Telemarketing Restrictions Increase at State Level

As we came down to the wire in the 1998 election cycle, candidates from both parties were busy criticizing incumbents for their participation in a “do-nothing” Congress. Whether it was President Clinton's troubles or other major issues that dominated lawmakers attention, many legislators complained that Congress accomplished less in 1998 than in any prior year in history.

That is why it is so interesting to look at state legislatures, where bills are being introduced and passed in record numbers. As has been noted previously in this column, state legislatures have become the primary problem solvers for the majority of American people. State legislatures are closer to the people and thus closer to the problems. It is arguably easier and less intimidating for most people to voice their concerns to their local representatives than to their Washington counterparts.

With that background, it is not surprising that state legislatures also lead the charge for increased regulation of the telemarketing industry. No fewer than five primary areas of telemarketing regulation have emerged at the state level in recent years. Legislation requiring the registration and bonding of telemarketing firms; restricting the hours in which calls to consumers may be made; establishing state-run Do-Not-Call lists; prohibiting the blocking of Caller-ID and requiring additional disclosures, including a requirement that telemarketers ask consumers for their permission to make the telephone solicitation, have been introduced in a majority of states across the country. Already we have seen bills proposing four of these major regulatory initiatives, prefiled for introduction in 1999.

Texas Considers More Telemarketing Statutes

Perhaps the most important state for the industry to watch in 1999 will be Texas. In 1998, the Speaker of the Texas House of Representatives instructed the House Committee on Business and Industry to conduct a study of the telemarketing industry in the State and asked the Committee to make recommendations for necessary amendments or additions to the Texas telemarketing statutes. The Committee held hearings during the year to gather information on the industry, and was preparing to issue its final report at our deadline.

While it is unclear what the report may recommend, it is clear that the primary issues being studied by the Committee were: the number of exemption categories in the state's registration and bonding law, the possibility of establishing a state-run Do-Not-Call list, and additional penalties for telemarketing fraud. Given that the report to be issued was the result of a directive from the Speaker of the House, it is unlikely that the report will simply disappear under a mountain of legislative paper. It is highly likely that some legislative initiatives will be proposed in Texas in 1999.

Other States Also Add Restrictions

If Texas is the most important state to watch, it appears that Massachusetts may be a close second. By mid-December there were already eight telemarketing related bills prefiled with the legislature. These proposals include nearly every type of telemarketing legislation seen in other states, such as legislation seeking registration and bonding of telemarketers, prohibiting the blocking of caller-ID and creating additional safeguards against unfair and deceptive acts and practices, etc. The Massachusetts legislature will clearly have their hands full with telemarketing during this two-year session.

A number of other states have been busy pre-filing telemarketing legislation as well. Montana is proposing registration and bonding of telemarketers. Mississippi is proposing criminal penalties for repeat offenders of the state's law prohibiting the use of the telephone in any manner with the intent to abuse, threaten or harass a consumer. Missouri is proposing permission to continue legislation along with a prohibition on blocking caller-ID. Tennessee may be contemplating introducing legislation to create a state run Do-Not-Call list.

Keep in mind, all of these pre-filed bills and legislative maneuverings have taken place more than a month before the first legislative session convenes. This kind of pre-session activity should serve as an early warning for the industry that 1999 may be a very active year. I don't think telemarketers can count on their state legislatures getting bogged down in any of the partisan gridlock that many federal legislators have complained about. Given the relatively small number of days most state legislatures are in session, the majority of state members are so focused on addressing the concerns of their constituents that they have no time for gridlock.

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