A Monthly Review of Issues Affecting Commercial Telemarketing by Copilevitz & Canter, LLC, Attorneys at Law

September, 2001

TCPA -UNSOLICITED FAXING
As you know, the Telephone Consumer Protection Act applies restrictions to the delivery of faxes to telephone lines. You may not know, however, that the restrictions applicable to faxing are more rigorous than those applied to delivery of recordings. First, fax restrictions apply to business and residential recipients, while the recording laws apply only to calls to residences. Second, recorded calls are allowed in four circumstances while faxes containing "unsolicited advertisements" are not allowed in any circumstance. Plaintiffs attorneys continue to file class actions against senders of unsolicited faxes.

CALIFORNIA
California Assembly Bill 870 has been amended to delete language concerning prerecorded messages. The Bill now would prohibit any person from using a predictive dialer unless a live telemarketer is available for the person called. If passed, the law would be effective on July 1, 2002. The Bill would eliminate one of the largest gains in efficiency created by a predictive dialer and it would be very wise if you contacted your representative in the State of California to oppose this Bill. Although California is one of the first states to consider laws regulating predictive dialers, it is likely that other states will address this issue in the future.

The California Senate is considering a bill which would create a state "do-not-call" list to be implemented no later than January 1, 2003. The bill allows the state to charge consumers a fee not to exceed $1 every three years to sign onto the list. Telemarketers will be charged on a sliding scale based on the number of employees to access the California list. The bill would exempt calls to consumers with whom the telemarketer has an established business relationship and calls placed by businesses which employ no more than five full or part time employees calling persons within 50 miles of the location of the small business.

The California Senate is considering a bill which would implement the privacy provisions of Gramm-Leach Bliley.

California has passed a law regulating discount buying organizations and telemarketing. A discount buying organization is now required to disclose to members that it already has a consumer's credit card information when telemarketing that consumer for additional products or services.

INDIANA
The Attorney General of Indiana has proposed regulations to implement the state's "do-not-call" list law. Indiana is aggressively marketing its list to consumers. The law goes into effect on January 1, 2002.

KANSAS
The Attorney General of Kansas is attempting to enforce it's "dead time" law aimed at predictive dialers against a Kansas company. Although the dialer automatically hangs up within five seconds, the consumer in this instance held the line for approximately one minute and now the Attorney General is claiming that the dialer was operated in violation of Kansas law allowing only a five second gap. Kansas is one of the first states to adopt such a law and to my knowledge the first state to attempt to enforce it. Most recently, the conversation I had with a Kansas Assistant Attorney General indicated that Kansas may enforce this statute to prohibit any abandonment rate, at all. His interpretation was that the statute required that the predictive dialer either play a recording or connect the consumer with a live operator within five seconds at the beginning of the call and that disconnecting the line was not a legal option. Obviously,

this interpretation would make nearly every dialer calling into Kansas illegal. Please contact me at your convenience to discuss compliance with this law and this radical interpretation.

The Kansas Corporation Commission has adopted a regulation which requires local telephone companies and long distance companies to collectively develop methods of informing consumers of Kansas and federal laws concerning unsolicited telephone calls. The telephone companies are required to inform consumers, of how to register for the Direct Marketing Associations Telephone Preference Service.

MISSOURI
The State of Missouri has continued to aggressively enforce it's state "do-not-call" list law. In addition to enforcing the law, Missouri has, in several instances, pressured companies to enter into assurances of voluntary compliance which impose even harsher penalties than the "up to $5,000 per violation" language found in the statute. In this situation, it would be very wise to purchase and comply with the list and, if challenged, carefully review the terms of any settlement document. The Missouri Attorney General continues to pressure companies to enter into such settlements quickly so that he can announce the monetary penalties at press conferences. Missouri, New York, and Tennessee are all aggressively enforcing their "do-not-call" list laws at this time.

NEW YORK
The State of New York has passed a law appropriating $1.2 billion to administer it's state "do-not-call" list.

NORTH CAROLINA
The North Carolina House is considering a new bill to regulate mortgage brokers. If your telemarketing campaigns involve lead generation for mortgage companies or you are a mortgage company generating these leads yourself, it is important to review state law concerning what you are allowed to say in your initial telephone calls to consumers.

TENNESSEE
Regulators in Tennessee continue to insist that businesses which hire telemarketers to place their calls are required to purchase the Tennessee list even if their third-party telemarketer already purchases the list. So far, no entity has challenged this interpretation in court.

UTAH
Utah has amended its regulations concerning telemarketers to require that an application for registration include certain background information regarding the applicant, telephone numbers used and description of the goods and services subject to the telephone solicitation. As I am sure you know by now, 26 Attorneys General reached a multi-million dollar settlement with Publishers Clearinghouse resolving allegations of deception with regard to sweepstakes and magazine sales. Although this settlement dealt with a direct mail firm, businesses marketing magazines using sweepstakes or other prizes by telephone should review their campaigns to ensure compliance with state and federal consumer protection laws.