Frequently Asked Questions Regarding FINRA Rule 3230

Background

FINRA Rule 3230 (Telemarketing) applies to all members and their associated persons.1 Rule 3230 is required to be “substantially similar” to the Federal Trade Commission’s (FTC) telemarketing rule.2 Accordingly, the FTC’s telemarketing rules and related interpretative guidance are instructive in considering Rule 3230’s requirements.3

Frequently Asked Questions

1. What is the purpose of Rule 3230?

Rule 3230 imposes restrictions on telephone calls by members and their associated persons to induce the purchase of goods or services or to solicit charitable contributions, subject to some exceptions set forth in the Rule. Specifically, unless an exception is available, Rule 3230 prohibits members and their associated persons from initiating any “outbound telephone call” during restricted periods of time or to individuals on the “firm-specific do-not-call list” or the “national do-not-call list.” Rule 3230(m)(16) defines “outbound telephone call” to mean “a telephone call initiated by a telemarketer to induce the purchase of goods or services or to solicit a charitable contribution from a donor.” While Rule 3230 does not define “telemarketer” for purposes of the rule, Rule 3230(m)(20) defines “telemarketing” to mean “consisting of or relating to a plan, program, or campaign involving at least one outbound telephone call, for example cold-calling.”

2. What is the difference between the “firm-specific do not call list” and the “national do-not-call-list” under Rule 3230?

The national do-not-call list (also commonly referred to as the “national do-not-call registry”) was jointly established by the FTC and the FCC. Rule 3230 prohibits, with some exceptions, “outbound telephone calls” to individuals who have registered their telephone numbers on the national do-not-call list.

Rule 3230(b) provides for three exceptions that permit outbound telephone calls to individuals who have registered their telephone numbers on the national do-not-call list: (1) having an “established business relationship” (as defined in Rule 3230(m)(12)) with the individual receiving the call; (2) prior express written consent to be called; and (3) having a “personal relationship” (as defined in Rule 3230(m)(18)) between the caller and the individual receiving the call. For example, a customer with an account at the member would have an “established business relationship” with the member and, unless the customer is on the firm-specific do-not call list (as defined below), an associated person of the member may call the customer even if the customer has registered his telephone number on the national do-not-call list. In addition, Rule 3230(c) provides a safe harbor from liability for an outbound telephone call by a member or associated person to an individual who has registered his or her telephone number on the national do-not-call list, provided that the member or associated person demonstrates that the violation was the result of an error and that as part of the member’s routine business practices it meets specified standards.

Each member is also required to establish and maintain a do-not-call list for persons who do not wish to receive telephone solicitations from the member or its associated persons (referred to in Rule 3230 as the “firm-specific do-not-call list”). Rule 3230(a)(2) prohibits making outbound telephone calls to any individual on the firm-specific do-not-call list. A customer may request to be added to the firm-specific do-not call list.4 Unlike the national do-not-call list, there are no exceptions or safe harbors from the firm-specific do-not-call list.

3. Under Rule 3230(a)(2), is a FINRA member required to have a separate firm-specific do-not-call list if the member’s corporate parent has a single do-not-call list that is also used by that member?

If the member’s corporate parent has a do-not-call list that meets the requirements of Rule 3230, the member firm may adopt that list as its firm-specific do-not-call list for purposes of Rule 3230.

4. Does an outbound telephone call to a business number listed on the national do-not-call list violate Rule 3230?

No. While Rule 3230(a)(3) prohibits calling any “person” who has registered his or her telephone number on the national do-not-call registry,5 the national do-not-call list is intended only for residential phone numbers. The FTC, which manages the national do-not-call list, has expressly declined to permit businesses to register their numbers on the list,6 though the list is not enabled to restrict businesses from placing their phone numbers on it. Accordingly, while a business has the ability to add its phone number to the national do-not-call list, the business number would not be considered validly registered on the list.

FINRA presumes that any number listed on the national do-not-call list is validly registered on the list (that is, it is a residential phone number). However, a firm may rebut this presumption by presenting evidence that the outbound telephone number was placed to a business number.7

  1. In 2012, the SEC approved the adoption of NASD Rule 2212 (Telemarketing) in the consolidated FINRA rulebook as FINRA Rule 3230 (Telemarketing), taking into account requirements under NYSE Rule 440A (Telephone Solicitation) and its interpretation. See Securities Exchange Act Release No. 66279 (January 30, 2012), 77 FR 5611 (February 3, 2012) (Order Approving File No. SR-FINRA-2011-059) (“SEC Approval Order”); Regulatory Notice 12-17 (April 2012).
  2. The Telemarketing Consumer Fraud and Abuse Prevention Act of 1994 requires the SEC to promulgate or direct any national securities exchange or registered securities association to promulgate rules substantially similar to the FTC’s rules to prohibit deceptive and other abusive telemarketing acts or practices. See 15 U.S.C. 6102. In addition, in adopting FINRA Rule 3230, SEC staff directed FINRA to conduct a review of its telemarketing rule and propose amendments that provide protections at least as strong as those provided by the FTC’s telemarketing rules. See SEC Approval Order, supra note 1, 77 FR 5611, 5612, n.12 (citing Letter from Robert W. Cook, Director, Division of Trading and Markets, SEC, to Richard G. Ketchum, Chairman and Chief Executive Officer, FINRA, dated May 10, 2011).
  3. In addition, the Federal Communications Commission’s (FCC) telemarketing rules apply to a broad range of SEC-regulated entities, including broker-dealers. See 47 CFR Part 64.
  4. See Rule 3230((b)(1) stating that “[a] person’s request to be placed on the firm-specific do-not-call list terminates the established business relationship exception to that national do-not-call list provision for that member even if the person continues to do business with the member.”
  5. Consistent with the FTC’s Telemarketing Sales Rule, Rule 3230(m)(17) defines a “person” as “any individual, group, unincorporated association, limited or general partnership, corporation, or other business entity.”
  6. See, e.g., FTC, National Do-Not-Call Registry, available at https://www.consumer.ftc.gov/articles/0108-national-do-not-call-registry. In addition, in establishing the national do-not-list with the FTC, the FCC declined to permit businesses to register their numbers on the national do-not-call registry, but noted that a business could nevertheless request that its number be added to a company’s do-not-call list. See 68 FR 44144, 44176 (July 25, 2003).
  7. The FCC has stated that it will presume wireless subscribers who ask to be put on the national do-not-call list are residential subscribers, but this presumption may require a complaining wireless customer to provide further proof of the validity of that presumption should the FCC need to take enforcement action. FINRA agreed with this interpretation when adopting the requirement that members participate in the national do-not-call registry. See Securities Exchange Act Release No. 48390 (August 22, 2003), 68 FR 51613 (August 27, 2003) (SR–NASD–2003–131).