New Jersey 'EBR' Not so EZ

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As most teleservices professionals know, the New Jersey Division of Consumer Affairs released a new set of telemarketing regulations May 17. Along with a host of changes regarding telemarketer registration and do-not-call issues, the state introduced a unique (to say the least) set of rules governing what heretofore generally has been known as "established business relationship" rules.


Rather than work within the framework that has long been established at the state and federal levels when it comes to established (or existing) business relationships, New Jersey decided to go its own way. The state created separate definitions for the terms "continuing services," "established customer" and "existing customer," each of which plays a role in New Jersey's complex business relationship rules. Perhaps the most frequently asked question in the past few months has been: How exactly do these new rules work?


It takes a little analysis, but New Jersey's rules can be deciphered. To fully understand them, however, it is helpful to compare them with the federal "established business relationship" rules.


Under New Jersey regulations, an entity can make a telemarketing sales call to "existing customers" (defined as someone who either owes a seller money for merchandise purchased or who has a contractual relationship with the seller with outstanding obligations) independent of whether they are on the New Jersey DNC list. If the entity does nothing but offer credit to consumers (i.e., a credit card company), there is a special rule that enables it to call its "existing customers" up to 18 months after the date of the last credit transaction by the consumer or until the consumer satisfies the credit obligation, whichever is later.


Therefore, the credit card company always can call as long as there is a balance on the consumer's card (or account), and has 18 months from the date of the last credit transaction to call, even if the consumer pays off the account balance during the 18-month period. Note, however, that once the agreement to extend credit is terminated or canceled and the credit obligation is paid off, no more DNC exemption is available.


If, however, an "existing customer" asks to be put on an entity's in-house DNC list, the entity may not call them, despite the "existing customer" relationship. In other words, the in-house DNC rules trump the "existing customer" rules. Also, the "existing customer" exemption does not extend to calls made to existing customers of an entity that is merely affiliated with your company.


How does this compare with the federal rules? The federal established business relationship rules give a company 18 months to call from the date of the last financial transaction between the company and its customer. Some of these relationships will be "existing customers" as defined under New Jersey rules, but many will not be (i.e., the customer paid the company money, the company delivered the good/service and there is no outstanding payment or contractual obligation.) You can call "existing customers" in New Jersey only while a payment or contract obligation is pending; there is nothing comparable to the 18-month window of opportunity that the federal rules allow (except in the limited case of credit card companies.)


The federal rules therefore provide a wider opportunity for companies to call consumers. In addition, the federal rules let affiliated entities take advantage of the EBR exemption (but only to the extent that the consumer called would reasonably expect to receive calls from the affiliated entity). New Jersey's regulations give no such leeway.


An entity can call an "established customer" to whom it is providing "continuing services," irrespective of whether the person in question is on the New Jersey state DNC list or even the entity's in-house list (but only if the entity is calling about the service itself or other services directly related to the service.)


A "continuing service" is defined under the New Jersey regulations as the "performance of work, the provision of medical care or other professional services or the affording of access to a utility, typically provided to an established customer on a recurring basis." Though the New Jersey regulations do not provide a complete set of examples of what exactly constitutes a "continuing service," and this term will have to be fleshed out over time, the key term is "recurring." Any service that does not fit comfortably within this term will not fit within the "established customer" exemption.


Why this blanket exemption, covering both state and in-house DNC lists? Because a call to an "established customer" regarding the continuing service you provide (and only regarding the continuing service -- otherwise, the exemption does not apply) is not considered a telemarketing sales call in the first place. Thus, these calls do not even fall within the scope of the regulations at all.


The concept of "continuing service" does not exist at the federal level, so no direct comparison can be made between the New Jersey and federal rules in this regard. However, once again, the New Jersey rules are more limiting, in both scope and time frame, than their federal counterpart. The federal rules merely require a financial transaction of some sort between the consumer and the seller in order for the established business relationship exemption to come into play. There is no requirement under federal law for the financial transaction to be of a "continuing" sort.


The federal exemption therefore includes all "continuing services" (as that term is defined in New Jersey), plus any other type of service (continuous or otherwise), and provides an 18-month window of opportunity from the date of the last transaction. New Jersey, on the other hand, does not consider calls pursuant to an established, continuous relationship to be a telemarketing sales call at all, and thus they do not fall within the ambit of the New Jersey regulations.


However, this lack of coverage applies only while the continuing relationship is in fact ongoing; once the relationship is terminated or canceled, all calls must stop, and there is no 18-month period following this termination within which to call.


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