Teleservices Legislation Front and Center in 2005

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After three years of a seemingly endless stream of new rules and regulations, many in teleservices were looking forward to a détente of sorts this year. Problem is, no one told the state legislators.


The introduction of bills in 2005 affecting the industry continues at about the same pace as in 2004. The types of bills, however, have changed. There are still many bills aimed at reducing overseas outsourcing, but many have additional, and more costly, provisions.


Disclosures appear to be at the forefront of issues for many legislators while "traditional" areas of interest, like existing business relationships and calling time restrictions, remain the subject of much activity. This year also has seen a spate of regulations to restrict charitable and political calls, areas previously considered off-limits.


No fewer than 27 bills in 19 states were introduced in 2004 seeking "location disclosures" and financial data privacy protection in the context of offshore call centers. Though none of these bills passed in 2004, legislative activity on these issues has stayed high. These bills typically require call center representatives to disclose where they are physically located and also require specific permission from a consumer before that consumer's private financial information is shared with an overseas entity.


Of the many location-disclosure bills introduced in 2005, two (Florida Senate Bill 614 and Oregon House Bill 3320) also require re-routing of calls from foreign call centers to domestic agents at the request of the consumer. Other than doubling the costs associated with handling such a call, it is hard to determine the specific benefits sought by such a rule. However, it seems clear that such a rule would have a chilling effect on the use of overseas operators.


Another trend in disclosures would let consumers "pierce the veil" of the call center and require it to provide specific information about the center itself, its employees and the seller that hired it. Connecticut House Bill 5202 requires any paid call center telephone sales rep to provide upon request the name, business address and telephone number of the supervisor in charge of the caller. Minnesota House Bill 471 and West Virginia House Bill 2207 require a call center sales rep to provide, upon the request of the consumer, the name and location of the employer of the person with whom the consumer is speaking. These bills also give the calling (or called) consumer the right to speak to a "qualified employee" of the "company or government agency with whom the person is doing business" (i.e., the entity that hired the call center).


On the do-not-call front, many states seek new ways to further restrict the activities of telemarketers. Florida House Bill 833 and Missouri House Bill 89 aim to let businesses add their numbers to the state DNC list. Iowa and Rhode Island have bills pending to create state-run DNC lists, with each bill seeking to restrict the existing business relationship exemption well beyond the current federal standard. New York, which adopted the federal DNC registry, nonetheless also seeks to make its EBR restrictions more onerous than the federal rules (see Assembly Bill 3581).


Legislators have been particularly active in New York, where Assembly Bill 581 and Senate Bill 2423 would require that any call made by a predictive dialer "immediately" connect to a live sales agent. Such "immediate" connection, of course, would render the use of predictive dialers impossible. New York Senate Bill 2244 seeks to create a "dinner time" rule, restricting any calls into New York from 5 to 7 p.m. New York also has proposed making it mandatory for telemarketers to proactively inquire whether the called consumer wishes to join the company's in-house DNC list (Assembly Bill 636 and Senate Bill 248).


One of the most popular topics for legislators is the regulation of political calls, focusing mainly on those delivered as prerecorded messages (16 bills introduced in 2005). This fit of political self-flagellation is in response to the wave of complaints generated from the last election cycle. Despite the sheer number of such bills, however, it is doubtful that any will make their way out of their initial committee assignments.


Another area drawing attention (eight bills introduced) is the regulation of charities. These bills aim to combat the perception that nonprofit telemarketing fundraisers keep an unacceptably high percentage of contributions, with little left over for the charitable organization. Iowa Senate Bill 31 and House Bill 110 would make calls by third-party entities hired by nonprofits subject to a state-run DNC registry, a requirement that goes beyond similar federal rules.


Despite the continued attention of legislators, the good news for teleservices is that the industry has proved remarkably resilient even amid the onslaught of new rules and regulations. The most important factor is the growing sophistication of teleservices companies in quickly and increasingly proactively addressing new regulatory issues. With DNC compliance technologies, centralized compliance procedures, better sources of regulatory information and third-party compliance audits, the industry is better equipped than ever at recognizing new issues and implementing new procedures. Perhaps more importantly, though legislators never seem to run out of ways to regulate teleservices, the industry is more prepared and motivated than ever to mobilize to protect its interests.


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