Telemarketing and Do-Not-Call Rules
Cold calling is one of the oldest sales techniques in the securities industry. The Telephone Consumer Protection Act (TCPA) and FINRA Rule 3230 place restrictions on when, how, and whom firms can call.
What You'll Learn
- The two do-not-call lists firms must maintain
- Permitted calling hours and whose time zone applies
- Exceptions that allow calls to people on do-not-call lists
- Caller identification and disclosure requirements
- Record retention rules for do-not-call requests
Two Do-Not-Call Lists
Firms must comply with two separate do-not-call lists:
| List | Who Maintains It | How It Works |
|---|---|---|
| National Do-Not-Call Registry | FTC (Federal Trade Commission) | Consumers register their phone numbers; firms must not call registered numbers |
| Firm-specific do-not-call list | Each individual firm | If a person asks the firm to stop calling, the firm must add them to its internal list and stop |
- A firm-specific do-not-call request must be honored for 5 years from the date the request is made
- The firm must comply with a do-not-call request within 30 days
- All personnel involved in telemarketing must be trained on the existence and use of both lists
Exam Tip: Gotchas
- There are TWO do-not-call lists, and firms must honor both. Even if a person is NOT on the national registry, a personal request to stop calling triggers the firm's internal list obligation.
- The firm-specific list lasts 5 years, not indefinitely. After 5 years, the request expires unless renewed.
Calling Hours
Telemarketing calls may only be made between:
8:00 AM and 9:00 PM in the customer's time zone (not the caller's time zone)
Think of it this way: If a New York firm calls a California customer at 9:30 PM Eastern, it is only 6:30 PM Pacific, so the call is permitted. But if the firm calls at midnight Eastern (9:00 PM Pacific), the call would be at the very edge of the allowed window.
Exam Tip: Gotchas
- The time restriction is based on the customer's time zone, not the firm's. Questions often test this by giving both time zones and asking whether a specific call is permitted.
Exceptions to Do-Not-Call Rules
A firm may call someone on the do-not-call registry in these situations:
- Existing business relationship within the last 18 months (includes having an account, a securities position, or a financial transaction with the firm)
- Recent inquiry within the last 3 months (the person contacted the firm to ask about a product or service)
- Prior express written consent (the person gave written permission to be called)
- Tax-exempt nonprofit organizations (not subject to the same restrictions)
Exam Tip: Gotchas
- An "established business relationship" lasts only 18 months. After that, the exception expires and the firm must stop calling.
- A simple inquiry creates a shorter window: only 3 months.
Caller Identification and Disclosure
When making a telemarketing call, the representative must provide:
- The name of the individual caller
- The name of the firm
- A telephone number or address where the firm can be reached (cannot be a 900 number or any number that charges beyond normal transmission fees)
- A statement that the purpose of the call is to solicit the purchase of securities or related services
Firms must also transmit their telephone number (and name, when available) to caller identification services. Blocking caller ID is prohibited.
Exam Tip: Gotchas
- Firms cannot block caller ID on telemarketing calls. The number displayed must allow the recipient to call back and make a do-not-call request during regular business hours.