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

June, 2002

CALLER ID DEVICES
A recent trade journal article focused on leaving text messages to consumer caller i.d. devices. Unnamed privacy advocates have alleged that this violates the TCPA's prohibition on prerecorded advertisements. Although this argument is probably invalid, this sales tactic will not escape regulation by the Federal Trade Commission (FTC) or the Federal Communications Commission (FCC) or other state or federal regulators for long.

FEDERAL TRADE COMMISSION
The FTC has proposed rules concerning purchase of the national "do-not-call" list. The FTC's proposal is for a $12 fee per year per area code with a maximum fee per business of $3,000. The list will be fully funded by purchasers of the list and will not charge consumers to add their name to the list. This proposal was silent as to the effect, if any, the national list will have on state lists.

On another note, this firm's senior partner, Errol Copilevitz, will speak at the FTC's forum next week on the revision to the Telemarketing Sales Rule (TSR). Errol will be focusing on the revision's potential effect on free speech.

LONG DISTANCE SETTLEMENT
Twenty three Attorney's General have reached a settlement with three major long distance carriers regarding how much their services were represented to cost. The suit alleged that the quoted price did not include monthly access charges, etc., and only stated the "cents per minute" rate. Any time a consumer offer is made, the price quoted needs to disclose all applicable fees including shipping and handling, etc. Failure to include this type of information in a consumer transaction will create liability.

ARIZONA
The Arizona Senate has given preliminary approval to a "do-not-call" list law.

CALIFORNIA
Two bills have been proposed in California which would prohibit marketers from automatically billing consumers after a free trial period (opt out). This legislation is an example of the increasing scrutiny on consumer's account information including credit card numbers.

The California Attorney General has filed comments in response to the Public Utilities Commission (PUC) setting the proposed abandonment rate at three percent until January 2003, and one percent thereafter. The Attorney General has urged that the abandonment rate should be zero and that any abandonment undermines the statute's "ultimate objective or protecting California's privacy rights and the right to feel safe and secure." The PUC has indicated that it will apply this abandonment rate to any call received in the state. Therefore, it is extremely important that you review your dialing technology to ensure compliance. This issue will be addressed by the FTC on a national level pursuant to its revision of the TSR, so beginning to implement compliance procedures in California will not be a wasted effort as a national standard will soon be published.

COLORADO
The Colorado no-call list is to take effect July 1. The state has begun registering residential telephone numbers and fax numbers to its "do-not-call" list. The director of the Public Utilities Commission has stated that registration only requires a phone number and a zip code, and can be done by the internet or a toll-free number. The potential for fraud is obvious.

ILLINOIS
The Illinois "do-not-call" list law has passed both houses of the Legislature but has not yet been signed by the Governor.

KANSAS
The State of Kansas has adopted a no-call list which will take effect July 1, 2002. The Direct Marketing Association will administer the list for this state which makes this law one of the more reasonable state "do-not-call" list laws. Violations of the state "do-not-call" list can be prosecuted as unfair or deceptive consumer protection violations. The law does set forth an affirmative "good faith" defense for calls placed as a result of error.

KENTUCKY
The State of Kentucky has published its new forms regarding registration of telemarketers. As you know, the state has eliminated almost all exemptions to the registration law thus requiring most telemarketers, including publicly-traded companies, banks, etc., to file a bond and register in the state. This registration is to be effective July 15, 2002. Please contact me if you would like further information.

MINNESOTA
The State of Minnesota has passed a law regulating electronic mail solicitations. The law prohibits internet service providers from disclosing personal information concerning their consumers to other entities and prohibits false or misleading commercial electronic mail messages. The law also requires that each commercial electronic message contain an "opt out" 800 number or return address. How courts interpret laws such as this one will affect telemarketing businesses, as well, because telemarketing and commercial email are treated the same under First Amendment analysis.

NEBRASKA
The State of Nebraska has passed a law extensively revising its regulation of telecommunications companies including how telecommunications companies market to consumers.

PENNSYLVANIA
The Pennsylvania Governor has signed a new "do-not-call" list law. The list contains a good faith defense and is to take effect May 31, 2002.

WYOMING
The Wyoming Attorney General has begun to require telemarketers to file a statement designating the Secretary of State as agent for service of process. Please contact me if you would like the form.