Opinion 06-2

UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580
Thomas P. Rowan
Attorney
600 Pennsylvania Ave., N.W., Room 286
Washington, D.C. 20580
trowan@ftc.gov
202-326-3302
July 19, 2006
Michael Goodman, Esq.
Hudson Cook, LLP
1020 19th Street, N.W., 7th Floor
Washington, D.C. 20036
Re: Request for Informal Advisory Opinion Concerning the Application of the Telemarketing
Sales Rule’s “Established Business Relationship” Exemption to an Internet-based Lead
Generation Mechanism
Dear Mr. Goodman:
This staff advisory opinion responds to your letter of April 3, 2006, seeking an informal
opinion letter regarding the application of the Telemarketing Sales Rule’s (“TSR’s” or the
“Rule’s”) established business relationship (“EBR”) exemption to an Internet-based lead
generation mechanism. The central issue your letter presents is whether the exemption applies to
a lender that initiates a telephone call to a consumer based on contact information the lender
obtains from a lead generator.
Our conclusion is that, under a strict reading of the language of the Rule, the lender does
not have an EBR with a consumer who responds to a lead generator’s solicitation, and therefore
would not normally be entitled to claim the EBR exemption. However, FTC staff would not
recommend a Do Not Call enforcement action against a lender that calls consumers who have
responded to a lead generator’s solicitation if, as described more fully below, the lead generator
makes full and adequate prior disclosure of certain material facts about the consequences of
responding to such solicitations. The opinions expressed in the following discussion of the basis
for this conclusion are those of Commission staff only and are not attributable to, nor binding on,
the Commission itself or any individual Commissioner.
Rule Provisions
Section 310.4(b)(1)(iii) of the TSR provides, among other things, that it is a violation of
the Rule to initiate any outbound telemarketing call to a person when that person’s telephone
number is on the National Do Not Call Registry unless the seller has an EBR with such person.
See 16 C.F.R. § 310.4(b)(1)(iii). The Rule defines an EBR as:

Michael Goodman, Esq.
Hudson Cook, LLP
July 19, 2006 - Page 2
1 For the purposes of this advisory opinion, we presume that the lenders described
in your letter are “persons, partnerships, or corporations” under Sections 5(a)(2) and 19(a) of the
Federal Trade Commission Act, 15 U.S.C. §§ 45(a)(2) and 57b(a), and meet the definition of a
“seller” under Section 310.2(z) of the TSR, 16 C.F.R. § 310.2(z).
a relationship between a seller and a consumer based on:
(1) the consumer’s purchase, rental, or lease of the seller’s goods or
services or a financial transaction between the consumer and seller,
within eighteen (18) months immediately preceding the date of a
telemarketing call; or
(2) the consumer’s inquiry or application regarding a product or
service offered by the seller, within the three (3) months
immediately preceding the date of a telemarketing call.
16 C.F.R. § 310.2(n).
Discussion
Your letter discusses an Internet-based mechanism that generates leads for lenders. It
describes the mechanism in the following way:
[The] consumer visits a website that offers to arrange for several
lenders to compete for the consumer’s business. Before the
consumer submits an inquiry, the website may disclose
approximately how many lenders are likely to respond. The names
of those lenders are not disclosed at that point, however, because
they have not yet been determined. The website may have a
network of dozens or even hundreds of lenders who may be asked
to respond to a consumer’s inquiry with proposed lending
terms. . . . The lenders’ names are disclosed to the consumer when
the lenders contact the consumer to present lending terms.
The consumer is asked to submit contact information with her
inquiry. Typically, this includes an email address and telephone
number. Some websites may expressly disclose that contact
information is collected so that lenders can respond to the
consumer.
FTC staff’s opinion is that a lender who receives a consumer’s contact information from
such a lead generation mechanism generally does not have an EBR with the consumer.1 The

Michael Goodman, Esq.
Hudson Cook, LLP
July 19, 2006 - Page 3
Rule provides that, for the EBR exemption to apply, the seller must itself have a relationship with
the consumer. See 16 C.F.R. §§ 310.4(b)(1)(iii)(B)(ii) and 310.2(n). In the scenario your letter
describes, it is the lead generator, not the seller, that has an inquiry-based established business
relationship with the consumer.
However, we agree with your letter’s assertion that the consumer’s reasonable
expectations regarding the lender must be considered. In the Statement of Basis and Purpose
(“SBP”) accompanying the Rule, the Commission states: “The consumer’s expectations of
receiving the call are the measure against which the breadth of the [EBR] exemption must be
judged.” SBP, 68 Fed. Reg. 4594, Jan. 29, 2003. The SBP does not discuss consumer
expectations specifically in the context of lender-clients of a lead generator. However, it does
discuss them in a related context, i.e., with regard to the affiliates of a corporate seller:
If consumers received a call from a company that is an affiliate or
subsidiary of a company with whom they have a relationship,
would consumers likely be surprised by that call and find it
inconsistent with having placed their telephone number on the
national “do-not-call” registry?
Id.
Thus, the question is whether the consumer in the scenario your letter describes has a
reasonable expectation of receiving calls from lenders who receive her name and telephone
number from a lead generator. We believe that the consumer’s expectation of privacy is such
that, if she receives (1) calls from lenders when she does not expect to receive such calls, (2)
calls from an infinite number of lenders when she only expects to receive calls from a few, or (3)
calls from lenders whose identities are not linked in her mind to her online inquiry, she will be
surprised, and find these calls invasive of her privacy and contrary to the promised protection of
the National Do Not Call Registry. However, we also agree with your letter’s basic assertion that
the consumer expects to receive some calls as a result of her visit to the website. In addition, we
believe the lead generation mechanism your letter describes offers the consumer a true benefit,
i.e., the ability to quickly and easily obtain multiple credit offers based on her unique financial
situation.
In view of these considerations, FTC staff believes that the Commission should exercise
discretion in evaluating the use of lead generators by lenders, as described in your letter. As long
as the lead generator provides the consumer with certain material disclosures, staff likely would
not recommend filing a Do Not Call enforcement action against the lender. Specifically, staff
likely would not recommend taking such action if the lead generator clearly and conspicuously
discloses to the consumer, before the consumer divulges her telephone number, both that the
consumer may receive telemarketing calls as a consequence of submitting her telephone number,
and the maximum number of entities from which the consumer may receive these calls.

Michael Goodman, Esq.
Hudson Cook, LLP
July 19, 2006 - Page 4
2 The lead generator should not refer the consumer to a lengthy list of hundreds or
thousands of lenders that may contact the consumer. Rather, it should inform the consumer of
the identities of the lenders with which it has “matched” the consumer.
3 If contact between the lead generator and the consumer occurred online, these
disclosures appropriately could be made via email. Conventional mail disclosures likely would
not be adequate where the initial exchange took place online. Nothing in this letter should be
construed to mean that such electronic message need not comply with the CAN-SPAM Act, 15
U.S.C. §§ 7701 - 7713. Note, however, that the email likely would constitute a “transactional or
relationship message,” and would therefore not be subject to many of the CAN-SPAM Act’s
requirements. See 15 U.S.C. § 7702(17).
In addition, FTC staff’s opinion is that the consumer should, if possible, be informed of
the identities of the lenders who may call the consumer before the consumer receives any such
calls.2 This disclosure should be made in a manner likely to be seen and understood by the
consumer, in light of the medium used to induce the consumer to submit her information to the
lead generator.3 We note that, as a practical matter, notifying the consumer in this way about
which specific lenders may be calling makes good business sense. The consumer is more likely
to accept a telemarketing call from a lender when she is expecting that particular lender to call.
She may reject a call from a lender she does not recognize and instruct the lender not to make
further telemarketing calls to her, thereby asserting her rights under the TSR’s entity specific Do
Not Call provision. See 16 C.F.R. § 310.4(b)(1)(iii)(A). Of course, consistent with Section
310.2(n)(2) of the TSR, 16 C.F.R. § 310.2(n)(2), the lender may only initiate an outbound call to
the consumer within three months of the date of the consumer’s inquiry to the lead generator. In
the staff’s opinion, fulfilling the above conditions ensures that the use of lead generators is
consistent with the privacy expectations of a consumer who has placed her number on the
Registry.
I hope this discussion is helpful to you. If you have any further questions, please do not
hesitate to contact me.
Sincerely,
Thomas P. Rowan