Wisconsin Businesses Sue to Rein in State DNC Law

A group of trade associations, businesses and individuals filed a legal challenge to Wisconsin's no-call law that takes to task the state's unusual method of assessing fees for telemarketer registration.

The groups claim that Wisconsin's do-not-call law was intended to let consumers block calls from out-of-state telemarketing agencies. They deny they are trying to overturn Wisconsin's DNC law and say they are asking the state courts to throw out the parts of the law that could affect small business.

According to the lawsuit, the state Department of Agriculture, Trade and Consumer Protection, which administers the DNC list, overstepped its authority when it wrote the administrative rules used to enforce the law.

A spokesman for the department declined comment, and state Sen. Jon Erpenbach, the lawmaker who supported the DNC law, did not immediately return calls for comment.

Most states charge flat fees for telemarketer registration. In contrast, Wisconsin charges an initial fee of $700 and $500 for each subsequent year, plus an annual fee of $75 per telephone line used in telemarketing if the business uses four or more outbound lines.

Telemarketers also must pay $25 for a digital or CD-ROM version of the no-call list, or $1,000 for a hard copy. Total fees are capped at $20,000.

The fee structure is unfairly burdensome to individuals and small businesses that engage in outbound telemarketing, the lawsuit claimed. Furthermore, the fee system collects money for the cost of maintaining and enforcing the list, while the state's DNC law allows fees to be used only for list maintenance, according to the lawsuit.

“It doesn't accurately reflect what's set forth in the statute,” said Mike Wittenwyler, a Madison, WI, attorney representing the plaintiffs.

Wisconsin has collected $1.8 million in registration fees, the lawsuit said. The state originally projected that less than $500,000 would be needed for the list launch.

The department's rules also charge registration fees to individuals who make telemarketing calls on their own, whereas the statute limits the fee to companies that employ telemarketers or pay others to do their telemarketing for them, the suit claimed.

The lawsuit does not single out the state's practice of charging telemarketers by the phone line, a practice that is required by the state DNC law. However, legal observers in telemarketing have cited the Wisconsin fee structure as unusual and burdensome.

Notably, the local groups suing the state differentiate themselves from “telemarketers,” arguing in a frequently-asked-questions list published online by the Wisconsin Realtors Association that their calls are “legitimate business calls,” not telemarketing calls. The state law makes “criminals out of non-telemarketing individuals and businesses,” the groups said.

Along with targeting Wisconsin's fee structure, the lawsuit claims that the department unfairly narrowed the definition of nonprofit solicitation and pre-existing business relationship, both of which are exempt under the state law.

Nonprofits that are subject to state sales and federal income tax laws do not enjoy an exemption, according to the suit. The pre-existing relationship definition is limited to calls pertaining to the type of service the customer already receives, so a local telephone provider couldn't market long-distance or broadband services to its customers.

The lawsuit makes other allegations of inconsistencies between the department rules and the law, including the application of the DNC list to home-based businesses. The law doesn't apply the DNC list to homes used for both residential and business purposes, but the rules do, according to the suit.

The rules also provide for citizens to file private lawsuits over violations of the DNC list, which is not contemplated in the law, the lawsuit said.

Plaintiffs in the lawsuit include the Wisconsin Realtors Association; the Wisconsin Newspaper Association; Wisconsin Association of Health Underwriters; Bliss Communications, a newspaper publisher; Mary Ripp, a home-based saleswoman for Mary Kay in Madison; Edward Chamberlain, a Racine, WI-based real estate broker; and Paul Bunczak, a Wausau, WI, auctioneer.

Wisconsin's no-call law took effect Jan. 1. About 1.1 million consumers registered, and the list has generated about 2,500 complaints since taking effect.

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