Telemarketers navigate an increasingly complicated web of state laws and regulations. The industry has grown so confusing because telemarketing law is not uniform nationwide.
A telemarketer’s sales practices may comply with the laws of one state yet expose him to fines, penalties and criminal charges in another. All 50 states now have telemarketing laws to some extent, and they differ greatly in how they apply and enforce those laws.
So what in the name of capitalism are telemarketers to do? First, identify the legal obstacles that affect your business. Daily, we see clients asking for help in three areas: do-not-call list laws, cancellation laws and registration laws. Second, be proactive and formulate a plan before the attorney general’s office knocks on your door. Finally, educate your staff on the laws affecting your business.
One common problem with state DNC list laws is confusion by residential telephone subscribers. Many of these subscribers do not realize that placement on the list is telephone-number specific and applies only to residential numbers.
For example, a hypothetical man named Joe has two telephone lines in his home. One is for his home office and the other is the residential number he and his family use to call friends. Joe has his residential number placed on the DNC list. But his home office line cannot be placed on the list because it is used for business. Joe gets a call on his business line from a telemarketer, becomes annoyed and files a complaint with the attorney general’s office even though the telemarketer did not call Joe at the number on the DNC list.
This occurs often and must be dealt with through careful investigation and documentation. Residential subscribers place one number on the state list but file complaints when called at numbers not on the list. Many telemarketers struggle with addressing consumer complaints lodged with agencies. No two state agencies handle consumer complaints alike. This inconsistency provides constant frustration in telemarketing.
The key to addressing complaints lies in consistent preparation that lets the telemarketer produce evidence refuting invalid complaints. Telemarketers must maintain accurate DNC lists, consistently update the lists and then apply those lists to their leads. Also, coordination among multiple call centers is a must. The left hand must know what the right hand is doing. Finally, efficient record keeping frequently leads to quick resolutions of complaints at a minimum cost.
A second emerging issue in telemarketing law is registration with a state agency. Many telemarketers confuse DNC lists with registration. Registration in a state and subscribing to a state DNC list are separate issues. Subscribing to a state DNC list may not prevent fines and penalties for not registering in a particular state. Many states maintain a DNC list but don’t require registration. Some states require registration but have no laws regarding a DNC list.
Telemarketers doing business in a state where they are not registered risk administrative fines, civil liability and criminal charges. In Louisiana, telemarketers have been threatened with $10,000 fines for doing business in the state without registering. Such penalties may be imposed on the first violation, with no free pass for first-time offenders.
As with other areas of telemarketing law, different states apply various registration rules. Some states require a telemarketer to post a bond. Others require a telemarketer to divulge massive amounts of company information including bank account information. Most states require the telemarketer to pay an annual registration fee.
Registration is perhaps the most complicated area of telemarketing law because of the many exemptions. If a telemarketer qualifies for a registration exemption, he saves money that would have gone to registration fees and bonding. It is critical that telemarketers become familiar with the various state registration laws in order to claim an exemption if one is applicable.
State cancellation laws are the third hot legal topic. Most states have laws pertaining to a residential buyer’s right to cancel a purchase made over the telephone within a specified period of time and a seller’s obligation to advise that buyer of such rights. These laws and regulations apply to residential buyers but not to businesses. Increasingly, states like California and New York are enforcing their stringent cancellation laws through fines, penalties and voided transactions.
The manner in which a seller must advise a buyer of cancellation laws varies from state to state. Some require the seller to make an oral notification during the sales call while other states require a written notification to be sent with the goods purchased. Because many states have different cancellation and notification laws, it is increasingly difficult to comply with the laws of every state.
Becoming familiar with state cancellation laws benefits any telemarketer. First and foremost, telemarketers can protect themselves against the cancellation of otherwise valid sales. Also, telemarketers can reduce consumer confusion, leading to more satisfied customers. And such a review helps limit consumer complaints and subsequent prosecutorial actions by various state governments. Such actions can result in fines and penalties upward of $10,000.
Telemarketers must not put their heads in the sand while state agencies arbitrarily dole out punishment for supposed violations. A careful, reasoned and proactive approach makes the best business sense.