How to Maneuver Maze of State, Federal Laws

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As a business operating within the teleservices industry, one of the most vexatious problems with achieving compliance with state and federal laws is the vast number of laws that regulate the many aspects of your business. Not only must one consider laws for each state from which and into which calls are placed, often a given state will apply more than one law to the calling activity. One example of this problem is how state and federal laws treat monitoring or recording of telemarketing conversations for quality control purposes.


The laws regulating call monitoring are not to be found in the Federal Trade Commission's Telemarketing Sales Rule, or the Federal Communications Commission's Telephone Consumer Protection Act of 1991, or any of the states' telemarketing statutes. Rather, the source of regulation for this ubiquitous industry activity is federal and state criminal wiretapping statutes that regulate commercial monitoring as an afterthought, at most. The result is an imperfect fit of laws designed to regulate a specific activity, i.e. how law enforcement can use wiretapping to investigate crime, to another, almost altogether different, activity, commercial monitoring for quality control purposes. Regretfully, it is you that must bear the burden of this imperfect fit by determining how you will choose to comply when the correct answer is somewhat uncertain.


The Federal statute is uncomplicated and relatively easy to satisfy as is usual in this type of analysis. The complexity of this problem arises when the many states' laws interact with that Federal statute in an outbound campaign directed at several states' citizens or an inbound call center receiving calls from many states. Though usually based on the Federal statute, each state is free to impose its own more restrictive provisions on this activity, and several have done just that.


<subhed>Federal Law


The Federal statute prohibits interception of any wire communication or the use of any electronic, mechanical or other device to intercept any oral communication except with the prior consent of at least one of the parties to the conversation. Monitoring of a conversation, or recording it for later analysis with the telemarketer and his or her supervisor, clearly constitutes interception of that conversation within the meaning of the statute.


Proof of the how this statute doesn't quite fit commercial monitoring, however, can be found in the case law interpreting the statute which, almost exclusively, involves the use of wiretaps in criminal investigations. The cases offer little guidance of how commercial monitoring will be treated by the courts.


One applicable rule is clear from the cases, however. Consent to monitoring of any sort can effectively be given in advance and does not necessarily have to be express, rather, it can be implied from the circumstances of the call. Thus, your center can obtain consent from all your calling representatives in advance, preferably in writing at the beginning of their employment, and a party to a conversation is deemed to have consented to monitoring if that party knows about the monitoring and proceeds with the conversation despite that knowledge.


Even if such consent was not obtained at the beginning of employment, such consent should be now obtained from all employees who conduct calls. If a dispute or litigation has already arisen, the statute contains some exemptions that could protect you.


For our purposes, the final important aspect of the federal statute is an exemption it contains for a monitoring using a device defined as a "telephone instrument, equipment or facility, or any component thereof" furnished by a common carrier in the ordinary course of business and used in the ordinary course of business by the device's owner. A recent federal appellate decision ruled that the device could be furnished by a common carrier (e.g. AT&T, Southwestern Bell, etc.) or merely offered by any common carrier but actually purchased from another type of business. This exemption is important for two reasons already briefly mentioned. First, it could be applicable to protect you in any dispute that may have already arisen if you did not obtain consent from your employees. Second, it is usually included in state statutes, which can be more restrictive than the federal statute.


<subhed>State Law


The more difficult compliance problems arise when state laws are considered. While the majority of state statutes are, for our purposes, identical to the Federal statute, a minority differs in an important way. These states require that both or all parties to a conversation consent to monitoring and provide for civil fines and/or penalties if this consent is not obtained.


The dilemma for a call center with nationwide contact (inbound or outbound) arises in determining how this consent should be obtained. One option for outbound call centers is to include a statement in the introduction of the script, something like "Hello. This is Bill Raney calling from Copilevitz and Canter about our long distance service. This call may be monitored for quality control purposes. . ." This scripting could be included in all calls, or calls placed to citizens of those states only. Either way, you bear the burden of devoting valuable time to this disclosure at the time most crucial to making your sale -- the very first part of the call. If you decide to make the disclosure in those 11 states only, you must have two scripts and train your callers accordingly.


Similarly, an inbound center can either address the problem by disclosing to every inbound call -- perhaps using a recorded message -- the potential for monitoring, or address the technical problem of making this disclosure to calls received from those states only. While the diverted time at the beginning of the presentation is not of such crucial concern as in outbound calling, the cost of the time, usually on a toll-free number, can be substantial.


According to a major bank, the 10 seconds devoted to disclosure, multiplied by his toll free rate and the number of incoming calls per year, resulted in a final cost to his business of over $90,000 per year.


However, it is perhaps a needless expenditure. There are several reasons why commercial call monitoring is exempt from the state statutes requiring both parties' consent. Most importantly is the exemption found in the Federal statute detailed above. This exemption, or variations of it, is found in 10 of the 11 states that cause this compliance problem.


Other exemptions can apply and can be found both in the text of the state statutes, as well as in some states' case law, which can provide more guidance. Your legal counsel can be of more assistance.


<I>William E. Raney is an attorney in the Kansas City office of Copilevitz and Canter, P.C.<I>
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