Is Cold Calling Legal? Regulations, Compliance Tips, & More

Cold calling is almost as old as the telephone itself. It has weathered challenges from a series of new, breakthrough technologies over more than 100 years. Despite what naysayers claim, cold calling continues to be used in its conventional form, or at least in its essence, to this day.

Few contact techniques are as effective in clinching a potential buyer’s attention as cold calling. Despite faster, more scalable communication channels birthed by the internet, it remains the tool of choice for many sellers. 

In highly competitive markets, cold calling helps reps move quickly to establish themselves as a viable option before buyers browsing the internet. Frankly, it is a no-nonsense approach that wins facetime with prospects and lets reps cut to the chase faster and more efficiently.

A paradigm shift in the way we communicate has brought with itself legions of issues never seen before. Growing data and privacy protection advocacy has found its way into sales, and legal consumer protection measures have claimed cold calling as their first victim.

The Rise and Fall of Cold Calling

Thanks to the advent of the internet and a rapidly shifting focus on customer experience, the history of cold calling has been as chequered as it is interesting. Cold calling became a widely used, successful contact technique as telemarketing technology innovated breathlessly over the course of the 20th century. It allowed companies to make calls at scale, lopped costs and increased their outreach significantly. 

Jobs Are Created 

In 1878, the inventor of the telephone, Alexander Graham Bell handpicked the first female telephone operator, Emma Nutt, for the Boston Telephone Dispatch Company to replace the boisterous teenage boys in his employ.

The demand for telephone and switchboard operators grew in the early 20th century. Women, considered mild-mannered and a relatively economical labour source, were preferred for the job. With men fighting the two World Wars, and a general dearth of technical jobs for women, they leapt at the opportunity.

Notable Inventions

Technological inventions spurred the growth of telemarketing and the use of cold calling in outbound sales. Breakthroughs in communication technology in the 1960s and 1970s – from touch-tone dialling to toll-free numbers and more – helped companies speed up and scale their telemarketing efforts. 

In the 1970s and 1980s, the momentum was with cold calling. But the following decade brought an inflection point — in the form of innovation in both technology and its misuse — pushing it out of favour. Voice mail, SMS and caller ID became the bane of cold calling. But the internet and social media now seem to be ringing a death knell on the practice.

• WATS: The Wide Area Telephone Service (WATS) allowed companies to make low-cost and long distance calls in bulk. 

• Touch-tone dialling: Touch-tone dialling enabled callers to dial directly, eliminating buttons on telephones as well as the need for operators to route phone calls.

• Toll-free numbers: Toll-free numbers became an easy way to collect calls without charging the caller.

• PBX: Private branch exchanges (PBX) allowed companies to route calls within the organisation both manually and automatically.

• IVR: Interactive Voice Response (IVR) aided customer support purposes by allowing callers to interact with a computerised voice by typing and through voice recognition.

• Voice mail: Voicemails enabled prospects to screen and dodge pesky cold calls from persistent sales reps.

• SMS: SMS opened the floodgates for non-telephonic communication and easy broadcasting. 

• Caller ID: Caller ID made it harder for reps to breach their prospects’ screening efforts.

• The internet: By 1995, the internet enabled buyers to do their own research independent of sales reps and emails were democratized. 

• Social media: By the 2010s, social media created fertile ground for inbound marketing and sales mediums, while outbound methods like cold calling suffered.

• Robo-calling: Reps could pre-record messages and play them on cold calls with prospects.

Cold Calling Earns a Bad Name

Telemarketing has become a dirty word, and the reasons are valid. In 2021, 59.4 million Americans fell prey to phone scams, losing nearly $30 billion. Although phone-related scams seldom impact B2B buyers, the sheer number of individuals duped despite growing awareness is enough to keep them on their guard.

In tamer cases, customers easily lose patience with reps’ dogged cold calling attempts. Buyers are now accustomed to the quality customer experience offered by emergent technologies. In light of this, telemarketing, especially cold calling, have become exasperating for them. 

Governments have sprung to action, some as early as the 1990s, to put an end to malpractices by unprofessional salespersons or scammers masquerading as sales reps. Several countries have introduced regulations of varying degrees for consumer protection. 

Is Cold Calling Legal? 

The answer to this question differs depending on where it is asked. Although it may not be banned outright, a number of countries have put in place different regulatory safeguards on cold calling and telemarketing. Here are a few —

1. The US

Two pieces of legislation largely govern cold calling activities in the United States – the Telephone Consumer Protection Act (TCPA) and the Telemarketing Sales Rule (TSR). 

• The Telemarketing Sales Rule is enforced by the US Federal Trade Commission (FTC). It mandates callers to make disclosures of material information and prohibits them from calling customers on the Do Not Call Registry – a list of registered phone numbers protected from unsolicited phone calls from telemarketers. It bars sellers from hiding or faking their identity on caller ID and restricts calls made from predictive systems.

• The TCPA restricts pre-recorded calls or those made through automated phone equipment. It bans sellers from calling prospects after the 8 am to 9 pm window. Reps are also required to reveal their name and the company to the prospect. Sellers are prohibited from calling more than one line of the same business.

2. The UK

In the United Kingdom, the Privacy and Electronic Communications Regulations 2003 – derived from the EU’s ePrivacy Directives — regulate what are described as “direct marketing activities”. The law bears upon salespersons to prove that their customers wish to be contacted, and get their permission to do so.

When a rep performs a cold call, s/he is required to identify themselves and reveal their phone number and address, if asked. Like the US, the UK also has a Telephone Preference Service (TPS) operated by the Direct Marketing Association which can stop sellers from contacting registered individuals.

3. Europe

The European Union member states are governed by the EC Directive or the privacy Directive and the General Data Protection Regulation (GDPR). The GDPR disallows sellers from contacting buyers without their consent. It has the provision to fine violators 4% of their global turnover or 20 million euros, whichever is higher. The ePrivacy Directives applicable to EU countries are identical to the regulations in the UK.

4. Australia

Under the Australian Consumer Law, cold calling is regulated by the Do Not Call Register 2006. The register, like the one in the US and UK, enables consumers to list their phone numbers to restrict contact from telemarketers. 

It bars them from calling prospective buyers on Sundays and public holidays. Calls are allowed to be made between 9am and 8pm on weekdays and between 9am and 5pm on Saturdays.

5. India

In India, The Telecom Regulatory Authority of India (TRAI) allows customers to fully or partially block telemarketers. The Telecom Commercial Communications Customer Preference Regulations, 2018 regulates unsolicited commercial communication (UCC), or, cold calls. 

The regulation has given powers to telecom operators to allow customers to set the days and time frames within which they prefer to be contacted, whether through SMS or call. India’s telecom department levies a fine of up to Rs 10,000 per violation. The country also has a Do-Not-Disturb directory in place.

6. South America

In Argentina, a Do Not Call Registry is implemented by its National Directorate of Personal Data Protection which protects its registered numbers from cold calls. Brazil also has a Do Not Disturb list. 

What Are The Cold Calling Rules? How To Comply With The Laws?

Best practices aside, cold calling must be carried out bearing in mind the legislation around it in countries where your prospects are based. On an organizational level, your company must —

• Have resources like do not call registries for various countries. 
• Distribute copies of the different legal provisions to your sales workforce.
• Train your sales team to establish credibility right away without any misrepresentations.
• Train your sales reps to start calls with an introduction, move to the purpose of the call, and finally, into the sales pitch.
• Not encourage them to use misrepresentations to hook the prospects.

Here are some rules of thumb to follow for sales reps:

General Cold Calling Rules In The US

1. Stick to the numbers off the National Do Not Call Registry.
2. Look into each state’s law before dialing.
3. Share your identity, the company’s name, and the purpose of the call immediately.
4. Make all calls only within the 8 am to 9 pm time frame.
5. Do not ask for your prospect’s bank account details during the call.
6. Avoid sending pre-recorded messages.

General Cold Calling Rules In The UK

1. Do not call numbers registered on the Telephone Preference Service.
2. Identify yourself and the company you are representing.
3. Ensure you call prospects who you are permitted to contact.
4. Do not send automated messages without your customer’s consent.

General Cold Calling Rules In European Union

1. Only contact potential customers whose consent you have secured.
2. Look into the GDPR provisions accepted by member states where your prospects are based.
3. Make your identity known at the beginning of the call.

General Cold Calling Rules In Australia

1. Adhere to the Do Not Call Register.
2. On weekdays, make calls only between 9 am and 8 pm.
3. Call prospects between 9 am and 5 pm on Saturdays.

General Cold Calling Rules In India and South America

1. Ensure you’re calling a prospect within their chosen time frame.
2. Lay off Do Not Call and Do Not Disturb lists to avoid being penalized.

Is B2B Cold Calling and B2C Cold Calling Any Different?

Yes, B2B cold calling is very different from B2C cold calling, as both are governed by a different set of rules. 

According to the Telemarketing Sales Rule, you can cold call a business to sell your services. However, if this involves calling the personal number of an employee in the target company, it is illegal. 

Also, if the recipient of your B2B cold call explicitly states their disinterest, then the TSR rules apply. You’ll have to end the call and stop pursuing them in the future.

The TCPA prohibits B2B cold calls to mobile numbers using automated dialers. Since it is often difficult to accurately distinguish between a cell phone and an office number, you should always tread cautiously while cold calling using auto-dialers.

In Conclusion

Despite innovation in communication technology and growing concerns around data security, cold calling remains unmatched in the human touch it offers. So, by manoeuvring around the regulations on the practice in different countries, sales reps can continue to make the most out of it. 

Disclaimer: The information provided above is educational in nature. It should not be considered as legal advice. For actionable legal guidance, please consult an attorney.

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