from the last inquiry. The exam tests both numbers as separate facts.
• An EBR exempts the call from the national registry, not from the firm's own DNC list. The exam will sometimes describe an existing customer who has told the firm "stop calling me" and ask whether the firm can still call. The answer is no; the firm-specific DNC list overrides the EBR.

Caller-ID and Disclosure Requirements

The telemarketing rule's caller-ID provisions require that outbound caller-ID transmits:

• The firm's name (not the rep's individual name)
• A phone number that allows the recipient to make a do-not-call request
• The number transmitted must be answered during regular business hours

A spoofed or blocked caller-ID violates the telemarketing rule and can expose the firm to TCPA private civil action. The phone number transmitted must lead to a live representative who can take a DNC request, not to a dead number or unattended line.

Exam Tip: Gotchas

• The transmitted phone number must be answered during regular business hours. A firm that transmits a non-working callback number (or one that goes only to voicemail) violates the caller-ID requirement regardless of whether the substantive call complied with all other rules.

Wireless Numbers and Auto-Dialed Calls

Calls to wireless (cell) numbers and the use of automatic telephone dialing systems or prerecorded voice messages receive heightened protection under both the FINRA telemarketing rule and the federal TCPA:

• Calls to wireless numbers are subject to the rule, including time-of-day and DNC restrictions
• Use of an automatic dialer or prerecorded voice message to a wireless number requires prior express written consent of the called party
• The written consent must be specific: it must identify the products and services covered and the channels of contact authorized

Violations expose the firm to TCPA private civil action: $500 per call (knowing or willful violations: up to $1,500 per call) recoverable by the consumer in court. Class actions for autodialer violations can result in multimillion-dollar settlements.

Exam Tip: Gotchas

• Auto-dialed or prerecorded calls to wireless numbers require prior express written consent, not merely an EBR. The TCPA's heightened consent for autodialers does not have an EBR exception. A firm that auto-dials existing customers' cell phones without prior written consent violates the TCPA even though the call would otherwise satisfy the EBR exception.

Recordkeeping and Penalty Exposure

The telemarketing rule requires that records of:

• The firm-specific DNC list (every entry, with date added)
• The national-registry scrubbing process (registry copy date, scrub date, methodology)
• Caller-ID transmission verification
• Prior express written consent records for wireless autodialer calls

be retained for at least 5 years (industry practice; the rule itself does not set a single retention number, but FINRA examination practice expects 5 years and pairs it with the SEC's general communications retention framework).

Penalty exposure is multi-layered:

• FINRA disciplinary action (fines, suspension, expulsion)
• FTC enforcement of the federal Telemarketing Sales Rule
• Private civil actions under the TCPA: $500 to $1,500 per call
• State attorney general actions under state telemarketing laws

Exam Tip: Gotchas

• A single telemarketing-rule violation can trigger four enforcement layers. The exam tests this as: "What is the firm's exposure for a TCPA-violating autodialer call to a non-consenting wireless number?" The answer is FINRA discipline, FTC enforcement, private TCPA action, and state-AG action.