Love them or hate them. Those cold calls we get at our desk from sales reps promoting their new product or service?
Yep—they're legal.
But cold calling has changed a lot since businesses started using it as a sales tactic in the 60s. Harassing phone calls late at night and a rise in financial scams turned cold calling into an annoyance for customers. So, in the early 2000s, the US government began regulating cold calling.
The changes mean cold calling is much more restrictive now than it used to be. Businesses must follow rules around who they call, how they sell, and when they pick up the phone. But cold calling is definitely legal and with the right techniques, it can be an effective sales tool in your toolkit.
This guide will teach you everything you need to know to follow cold calling laws and regulations.
Understanding Cold Calling
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There's an ongoing debate about whether cold calling is still an effective sales strategy.
Only two percent of cold calls convert. But 69 percent of buyers are willing to take a cold call, and 57 percent of C-level buyers want sales reps to contact them first.
So, most signs point to yes. Cold calling still works and is a valuable tool for starting customer conversations.
But a part of cold calling isn't discussed much—the legalities of what businesses can (and can't) do.
Cold calling has been heavily regulated over the last 30 years to protect consumers from scams and late-night interruptions. Businesses must now follow restrictions on who they call, when, and how they sell.
Here are the three main regulations you need to be aware of 👇
The Telemarketing Sales Rule (TSR)
The Telemarketing Sales Rule (TSR), created in 1995, is a broad set of rules businesses must follow when making cold calls.
Under the law enforced by the Federal Trade Commission (FTC), telemarketers need to disclose specific information, like who they are and why they're calling. There are also restrictions on when they can make calls (not before 8 a.m. or after 9 p.m. local time), and if a customer asks them not to call them again—they must listen.
However, TSR has different cold calling restrictions for businesses and the general public.
The TSR has a "B2B exemption, " giving these calls more breathing room. Sales reps can contact potential customers to talk about goods or services or a charitable contribution by the business. Even with the exemption, there are still rules the caller must follow before jumping into their sales pitch:
- You need to identify yourself. The identity of the seller and the company you're calling on behalf of must be disclosed.
- You must state why you're calling. Are you calling to sell a product or upsell a service? Potential customers must be informed of this immediately. Misrepresentations, like making a "courtesy call" if you're trying to sell something, are illegal.
- You have to describe what you are offering. At the start of the call, give a brief description of the goods or services being offered. The potential customer can then decide whether to continue the call.
The same rules apply when you try to upsell or cross-sell a product or service to existing customers.
The National Do Not Call Registry
The Do Not Call (DNC) Registry is a subsection of the TSR that helps consumers stop unwanted sales calls to their cell phones and home numbers.
The registry opened in 2003 and is regulated by the Federal Trade Commission (FTC).
Any American can add their phone number for free to the do-not-call list, and it's proven to be extremely popular. According to Statista, over 244 million people have now submitted their details to the DNC registry, so they won't receive cold calls.
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Like the TSR, there are exemptions to the registry for businesses:
- It only applies to personal telemarketing calls, so businesses can't be added
- Even after a phone number is added to the do-not-call list, a business can call it for 31 days before restrictions kick in
- Not-for-profit organizations can still call phone numbers on the list
- If a customer owes a business money, the company's debt collectors or creditors can legally contact them to collect payment
The registry's rules state any business making telemarketing calls must download the numbers on the DNC Registry to ensure they do not call anyone on it. To ensure they have an up-to-date call list, telemarketers must subscribe to the register, which updates when new numbers are added.
Most importantly, businesses must understand how seriously the FTC takes the DNC registry. A single rule violation can result in a fine of up to $43,792 per call 😲
The Telephone Consumer Protection Act (TCPA)
The last (but equally important) rule you must consider is the Telephone Consumer Protection Act (TCPA).
The act is older than the other laws on our list (enacted in 1991) and mainly focuses on telemarketing and robocalls. It limits how companies can use automatic dialing systems and what consent they need before soliciting an SMS or fax (although we don't know how many are sending faxes these days!)
The key parts of the TCPA are:
- Blocking. Consumers can contact their telephone service providers and ask to block robocalls.
- Automated calls and messages. Telemarketers can't use automated calling tech or leave pre-recorded messages without consumer consent.
- Control. Even if a customer has a business relationship with a salesperson and gives consent to call them or send them an SMS, they can rescind it at any time.
- Exemptions. If a company thinks a customer is at risk of fraud or needs to contact them urgently, there are some exceptions under the TCPA. However, customers must be given an "opt-out" option, which can be used anytime.
That final point touches on the most crucial element of the TCPA—consent.
Consent to call, text, or fax them is essential, as consumers can sue or file a class action if a company doesn't follow the TCPA guidelines.
Psst... Searching for the perfect sales headset? Our article on the top 8 options is a goldmine for cold calling pros.
Are the Laws Around Cold Calling the Same for B2C and B2B?
B2B and B2C cold calling are entirely different ball games.
There are a lot of gray areas that… aren't so gray once you start digging into them.
According to the TSR, B2B cold calling is allowed when a business specifically calls another business about goods and services. What is not allowed is a business calling a consumer at their workplace. Under the TCPA's wireless rules, mobile phones cannot be called from automated dialing systems unless the business consents.
Businesses need to follow certain guidelines when a cold call is answered. If the potential client receiving a cold call tells the telemarketer they're not interested, normal TSR rules apply. The salesperson must end the call. Businesses also have the right to withdraw their consent from being contacted by certain companies to stop cold calls.
What's interesting to note is while B2B cold calls are federally regulated under the TCPA and TSR, each state might also have its own rules.
For example, if your business is based in New York and you call a potential new customer in Texas, you may need to apply for a license to solicit sales and complete transactions. If sales calls are recorded, you will also need to make sure it's legal to do so in the state where the customer is (or if you need to get their consent).
For your own protection, research each state's laws before contacting potential customers.
Shh… Curious about B2B success? Master the B2B Sales Funnel stages with our help.
3 Cold Call Rules Your Business Must Follow
Cold calling is a legitimate (and lucrative) way of bringing in new business.
Data from Gartner found sales reps will dial nearly 12 times to connect with a cold prospect and another 22 times to converse. The number climbs if a sales team is trying to talk to a senior executive or businesses in complex industries like marketing or IT.
That's a lot of calls. And a lot of circumstances where a sales rep could make a mistake. A mistake that could land your business in hot water—and leave you with a hefty fine.
Here are three rules your sales managers should enforce to avoid getting into trouble 👇
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1. Establish Your Identity (And Be Upfront About Why You're Calling)
Sales reps must introduce themselves to consumers when they answer the call.
Legal outbound cold calls must still follow expectations set out by the Securities and Exchange Commission (SEC). Federal law states cold callers must, in a reasonable timeframe, tell consumers:
- Their name
- Their company's name
- The address or telephone number of their business
- Why they're calling (e.g., to sell a SaaS subscription for a product related to their business)
Businesses can also not block their numbers. If a consumer has Caller ID activated, they can identify the caller and decide whether to answer.
2. Be Mindful of Legal Cold Calling Hours
There are restrictions on when you can cold call consumers.
The Federal Trade Commission and the Federal Communications Commission state cold calls can only be legally made between 8 a.m. and 9 p.m. local time (of the consumer). Unless you're calling a current customer or someone on their business number, you need written consent to contact them outside these hours.
3. Don't Ask Customers for Money on a Call. Ever.
A cold call is the first time a consumer will have a conversation with you. However, even if the conversation has gone well, they may be wary of handing over payment information on the phone.
And for a good reason.
In 2020, Truecaller surveyed roughly 2,000 American adults, and 22 percent said they had been a phone scam victim in the last 12 months. The survey also projected that an estimated 56 million Americans have been targeted by phone scams and lost nearly $20 billion.
The SEC states that written approval is needed first if your business takes money from a consumer's account. A good rule of thumb is never to ask for financial information or bank account details on a cold call. When you send over a contract, give the new customer as much information about your product as possible so they can decide whether they're still comfortable going ahead with the purchase.
Use Cold Calling Effectively and Stay Within the Law
Companies can use cold calling for B2B sales and remain within the law.
Quality sales tools help companies meet strict regulations when using a predictive dialer.
For example, US FCC regulations state a cold call that's not answered within just 2 seconds is considered abandoned. By law, you must leave a message for the consumer and state who you are and why you're calling. Companies in the UK must follow similar rules, while countries like Canada have banned predictive dialers completely under a Do Not Disturb policy.
A tool like Close can set custom-pre recorded messages for sales reps to use and help them operate according to regulations:
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Close can also help you with the legalities of registering your number with carriers or local law enforcement agencies.
Often, businesses must provide identity documents like a passport, national ID, or proof of personal address to comply. Close can then handle the registration process to ensure you operate legally within local telephone laws.
Want to make the most out of your cold calls? Click here to watch a demo of Close's Predictive Dialer.
