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Legislation Could Bring Restrictions

Though almost all of the state legislatures have adjourned for the year and Congress is winding down, two pieces of legislation need your attention. One law is at the state level, and the other bill has passed the House of Representatives unanimously and is now before the Senate. Each could radically affect how you do business.

First, I’ll address the law that has already passed. You will need to incorporate it into your compliance efforts.

Gov. James B. Hunt Jr. of North Carolina signed House Bill 1493 on Aug. 2 with the stated purpose of balancing consumers’ privacy rights against the free-speech rights of legitimate telemarketers. It remains to be seen whether the state’s novel approach will be a good balance. While many states often duplicate laws found in other states or in federal law, North Carolina has taken a different tack.

The do-not-call portion of the law mirrors the DNC provisions found in the Telephone Consumer Protection Act. Telemarketers are forbidden from contacting any residential subscriber who has “communicated to that telephone solicitor a desire to be taken off the contact list of that solicitor.”

The unique part of the law is that it creates a private cause of action for violation of its provisions with damages of $500 for each violation. Prevailing plaintiffs can be awarded reasonable attorneys’ fees. The law also provides that prevailing defendants can obtain attorneys’ fees if a nonsuccessful plaintiff “knew or should have known” that the plaintiff’s action was malicious or frivolous.

The TCPA has been enforced in small-claims courts nationwide largely by individual consumers, often not represented by counsel. This attorneys’ fees provision raises the stakes in North Carolina. The fee must be “reasonable,” which probably means that it must, to some extent, be proportional to the amount of the total award. But $500 per call is clearly at the low end of potential damages under this law.

At the same time, the law gives some protections to legitimate businesses that try to comply by giving telemarketers significant protection from shakedowns by frivolous plaintiffs. No longer is facing a frivolous suit a lose-lose proposition in North Carolina. Under the TCPA, a defendant is often faced with the choice of settling with the frivolous plaintiff or paying a greater sum to defense counsel to fight him, no matter what the merits of the case.

In another novel provision, the new North Carolina law prohibits continuing a telephone solicitation if the consumer “does not consent” to the call. This provision seems to add North Carolina to the ranks of “immediate disconnect” states rather than “permission to continue” states, but the law’s language is ambiguous.

The law became effective Oct. 1, 2000.

Next, you should be aware of a bill being considered by the Senate. If passed, it will have nationwide scope.

The House recently passed the Know Your Caller Act of 2000 by 420-0. The act would make it unlawful to interfere with or circumvent any caller-identification services if the caller can provide such information. The law states that if the equipment is incapable of transmitting this information it is not illegal to fail to transmit caller-ID information.

The act calls for the Federal Communications Commission to prescribe regulations implementing the subsection within six months of passage of the final law and provides for a private right of action similar to that set forth in the TCPA.

I have two concerns about this bill. First, its passage would bring to the fore the issue of whether T1 lines or other direct connections are capable of transmitting caller-ID information. If the FCC determines that these direct connections can transmit this information, it would be illegal on a nationwide basis to place calls that do not communicate a telephone number to consumer caller-ID devices. It is uncertain whether the law would require older telemarketing equipment to be replaced. However, that should be a concern.

A second issue is the wave of TCPA-like suits that will result if the law is enacted. Many consumers do not know what a T1 line is. They might see “unavailable” on their caller-ID registers, hear about this law on the news and sue in small-claims court. Regardless of the result of the first concern, telemarketers will be forced to sort out the issue in innumerable small-claims cases – an expensive and time-consuming proposition.

If these concerns worry you, it would be wise to contact your senator.

• William Raney is an attorney at Copilevitz and Canter PC, Kansas City, MO.

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