How long does a purchase or an inquiry support an established business relationship?

Under the current rule, a purchase, rental, lease, or financial transaction with the seller supports an established business relationship for the 540 days before the call. An inquiry or application about the seller's good or service supports one for the 90 days before the call. Earlier FTC orders stated the same windows as eighteen months and three months.

What must a business do when it relies on an established business relationship?

A business must be able to demonstrate the relationship for each Registry call, and for an inquiry-based claim it must also keep specific records. Those records are the person's name and last known telephone number, the date of the inquiry or application, and the goods or services inquired about. Failing to keep required records in a complete and accurate manner is itself a violation.

Is a claim that callers only dialed people who had inquired enough to establish an inquiry-based relationship?

Not without evidence of the actual inquiries. In the Dish litigation, the court faulted Dish for failing to produce any consumer leads, which meant it produced no documentation of the inquiries it relied on. A defendant in another summary-judgment ruling asserted that its salespeople only called people who had asked for information, and the assertion failed because it offered no admissible evidence, such as recordings or salesperson testimony. An FTC civil investigative demand showed what proof looks like: a company that claims a relationship must produce documents showing the entity involved, whether the relationship rested on a transaction or an inquiry, and the date and nature of the last one.

Can a consumer end an established business relationship for telemarketing purposes?

A company-specific do-not-call request does, because the Registry exception applies only if the person "has not stated that he or she does not wish to receive outbound telephone calls" under the entity-specific provision. The FCC's rules go further: a seller-specific do-not-call request ends the relationship for telemarketing purposes even if the subscriber keeps doing business with the seller.

Does an established business relationship with a corporate affiliate count?

Only for calls the consumer would reasonably expect to receive. The FCC's rule for telephone solicitations is to the same effect: the relationship does not extend to affiliated entities unless the subscriber would reasonably expect them to be included, given the nature and type of goods or services the affiliate offers and the affiliate's identity.

Does relying on established business relationships change the Registry access fee?

It can remove the fee, but only if every call goes to people covered by the written-agreement or established-business-relationship provisions and the seller uses the Registry for nothing else.

Does an established business relationship permit prerecorded sales calls?

Not on its own. The rule bars prerecorded sales calls unless, among other conditions, the seller has obtained from the recipient an express agreement, in writing.

Lead GenerationTerm

Established business relationship (EBR)

Q: How can I tell whether a contact counts as an established business relationship?

The test is a purchase, rental, lease, or financial transaction with that seller, or an inquiry or application about its good or service, inside the window before the call. For an inquiry, the key issue is whether the consumer took an action that would "reasonably lead to an expectation of a prompt follow-up telephone contact." In the Westgate Resorts complaint, for example, responding to an online offer of free products from an unrelated site was alleged not to be an inquiry about the defendants' timeshares.

Berkeley Robinson, Managing Attorney at Robinson Law Firm PLLC

Author

Berkeley Robinson, Esq.

Managing Attorney, Robinson Law Firm PLLC

Berkeley has served as the go-to counsel for many scaling businesses in a transactional and litigation management capacity. Before becoming an attorney, Berkeley grew sales teams, ran online marketing campaigns, and did everything else an entrepreneur does—and still does today as the founder of two online businesses.

Definition

The government defines "Established business relationship (EBR)" as "a relationship between a seller and a person based on: (1) The person's purchase, rental, or lease of the seller's goods or services or a financial transaction between the person and seller, within the 540 days immediately preceding the date of a telemarketing call; or (2) The person's inquiry or application regarding a good or service offered by the seller, within the 90 days immediately preceding the date of a telemarketing call." Source: 16 C.F.R. § 310.2(q) Orders in earlier FTC matters state the same two prongs as eighteen months after a purchase or transaction and three months after an inquiry or application. Source: Consent Decree and Order for Civil Penalties, Injunction and Other Relief (ADT Security Services, Inc.), Definitions ¶ 11

Key legal rules

The Telemarketing Sales Rule states the duties below, and the orders that follow show what particular companies were required to do, which you can apply to your own marketing:

A seller or telemarketer may call a number on the National Do Not Call Registry on the strength of an established business relationship only if it can "demonstrate that the seller has an established business relationship with such person, and that person has not stated that he or she does not wish to receive outbound telephone calls under paragraph (b)(1)(iii)(A) of this section." Source: 16 C.F.R. § 310.4(b)(1)(iii)(B)(2), (b)(1)(v)(A)
The established business relationship provision is written as an exemption to the general rule, and in the Dish litigation the court treated an exemption from the general rule as an affirmative defense for which Dish bore the burden of proof. Source: United States v. Dish Network L.L.C., summary judgment opinion, Count I analysis
For a purchase-based relationship, the period runs from the customer's last purchase of goods or services, and campaign codes or disconnect dates are not a valid basis for measuring it. Source: Findings of Fact and Conclusions of Law, United States v. Dish Network L.L.C., Findings of Fact § B.1
For each person with whom a seller intends to assert an established business relationship based on an inquiry or application, the seller must keep a record of the person's name and last known telephone number, the date the person submitted the inquiry or application, and the goods or services inquired about. Source: 16 C.F.R. § 310.5(a), (c) (as attached to Stipulated Order For Permanent Injunction and Monetary Judgment Against Defendant Samuel J. Smith)
A seller or telemarketer must keep the records the rule lists for 5 years from the date the record is produced, unless the rule specifies otherwise. Source: 16 C.F.R. § 310.5(a), (c) (as attached to Stipulated Order For Permanent Injunction and Monetary Judgment Against Defendant Samuel J. Smith)
A seller need not pay the annual fee for access to the Registry if it "initiates, or causes a telemarketer to initiate, calls solely to persons pursuant to" the written-agreement or established-business-relationship provisions and does not access the Registry for any other purpose. Source: 16 C.F.R. § 310.8

For the sake of space, this page lists only the primary rules related to this term that most businesses should follow. More may apply to your situation, and your unique facts affect how they apply.

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Why these rules exist

The FTC's Westgate Resorts complaint recites the Commission's warning that the established business relationship exemption "is to be narrowly crafted and should be consistent with" consumer expectations. Source: Westgate Resorts - Complaint for Civil Penalties, Permanent Injunction, and Other Relief ¶ 13 For a claim based on a consumer inquiry, that expectation is the test: the key issue is whether the consumer has taken an action that would "reasonably lead to an expectation of a prompt follow-up telephone contact." Source: Westgate Resorts - Complaint for Civil Penalties, Permanent Injunction, and Other Relief ¶ 13

The exception was part of the Registry prohibition from the start: the prohibition did not apply if the person had an Established Business Relationship with the seller or telemarketer. Source: Findings of Fact and Conclusions of Law, United States v. Dish Network L.L.C., Findings of Fact § II.B The expectations test also limits corporate families, because only calls the consumer would reasonably expect fall within a relationship with a subsidiary or affiliate. Source: Phase One Mktg. - Complaint for Civil Penalties, Permanent Injunction, and Other Relief ¶ 12

Enforcement examples

United States v. Malvern Marketing, LLC d/b/a Phase One Marketing and Peoples Benefit Services, Inc. (health discount cards)

Complaint for Civil Penalties, Permanent Injunction, and Other Relief, United States v. Malvern Marketing, LLC, No. 06 CV 4612 (S.D.N.Y. June 15, 2006)

Peoples Benefit Services (PBS) sold prescription drug discount cards, dental discount cards, health-related discount cards, and an online referral service, and it had telemarketers such as POM call consumers on its behalf. Source: Phase One Mktg. - Complaint for Civil Penalties, Permanent Injunction, and Other Relief ¶¶ 18, 23 According to the complaint, the defendants called consumers who had recently bought accidental death, term life, and whole life insurance from members of PBS's corporate family. Source: Phase One Mktg. - Complaint for Civil Penalties, Permanent Injunction, and Other Relief ¶¶ 18, 23

Outcome. The complaint alleged that those consumers did not reasonably expect calls from PBS. Its example was a buyer of life insurance from an affiliate operating under a different name, who would not expect a call selling drug discount cards. Source: Phase One Mktg. - Complaint for Civil Penalties, Permanent Injunction, and Other Relief ¶¶ 18, 23 On that basis the complaint alleged that the defendants had no established business relationship or other affirmative defense for calls to tens of thousands of Registry numbers. Source: Phase One Mktg. - Complaint for Civil Penalties, Permanent Injunction, and Other Relief ¶¶ 18, 23

United States v. Bookspan (book clubs)

Complaint for Civil Penalties, Permanent Injunction, and Other Relief, United States v. Bookspan, No. 06-786 (E.D.N.Y. Feb. 23, 2006)

Bookspan's telemarketing was directed mainly at people who were existing or former members of one of its book clubs. Source: Bookspan - Complaint for Civil Penalties, Permanent Injunction, and Other Relief ¶¶ 14, 17, 21 Even so, the complaint alleged that over one hundred thousand calls went to Registry numbers for which Bookspan had no established business relationship with the consumer called. Source: Bookspan - Complaint for Civil Penalties, Permanent Injunction, and Other Relief ¶¶ 14, 17, 21

Outcome. The complaint charged these calls as violations of the Registry provision of the TSR. Source: Bookspan - Complaint for Civil Penalties, Permanent Injunction, and Other Relief ¶¶ 14, 17, 21

United States v. Central Florida Investments, Inc., Westgate Resorts, Ltd., and CFI Sales & Marketing, L.L.C. (timeshare vacations)

Complaint for Civil Penalties, Permanent Injunction, and Other Relief, United States v. Central Florida Investments, Inc., No. 6:09-cv-104-Orl-19GJK (M.D. Fla. Jan. 27, 2009)

The defendants bought phone numbers collected through Brandarama.com, a site that offered free and discounted products and asked visitors for their telephone number. Source: Westgate Resorts - Complaint for Civil Penalties, Permanent Injunction, and Other Relief ¶¶ 23-24 The online form did not identify the defendants. Source: Westgate Resorts - Complaint for Civil Penalties, Permanent Injunction, and Other Relief ¶¶ 23-24 Yet they called those consumers, many of them on the Registry, to market vacations at their timeshare resorts. Source: Westgate Resorts - Complaint for Civil Penalties, Permanent Injunction, and Other Relief ¶¶ 23-24

Outcome. The complaint alleged that responding to the Brandarama.com offer would not lead a reasonable consumer to expect a prompt follow-up call from any defendant, so the defendants had no established business relationship for calls to numerous Registry numbers. Source: Westgate Resorts - Complaint for Civil Penalties, Permanent Injunction, and Other Relief ¶¶ 23-24

United States v. Corporations for Character, L.C. (family-film telemarketing)

Memorandum Decision and Order, United States v. Corporations for Character, L.C., No. 2:11-cv-419-RJS

In its Kids First campaign, Corporations for Character asked call recipients to serve as volunteers who would receive two free DVDs and give feedback in a second call. In that second call, the company asked them to buy two additional DVDs. Source: Memorandum Decision and Order, United States v. Corporations for Character, L.C., Case No. 2:11-cv-419-RJS (Mar. 31, 2015) It was undisputed that the defendants called numbers on the Registry during that campaign. Source: Memorandum Decision and Order, United States v. Corporations for Character, L.C., Case No. 2:11-cv-419-RJS (Mar. 31, 2015)

Outcome. The court held that the first call, which solicited volunteers, did not create an established business relationship, that by the second call the recipient had neither bought from nor inquired of the defendants, and that the defendants had reached out first. It granted summary judgment to the FTC on liability under the Registry provision. Source: Memorandum Decision and Order, United States v. Corporations for Character, L.C., Case No. 2:11-cv-419-RJS (Mar. 31, 2015)

United States v. Dish Network L.L.C. (satellite television)

Findings of Fact and Conclusions of Law Issued By the United States District Court - In the Matter of Dish Network

Dish did not measure the 18-month period from the date consumers last paid for programming. Instead it used "the disconnect date that was associated with the file name" to build its calling lists. Source: Findings of Fact and Conclusions of Law, United States v. Dish Network L.L.C., Findings of Fact § B.1 (Account Number Campaigns) For its Lead Tracking System campaigns, Dish presumed an inquiry-based relationship because it dialed the lists within 24 to 48 hours of receipt. Source: Findings of Fact and Conclusions of Law, United States v. Dish Network L.L.C., Findings of Fact § B

Outcome. The court found that Dish personnel did not check the dates call recipients last paid, and that Dish therefore made over 15 million illegal Registry calls to people who had not paid Dish for more than 18 months, based on an expert's analysis of its 2007-2010 calling records. Source: United States v. Dish Network, L.L.C. (C.D. Ill.), Findings of Fact and Conclusions of Law (Count I) The court also found that Dish failed to prove that the Lead Tracking System consisted of contact information for people who inquired about Dish programming. Source: Findings of Fact and Conclusions of Law, United States v. Dish Network L.L.C., Findings of Fact § II.A It awarded civil penalties and statutory damages totaling $280,000,000 on the counts it decided against Dish. Source: United States v. Dish Network, L.L.C. (C.D. Ill.), Findings of Fact and Conclusions of Law A later district court opinion described the Seventh Circuit as finding the Rule unambiguous and rejecting Dish's mistake-of-law defense, because where FTC comments conflict with the Rule's text, "the text prevails." Source: Memorandum Opinion and Order, No. 19-cv-1984 (Sept. 1, 2023) (Liability for Calls Made by the LLC Defendants) That opinion also cited the district court's decision in the Dish litigation as reversed in part on other grounds. Source: Memorandum Opinion and Order, No. 19-cv-1984 (Sept. 1, 2023) (Liability for Calls Made by the LLC Defendants)

United States v. Vision Solar LLC (residential solar panels)

Complaint; Stipulated Order for Permanent Injunction, Civil Penalty Judgment, and Other Relief as to Defendants Solar Xchange LLC and Mark Getts, United States v. Vision Solar LLC, No. 2:23-cv-01387 (D. Ariz. July 18, 2023)

The complaint alleged that, for millions of consumers on the Registry who received calls, Vision Solar, its telemarketers including Solar Xchange, and their third-party lead generators had no evidence of an established business relationship and no evidence of express written consent. Source: Complaint (Vision Solar LLC; Solar Xchange) ¶ 45

Outcome. The stipulated order with Solar Xchange and Mark Getts required them to create and keep copies of any express written agreements, or documentation of any established business relationships, that correspond to all outbound calls to Registry numbers. Source: Stipulated Order for Permanent Injunction, Civil Penalty Judgment, and Other Relief as to Defendants Solar Xchange LLC and Mark Getts, § XI The order also required them to keep the websites, emails, texts, and other communications that they or any third party used to create an established business relationship for those calls. Source: Stipulated Order for Permanent Injunction, Civil Penalty Judgment, and Other Relief as to Defendants Solar Xchange LLC and Mark Getts, § XI

Exposure

A Registry violation can bring civil penalties and an injunction. In the Media Mix 365 complaint, the government stated that, as of February 14, 2019, the maximum civil penalty had been adjusted to $42,530 for each violation of the TSR. Source: Complaint for Permanent Injunction, Civil Penalties and Other Equitable Relief, United States v. Media Mix 365, LLC (C.D. Cal. 2019) A later complaint against HHM stated that the Telemarketing Act and the FTC Act authorize penalties of up to $50,120 for each violation of the TSR assessed after January 11, 2023. Source: Complaint for Civil Penalties, Permanent Injunction, Monetary Relief, and Other Relief and Demand for Jury Trial (HHM) ¶ 23 The stipulated order in the Media Mix 365 case barred Media Mix 365 from calling numbers listed for more than 31 days on the Registry unless it could demonstrate that the call was placed on behalf of a seller to a person from whom the seller had an express written agreement or an established business relationship and no opt-out. Source: Media Mix 365: Agreement to Enter Permanent Injunction Order (June 25, 2019), § IV.A That same order entered a $7.6 million civil penalty against the defendants, jointly and severally. Source: Agreement to Enter Permanent Injunction Order, United States v. Media Mix 365, LLC (June 25, 2019) (Monetary Judgment for Civil Penalty) Part of that judgment was suspended, on the premise that the defendants' sworn financial statements were truthful, accurate, and complete. Source: Agreement to Enter Permanent Injunction Order, United States v. Media Mix 365, LLC (June 25, 2019) (Monetary Judgment for Civil Penalty)

Money judgments are not limited to civil penalties. An order against emerchant, LLC and Chad E. VanSickle barred outbound calls to Registry numbers unless the seller proves a written agreement or an established business relationship with no prior opt-out. Source: Stipulated Final Order for Permanent Injunction and Monetary Relief as to Defendants Foundation Business Solutions, LLC; Emerchant, LLC; and Chad E. Vansickle, § VI.A The order also entered a $28,600,000 judgment against the settling defendants, jointly and severally, as equitable monetary relief. Source: Stipulated Final Order for Permanent Injunction and Monetary Relief as to Defendants Foundation Business Solutions, LLC; Emerchant, LLC; and Chad E. Vansickle, § VII.A

Companies that use outside telemarketers face monitoring duties on top of penalties. ADT's consent decree entered a $2,000,000 civil penalty. Source: Consent Decree and Order for Civil Penalties, Injunction and Other Relief, United States v. ADT Security Services, Inc. (Civil Penalty) Its monitoring provisions treat a call to a Registry number as proper only if the customer has given express agreement in writing or has an established business relationship with ADT. Source: Consent Decree and Order for Civil Penalties, Injunction and Other Relief (ADT Security Services, Inc.), § II.D Its reporting provisions call for the basis for any established business relationship between ADT and a person at the number called, or, if there was none, the reason the person was called. Source: Consent Decree and Order for Civil Penalties, Injunction and Other Relief (ADT Security Services, Inc.), § IX.C.4

Penalties can be large even when largely suspended. In a stipulated judgment, a $1,138,551 civil penalty was entered against the corporate defendant. Source: Stipulated Judgment and Order for Permanent Injunction (Executive Financial Home Loan Corp.), §§ I-II All but $50,000 of it was suspended, contingent on the accuracy and completeness of the defendant's financial statements. Source: Stipulated Judgment and Order for Permanent Injunction (Executive Financial Home Loan Corp.), §§ I-II

Poor records are themselves a violation, because failing to keep each required record in a complete and accurate manner "is a violation of this part." Source: 16 C.F.R. § 310.5(a), (c) (as attached to Stipulated Order For Permanent Injunction and Monetary Judgment Against Defendant Samuel J. Smith) A seller can also face a separate charge for the conduct of its telemarketer: the Vision Solar complaint alleged that the seller provided substantial assistance or support to Solar Xchange, a telemarketer it knew or consciously avoided knowing was violating the TSR. Source: Complaint (Vision Solar LLC; Solar Xchange) ¶ 64

FAQs

1.310.2. 16 C.F.R. § 310.2(q)
2.Consent Decree and Order for Civil Penalties, Injunction and Other Relief. Consent Decree and Order for Civil Penalties, Injunction and Other Relief (ADT Security Services, Inc.), Definitions ¶ 11
3.310.4. 16 C.F.R. § 310.4(b)(1)(iii)(B)(2), (b)(1)(v)(A)