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

November, 2001

DIRECT DEBITING OF CONSUMER CHECKING ACCOUNTS
We have completed a 50 state survey of the laws applicable to direct debiting of consumer depository accounts (e.g., "phone check"). As you know, there are certain authorization requirements found both in federal and state law to ensure that the consumer actually consented to debiting his or her account. This study sets forth those requirements at the federal level as well as each state which differs from the federal standard. Please contact me if you would like more information regarding this topic.

FEDERAL TRADE COMMISSION
FTC Chairman, Tim Muris, recently gave a speech at a Direct Marketing Association conference announcing that the Commission would attempt to implement a national "do-not-call" list to replace state "do-not-call" lists in the future. It is uncertain whether this would ever occur given the state bureaucracies already in place, but it does indicate that the FTC is aware of some of the difficulties in complying with the vast array of state laws. The Chairman's statement was also important because it reiterated the position that the federal law is applicable to interstate telephone calls and that the lack of a national list under federal law creates loopholes in applicability of state lists. Please contact me if you would like more information concerning the applicability of federal and state laws to interstate and intrastate telephone calls.

The FTC is also beginning a comprehensive investigation of telemarketing which involves free trials for some membership services. This could signal an increase of scrutiny on "negative option" plans.

Seven Attorneys General as well as the Federal Trade Commission have filed enforcement actions involving plans selling advanced fee loans, credit card protection and low cost office supplies.

On November 8, the FTC will hold a public workshop on marketing practice including telemarketing in the office and cleaning supply industry. Although the Telemarketing Sales Rule generally excludes business-to-business transactions, it makes an exception for the sale of office supplies due to the prevalent printer cartridge scams and similar types of illegal activity. It is doubtful that the Federal Trade Commission will expand its review of business-to-business telemarketing, however I will track the results of this conference.

The FTC has filed a complaint against a company which allegedly offered consumers with poor credit histories a high credit limit MasterCard or Visa Gold Card. The complaint alleges that the card received by consumers allowed them to purchase items only from defendant's Websites or catalogues. Advance fee credit card programs, membership programs, and programs which are represented to improve the purchaser's credit history are all subject to increased scrutiny by regulatory agencies.

THIRD-PARTY TELEMARKETING LISTS
As you know, the FCC has specifically ruled that the TCPA does not require you to accept a "do-not-call" request delivered to you by a third party (not the consumer). Many of my clients have received less than legitimate demands that they purchase and place all of the sender's names on the telemarketer's "do-not-call" list. There is no legal requirement that you do so, according to the FCC. Recently, an email to one of the publishers of such a list, well known in anti-telemarketing circles, was mistakenly sent to this firm complaining about how the company solicited the consumer to add her name to its "do-not-call" list (for a fee, of course).

ARKANSAS
The Arkansas Attorney General has filed suit against a vacation company from Missouri concerning violations of the state's "do-not-call" list law.

CALIFORNIA
The California Attorney General has settled a complaint against a wireless company alleging that the defendant failed to disclose the consumer's statutory right to cancel a phone contract without early termination penalties. The settlement involved $999,000 in civil penalties plus restitution.

COLORADO
Colorado has published regulations implementing Colorado's "do-not-call" list law.

CONNECTICUT
The State of Connecticut has reached a settlement with Quest Communications concerning allegations of "slamming." Quest was required to pay $1.1 million to the state for penalties and restitution.

KANSAS
A Legislator in the State of Kansas has announced plans to model a bill in the next session on the Missouri "do-not-call" list law currently in force.

MINNESOTA
The Minnesota Attorney General's lawsuit against Fleet Mortgage continues after the court refused to dismiss charges that the company violated state and federal laws by sharing customers' account numbers with telemarketers. The telemarketers sold a negative option membership campaign.

MISSOURI
Missouri has changed the price of its "do-not-call" list from $25 per quarter to $25 per quarter per Missouri area code. Currently there are three area codes in the state of Missouri. Public comments are allowed on the proposed change until November 15. Please contact me if you would like to comment in favor or against the proposed change.

OREGON
The State of Oregon has filed suit against a Portland auto glass repair company concerning violations of the state "do-not-call" list law.

PENNSYLVANIA
The State of Pennsylvania is considering a bill which would regulate certain types of political polling via telephone. The bill would prohibit using telephone calls for political purposes which state or imply that the caller represents a nonexistent person or organization and prevents any willfully false, fraudulent or misleading question in these types of polls, as well.

TEXAS
Texas has obtained a judgment against a broadcast fax firm after alleging that the company illegally sent unsolicited faxes to 500,000 fax machines. The company is now prohibited from sending advertisements without the express consent of the recipient and must pay nearly $500,000 in fines and attorney's fees.

VERMONT
The State of Vermont has reached a settlement with a marketing company for timeshare tours concerning an offer of "four free airline tickets." The Attorney General alleged that the tickets were not really free because several limitations applied to their use.

The authors make every attempt to provide current, accurate information, but Telemarketing ConnectionS® is not intended to be a substitute for legal counsel, and readers should not use it in lieu of obtaining knowledgeable legal, or other professional, counsel expert in the field of commercial telemarketing law. References in Telemarketing ConnectionS® do not constitute endorsement by Copilevitz & Canter, L.L.C. or Telemarketing ConnectionS®. November 1, 2001, Copilevitz & Canter, L.L.C.