When you read about the new state laws regulating telemarketing,
you probably envision the national firms that are always calling to
pitch magazines or time-shares. But small businesses are also
affected. If your employees call potential clients trying to drum
up business, federal rules require you to maintain a list of
customers who don't wish to be called. Laws in your state may
also require you to register, post a bond, reconcile your call list
with a state no-call list, or not make calls during certain hours.
It depends on your state's laws.
Those laws are expanding steadily. While no federal law tailored
to telemarketing has been passed since 1994, various state
legislatures debated 250 separate bills in 2001 alone. Nineteen
states now have state-run no-call lists, including five new states
last year (Colorado, Indiana, Louisiana, Texas and Wisconsin). New
laws regulating telemarketing took effect last year in Indiana,
Missouri and New York.
"This is a politically popular issue," says Tyler
Prochnow, a Kansas City, Missouri, attorney who represents the
American Teleservices Association, a trade group for telemarketing
companies. Consumers love hearing that the annoying calls during
dinner will stop, but business groups worry about the increased
cost and threat of major fines. Missouri, for instance, fined Fort
Lauderdale, Florida-based Access Resources Services Inc. $75,000 in
August for violating its no-call law.
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It's the Law
To avoid such fines, you have to understand a patchwork of state
and federal laws and regulations. The Telephone Consumer Protection
Act of 1991, enacted in 1995, led to FTC regulations spelling out
what telemarketers must do. "For the first time it drew a
bright line," Prochnow says, "so companies know what they
have to do and consumers know what they should hear."
Telemarketers must give descriptions, names and phone numbers for
their companies, the total cost of any goods or services ordered,
and any restrictions, such as blackout dates for travel deals.
Calls are prohibited between 9 p.m. and 8 a.m., and each company
must maintain a list of consumers who say they don't wish to be
called.
When a consumer says, "Don't call me again," you
must abide by that-for 10 years. If not, you can be liable for a
$500 fine. Prochnow reports that savvy consumers are tracking sales
calls and sending companies an increasing number of demand
letters.
When there's a state-run no-call list, any company doing
business by phone must purchase it for about $500 per quarter.
Note, however, that you usually can offer services to existing
customers even if they're on the list.
Twenty-eight states also have registration and bonding systems
to discourage phone scams. However, most businesses-such as
publicly traded companies, real estate and insurance firms,
companies with retail stores, those in business at least three
years, etc.-are exempt from registration.
Before you start phoning customers, consult your attorney about
applicable laws and regulations. Abiding by them can not only keep
you out of legal trouble, but it can also save the time and expense
of calling consumers who don't want to hear from you.
Steven C. Bahls, dean of Capital University Law School in
Columbus, Ohio, teaches entrepreneurship law. Freelance writer Jane
Easter Bahls specializes in business and legal topics.