What a Sales Call From a Health Seller Has to Disclose

Answer first: two lists, one of them short and one of them long

The Telemarketing Sales Rule, 16 CFR part 310, imposes two separate disclosure duties on a seller. The first is short and arrives early. On an outbound telephone call to induce the purchase of goods or services, a telemarketer must disclose "truthfully, promptly, and in a clear and conspicuous manner" four things: "The identity of the seller," "That the purpose of the call is to sell goods or services," "The nature of the goods or services," and, where a prize promotion is offered, that no purchase or payment is necessary to win.

The second list is longer and arrives later, at a specific moment. Section 310.3(a)(1) makes it a deceptive act "Before a customer consents to pay for goods or services offered, failing to disclose truthfully, in a clear and conspicuous manner" a set of material information. The trigger is consent to pay, not the end of the call and not the shipment of anything.

Both duties belong to the seller as well as the telemarketer. The rule defines a "seller" as "any person who, in connection with a telemarketing transaction, provides, offers to provide, or arranges for others to provide goods or services to the customer in exchange for consideration," and a "telemarketer" as "any person who, in connection with telemarketing, initiates or receives telephone calls to or from a customer or donor." A company that hires a call center does not become a bystander to what the call center says.

What the pre-payment list actually contains

The items in § 310.3(a)(1) are worth reading in the rule's own words, because several of them are the exact facts a price page tends to leave for later. The first is "The total costs to purchase, receive, or use, and the quantity of, any goods or services that are the subject of the sales offer." Total costs, not a starting price, and quantity alongside it.

The second is "All material restrictions, limitations, or conditions to purchase, receive, or use the goods or services that are the subject of the sales offer." The rule defines "material" as "likely to affect a person's choice of, or conduct regarding, goods or services or a charitable contribution" — a definition about influence on a decision, not about how important the seller considers the term.

The third concerns refunds, and it is written to cover both directions. "If the seller has a policy of not making refunds, cancellations, exchanges, or repurchases, a statement informing the customer that this is the seller's policy; or, if the seller or telemarketer makes a representation about a refund, cancellation, exchange, or repurchase policy, a statement of all material terms and conditions of such policy." Saying nothing about refunds is not an option on a call covered by this rule.

A fourth item reaches recurring charges directly. Where "the offer includes a negative option feature," the seller must disclose "all material terms and conditions of the negative option feature, including, but not limited to, the fact that the customer's account will be charged unless the customer takes an affirmative action to avoid the charge(s), the date(s) the charge(s) will be submitted for payment, and the specific steps the customer must take to avoid the charge(s)." The rule defines a negative option feature as a provision "under which the customer's silence or failure to take an affirmative action to reject goods or services or to cancel the agreement is interpreted by the seller as acceptance of the offer."

The parallel list of things that may not be misrepresented

Section 310.3(a)(2) prohibits "Misrepresenting, directly or by implication, in the sale of goods or services" a list of material information that overlaps the disclosure list and then extends past it. Total costs and quantity appear again. So do material restrictions and conditions. So does "Any material aspect of the nature or terms of the seller's refund, cancellation, exchange, or repurchase policies," and "Any material aspect of a negative option feature."

Two entries on that list matter to anyone comparing health sellers. One is "Any material aspect of the performance, efficacy, nature, or central characteristics of goods or services that are the subject of a sales offer." The word efficacy is in the rule text. The other is "A seller's or telemarketer's affiliation with, or endorsement or sponsorship by, any person or government entity" — a claimed relationship with a pharmacy, a manufacturer, or an agency is itself a representation the rule reaches.

The prohibition on misrepresentation is not limited to what is said outright. The rule's phrase is "directly or by implication," which puts the implied claim inside the same sentence as the explicit one.

There is also a separate provision for anyone standing behind the caller. Section 310.3(b) makes it a violation "for a person to provide substantial assistance or support to any seller or telemarketer when that person knows or consciously avoids knowing that the seller or telemarketer is engaged in any act or practice that violates" the rule's core prohibitions. "Consciously avoids knowing" is doing deliberate work in that sentence.

Which calls the rule reaches, and which it exempts

This is the part most summaries get wrong, and it changes what a reader should expect. The rule defines "telemarketing" as "a plan, program, or campaign which is conducted to induce the purchase of goods or services or a charitable contribution, by use of one or more telephones and which involves more than one interstate telephone call."

Section 310.6 then exempts several categories outright. Among them: "Telephone calls initiated by a customer or donor that are not the result of any solicitation by a seller, charitable organization, or telemarketer," and "Telephone calls initiated by a customer or donor in response to an advertisement through any medium, other than direct mail solicitation." A person who sees an ad, picks up the phone, and calls a seller is, by the rule's own terms, usually outside most of it.

Both of those exemptions carry the same carve-out, and it is the one worth remembering: the exemption "does not apply to any instances of upselling included in such telephone calls." The rule defines upselling as "soliciting the purchase of goods or services following an initial transaction during a single telephone call," and says explicitly that "The upsell is a separate telemarketing transaction, not a continuation of the initial transaction." So the moment a call the customer placed turns into an offer of something else, the rule's disclosure duties attach to that offer.

A response to a direct mail solicitation is treated differently again. That exemption at § 310.6(b)(6) applies only where the mailing itself "clearly, conspicuously, and truthfully discloses all material information listed in § 310.3(a)(1)." The exemption is conditional on the paper having already done the disclosing.

What the rule requires a seller to keep, and why that matters

Section 310.5 requires a seller or telemarketer to keep records "for a period of 5 years from the date the record is produced unless specified otherwise." The list is long and specific, and it is the reason a dispute about what was said on a call is not purely a matter of one person's memory against another's.

The retained items include "A copy of each substantially different advertising, brochure, telemarketing script, and promotional material, and a copy of each unique prerecorded message," and, for each call, the telemarketer, the seller, the good or service, whether the call was outbound, whether it used a prerecorded message, and "The telemarketing script(s) and prerecorded message, if any, used during the call."

The rule also requires records of consent. Section 310.5(a)(8) covers "All verifiable authorizations or records of express informed consent or express agreement," and specifies that a complete record includes the name and telephone number of the person consenting, "A copy of the request for Consent in the same manner and format in which it was presented," the purpose consent was requested for, a copy of the consent, and the date it was given.

Responsibility can be allocated but not shed. Section 310.5(e) permits a seller and telemarketer to divide the recordkeeping by written agreement, and then adds that if the telemarketer holds it, "the seller must establish and implement practices and procedures to ensure the telemarketer is complying," including "retaining access to any record the telemarketer creates." Where no agreement exists or it is unclear, "both the telemarketer and the seller are responsible."

The underlying statute frames all of this as consumer-facing rather than administrative. Congress directed the Commission, in 15 U.S.C. 6102(a)(3)(C), to require that a telemarketer "shall promptly and clearly disclose to the person receiving the call that the purpose of the call is to sell goods or services and make such other disclosures as the Commission deems appropriate, including the nature and price of the goods and services."