Call up someone and just say ‘buy’ – telemarketing and the regulatory environment

Since 1984, annual telemarketing sales in the United States quadrupled to $435 billion in 1990.(1) Thirty thousand businesses make telemarketing calls to 18 million Americans daily.(2) In light of this increased intrusion into consumers’ homes, lawmakers have responded with increased regulation over the telemarketing industry.

The Telephone Consumer Protection Act of 1991 is the federal legislative response(3) The Telephone Consumer Protection Act amends the Communications Act of 1934,(4) and directs the Federal Communications Commission (FCC) to regulate telephone solicitations. The Act restricts the use of autodialing equipment and pre-recorded solicitations and regulates calls to facsimile machines, cellular phones and emergency service providers.(5) Also prominent in the legislation is Congress’s mandate to the FCC to develop rules to protect residential subscribers from receiving uninvited telephone solicitations.(6)

While the new federal law and, corresponding FCC regulations were several years in the making, numerous states proceeded to pass telemarketing legislation, to protect consumers from telemarketing fraud and invasion of in-home privacy. The state approaches vary widely, from cooling-off periods during which the consumer has a right to cancel telephone purchases,(7) to in-state “do not call” mechanisms, whereby consumer demands not to receive solicitation calls must be ascertained and honored.(8) Despite the obvious interstate character of telemarketing activity, the new federal law has little impact on state enforcement of these multifarious local rules.

Both the federal and state regulatory schemes for telemarketing must not interfere with the commercial speech rights of advertisers that are guaranteed by the first amendment. Section I below explains the nature of free speech protection for in-home solicitation, including commercial telephone solicitation. Next, the article explains the new federal law and the FCC regulations pursuant to it and evaluates the validity of these new limits on telemarketing in light of the commercial speech doctrine. Section III discusses the variety of consumer protections the states have adopted and the validity of these state laws, under the First Amendment and in light of the new federal dictates. The piece concludes with a view to the future of telemarketing regulation.

FREE SPEECH PROTECTION FOR TELEPHONE SOLICITATION

When Congress or the states limit telephone advertising, they must do so within the constraints of advertisers’ First Amendment free speech rights. This section reviews the history of free speech protection and how that protection affects regulation of in-home solicitation. This analysis distinguishes non-commercial speech from purely commercial speech — advertising for goods or services.

In-home Privacy Versus Free Speech: Non-commercial Solicitation

Although “a man’s home is his castle,” the Supreme Court has been willing to permit limited intrusions into that fortress for the sake of free speech, especially when the speaker espouses a political, social or economic message.

For example, in Consolidated Edison v. Public Service Commission of New York,(9) the government tried to prohibit a public utility from using bill inserts to promote nuclear power. Although Consolidated Edison’s pro-nuclear position clearly was profit-motivated, the motive did not diminish the political and social content of the message. Accordingly, unless the Commission could articulate a compelling state interest in limiting this type of message, the restriction of Coned’s promotional bill inserts would fail. Further, even if the state could articulate a compelling state interest, the First Amendment required that the regulation in support of that interest be narrowly drawn.(10)

On the matter of a compelling state interest, the Commission argued that the utility customer was a “captive audience” for this potentially objectionable speech: the customer had to get utility service from the monopoly licensee and the customer had no choice but to open its bill.(11) Accepting this as a compelling state interest, the Court still struck the Commission’s ban on the use of bill inserts for Coned’s message. It concluded that the utility customer could protect itself from any offense given by the pro-nuclear material “simply by transferring the bill insert from envelope to wastebasket.”(12) Accordingly, the government response that totally blocked this form of speech was not narrowly drawn.(13) The consumers’ obvious self-help option proved the state’s response to this speech was excessive.

Similarly, a variety of attempts to prohibit in-home charitable solicitations has failed.(14) Typically, these state laws restricted the types of organizations that could solicit door-to-door or by phone. The states’ purposes behind such regulations were to protect citizens from unscrupulous solicitors and to protect legitimate charities from the negative repercussion in public opinion created by disreputable solicitors. The states also asserted an interest in protecting in-home privacy of citizens. For example, in Village of Schaumburg v. Citizens for a Better Environment, such solicitation was prohibited unless the organization could prove that at least 75% of its collections were used for charitable purposes.(15) In several other cases, professional solicitors were barred from all telemarketing.(16)

In Schaumburg, the Supreme Court established that charitable solicitations cannot be regulated as “purely commercial speech.”(17) Charitable “solicitation is characteristically intertwined with informative and perhaps persuasive speech seeking support for particular causes or for particular views on economic, political, or social issues. ….”(18) Accordingly, the charitable solicitation statutes could only survive if they were narrowly drawn to protect a compelling state interest.(19)

Under the compelling interest standard, all state laws prohibiting telephone or door-to-door charitable solicitations have fallen. A state’s interests in preventing fraud and in protecting legitimate charities from the black eye created by “bad apples” are insufficient to bar this protected speech. These public interests can be satisfied by lesser restrictions on speech rights, such as registration and disclosure schemes.(20) Further, restrictions on solicitation by a limited group of professional solicitors do “virtually nothing to promote the State’s alleged substantial interest in residential privacy” because they do not preclude unlimited, intrusive solicitation by charity volunteers or by those working for commercial or political purposes.(21)

In-home Privacy Versus Free Commercial Speech

First Amendment protection for speech that only proposes a commercial transaction is relatively new in our constitutional history. For example, in 1951, a local regulation prohibiting uninvited door-to-door magazine sales was upheld because the speech was promoting profit, not ideas.(22) However, since the mid-1970s, commercial speech has been protected because of its informational value to the consuming public.(23) Nevertheless, government still may legitimately limit commercial speech.(24)

The Supreme Court articulated its current commercial speech analysis in Central Hudson Gas & Electric v. Public Service Commission.(25) A state must establish a substantial interest to justify regulations limiting commercial speech. Further, the regulation in question must directly advance the state interest to survive. Finally, the regulation must be no more extensive than necessary.(26)

Under the Central Hudson analysis, Virginia’s comprehensive regulation of pre-need funeral contracts, including a statutory prohibition on door-to-door and telephone solicitation was upheld in National Funeral Services Inc. v. Rockefeller.(27) The funeral industry argued that the prohibition violated its members’ First Amendment free speech rights because less onerous restrictions could protect the state’s interests in preventing consumer fraud and protecting privacy.(28) The court found ample evidence that the sale of funeral services is emotion-charged and fraught with potential for fraud. Further, the state has a substantial interest in protecting the privacy of the home.(29) Both in-person and telephone solicitation impose an uncomfortable confrontation on the consumer. And when the product is a sensitive one like funeral services, the in-home imposition can be even more upsetting.(30) Prohibiting both door-to-door and telephone solicitation legitimately protected these interests.

The court acknowledged that the state’s commercial speech limits could not be more restrictive than necessary.(31) However, the court did not “engage in a speculative search for the least restrictive alternative.”(32) A restriction is permissible if it is reasonable and not excessive, especially in a comprehensively-regulated industry, such as the funeral industry.(33) The National Funeral Services court noted that the law specifically allowed general advertising, direct mail communication and all contacts with anyone responding to these legal forms of communication. Thus, “the statute is narrowly drawn, to eliminate no more than the evils it seeks to remedy — fraud and invasion of privacy.”(34)

The National Funeral Service court correctly analyzed the Central Hudson requirement that a commercial speech regulation be no more restrictive than necessary. In SUNY v. Fox,(35) the Court explained that a state’s chosen method for protecting an alleged interest does not have to be the least restrictive alternative, as some had previously interpreted Central Hudson to require.(36) Instead, the Fox Court called for states to choose regulatory mechanisms that are narrowly tailored and establish a “reasonable fit” between the legislative means and the desired end.(37) The reasonable fit standard was intended to provide lawmakers the necessary leeway to legislate and to relieve them of the task of determining if every regulatory mechanism might be unconstitutional because another slightly less restrictive one could be imagined.(38)

Other attempts to regulate various direct marketing tactics have come under the Court’s scrutiny either before or since Central Hudson and Fox. For example, Ohralik v. Ohio State Bar Association(39) upheld a categorical ban on in-person solicitation of clients by attorneys. According to the Court, the potential for manipulation and overreaching when an attorney confronts an injured or bereaved potential client warranted such a ban. Further, other advertising methods were still available to lawyers.(40)

Subsequently, Kentucky tried to prohibit lawyers from advertising through direct mailings that were targeted to individuals with specific legal problems.(41) The state defended the regulation based on its accepted interest in protecting vulnerable parties from overreaching by attorneys. It compared the targeted direct mailings to in-person attorney solicitation.(42) In other words, the targeted mailings were allegedly akin to direct mail ambulance chasing and could be prohibited.

This time, the Court rejected the state’s justification for the advertising ban. Kentucky’s interest in protecting consumers from overreaching lawyers could be accomplished by less restrictive measures than an outright ban on the commercial speech, such as supervision of the use of targeted direct mailings and proper ethical training for lawyers.(43)

Recently, the Supreme Court held that the Ohralik prohibition on in-person soliciting by lawyers could not be extended to certified public accountants.(44) The Florida Board of Accountancy asserted that this solicitation ban was necessary to maintain the accountant’s independence and to prevent fraud and deception. Allegedly, clients could bold greater financial leverage over CPAs who needed to secure business through in-person solicitation.(45) While the Court acknowledged the state’s interest in preventing public accounting fraud, it found no evidence that this regulation furthered the legitimate state interest.(46) The case differed from attorney in-person solicitation, which is properly banned, because individuals sought out by CPAs will not be in the diminished emotional or physical condition as the clients lawyers often pursue. Further, potential clients for CPAs will be business parties who will not be as susceptible to overreaching that the legal client could suffer.(47)

The United States Postal Service regulates a ticklish form of in-home solicitation. The Post Office is charged with protecting mail customers who have requested not to receive sexually-oriented advertising through the mail. The Postal Service maintains an “opt off” list of all such postal patrons.(48) If a purveyor of sexually-oriented advertising fails to yield to a customer’s request by mailing materials to him, it is subject to civil or criminal enforcement.(49) This Postal Service “pandering” regulation withstood First Amendment scrutiny because it is not a pervasive prohibition on commercial speech. It blocks communication with only those postal patrons who specifically request protection. Opting off of mailing lists protects consumers with legitimate interests in not receiving the unwelcome materials, such as parents of young children. Other mail customers could receive the material and deal with it as they please, as the Court suggested in Consolidated Edison.(50) This “opting off” approach for consumers will be invoked in new telemarketing regulations.

Recently, the Supreme Court reaffirmed its position that commercial speech is of high value and entitled to significant protection under the First Amendment. In Cincinnati v. Discovery Network,(51) Cincinnati sought to stem the proliferation of sidewalk newspaper dispensers, to improve the look of the city. To achieve this aesthetic goal, the City banned all commercial publications (such as real estate magazines) from using sidewalk dispensers, thus preserving the fewer remaining dispensers for “real” news publications.(52) The lower courts concluded that the city’s approach failed the Fox reasonable fit requirement because the regulation only eliminated approximately 60 of some 2000 dispensers. Thus, the regulation did little to accomplish the city’s aesthetic goal.(53)

In affirming the result, the Supreme Court went further and said that seldom could commercial speech be completely banned to accomplish a legitimate state goal, as Cincinnati bad done.(54) The Court concluded that such regulations diminish the inherent value of commercial speech far beyond what the commercial speech doctrine ever had intended.(55) Discovery Network will be the basis for one court’s conclusion that portions of the Telephone Consumer Protection Act are unconstitutional.(56) This new federal law is analyzed next.

THE TELEPHONE CONSUMER PROTECTION ACT OF 1991

The purpose of the Telephone Consumer Protection Act (TCPA) is to protect telephone subscribers against unwanted “telephone solicitations.” Congress, however, recognized that telephone subscribers were not the only parties the legislation had to consider. “Congress acknowledged that individuals’ privacy rights, public safety interests and commercial freedoms of speech and trade must be balanced in a way that protects the privacy of individuals and permits legitimate telemarketing practices.”(57) Thus the law tries to find a reasonable fit between in-home privacy and commercial freedom.

“Telephone solicitation” is defined in the law as “the initiation of a telephone call or message for the purpose of encouraging the purchase or rental of, or investment in, property, goods, or services. . . . .”(58) Telephone solicitations expressly exclude calls (1) to persons with whom the caller has an established business relationship

The act expressly prohibits the following: (1) autodialed calls to emergency service providers, cellular and paging numbers and to a patient room in a medical facility

These autodialing bans in the law should survive constitutional scrutiny. Obviously, the financial detriment to owners of pagers, cellular phones and fax machines created by these uninvited calls cannot be avoided other than with an outright ban.(64) Similarly, the public’s significant interest in health and safety requires that phone lines to emergency service providers not be blocked with commercial calls. Presumably, these public needs can be met only with a total ban on the offending speech. These autodial bans have not been challenged in any court.

Further, the ban on pre-recorded messages to a residence (unless prior consent is obtained) addresses several unique concerns these calls raise, including (1) phone line lock-up when these pre-recorded messages do not disconnect after the recipient hangs up, (2) delivery of inappropriate messages to children, (3) delivery of messages that cover an entire answering machine tape, and (4) delivery of messages without adequate information about the caller.(65) The statute imposes new restrictions on manufacturing of these delivery systems, to require they disconnect within 5 seconds after hang Up.(66) Thus, the line lock-up problem has been averted and cannot support the ban on residential pre-recorded messages. Those new technological requirements, however, do not meet the additional foregoing concerns that arise when these pre-recorded messages are delivered without any human discretion or intervention. Again, the outright ban on these calls may be the only mechanism to protect these unique privacy concerns that pre-recorded messages create.

Nevertheless, the only court to analyze this pre-recorded message ban has ruled it unconstitutional.(67) In Moser v. FCC, the plaintiff ran a chimney-sweeping service that attracts a substantial portion of its customers from pre-recorded solicitation calls to residences. She sought to enjoin the FCC from enforcing the pre-recorded message ban.(68) In reaching its conclusion that the pre-recorded message ban is unconstitutional, the Oregon district court relied heavily on Discovery Network.(69) The court equated the ban on pre-recorded solicitation messages to residences to Cincinnati’s ban on commercial papers using sidewalk dispensers. Because the TCPA exempts all charitable and political solicitation from the pre-recorded message ban,(70) the Moser court concluded the act impermissibly bans commercial speech (to protect privacy) so that non-commercial speech can continue (and continue to invade privacy). This diminished value on commercial speech vis-a-vis “real” speech is what Discovery Network chastised. Further, according to the court, pre-recorded messages only constitute three percent of all commercial solicitation calls.(71) Therefore, a ban on such a small portion of calls does not “reasonably fit” Congress’s privacy goal.(72)

For several reasons, the Moser analysis is misplaced. First, the TCPA regulations adopted by the FCC do not totally ban commercial pre-recorded messages to residences. Non-solicitation messages, such as blanket notices to employees about a site closing or utility customers about an outage, may be delivered via recordings and autodialers. Also, the act still permits pre-recorded solicitation messages if the resident gives prior permission for the call. From the caller’s perspective, this concession may not be a promising one, but it still distinguishes the provision from the total prohibition in Discovery Network. The Moser opinion relied heavily on equating the pre-recorded message ban to the Cincinnati ban on commercial publications. That analogy, however, ignores these exceptions in the TCPA and the regulations, which fall short of a total ban on this form of commercial speech.

Further, the Moser opinion asserts that a three-percent reduction in commercial solicitation calls that the ban yields does little to protect privacy. This generality fails to consider the specific, unique concerns Congress targeted with the pre-recorded message ban.(73) Because no human operator is involved, a child who answers a pre-recorded call may hear an inappropriate message that a human operator would not deliver. Presumably, a human operator also would not deliver their entire sales pitch to an answering machine tape, as computerized messages do. The Moser court acknowledged these Congressional goals but objected to non-commercial calls being allowed to continue to create the same problems. The three-percent reduction, however, applied only to commercial solicitation calls and must be analyzed independently of the non-commercial calling to determine if that reduction supports the ban.(74) Additionally, in Discovery Network, the Court emphasized that non-commercial publications were the overwhelming aesthetic culprits. In its reliance on Discovery Network, the Moser court never discusses whether noncommercial solicitors will continue to pose any real threat regarding pre-recorded messaging.

Finally, the Moser court also diminishes the impact of a three-percent reduction in solicitation calls. In 1991, Congress found that every day 18 million American homes were called by telemarketers. Obviously, even a three-percent reduction in such a volume of calls can be significant. Cincinnati’s 2000 newspaper dispensers in Discovery Network are incomparable to the volume of calls the TCPA addresses with the pre-recorded message ban.(75) Discovery Network is not a conclusive authority regarding the constitutionality of the TCPA, despite the Moser court’s conclusion to the contrary.

Much of the remainder of the Act addressed FCC rulemaking proceedings, particularly regarding a mechanism by which consumers would opt off telephone solicitors’ lists.(76) Presumably, Congress’s intention to create some form of opt-off mechanism should satisfy First Amendment scrutiny. The opt-off mechanism has been upheld in the Postal Service pandering regulations and was suggested by one court as a legitimate alternative to a ban on charitable solicitation.(77) Admittedly, the pandering regulations protect against exposure to sexually-oriented material, which is more offensive than general commercial advertising covered by the TCPA. On the other hand, telephone marketing is more intrusive than direct mail. On balance, the Postal Service cases are instructive that opt-off mechanisms are a reasonable fit in the attempt to protect in-home privacy without unduly hampering telemarketers’ commercial speech rights. Further, opt-off schemes satisfy an oft-stated objective of the direct marketing industry: not to communicate with consumers when the message is unwelcome.(7)

In this regard, FCC requires sellers to keep internal “do not call lists” generated from customer requests upon being called.(79) The list-keeping requirement also requires sellers to establish an internal policy for training telemarketers to meet the regulatory requirements. The order also established national time-of-day restrictions for calling between 8AM and 9PM.(80)

Finally, the act creates a private cause of action for anyone who received (1) a prohibited autodialed or pre-recorded call, or (2) an unsolicited ad to a fax machine, or (3) more than one call from the same entity in a 12-month period, when the called party had exercised its right to opt-off the caller’s telemarketing list.(81) Such a claim may be pursued in state court and permits recovery of the greater of $500.00 or the plaintiffs actual monetary loss. Treble damages are available, at the court’s discretion, for knowing or willful violations of these provisions.(82)

State attorneys general may pursue injunctive relief against parties that engage in a pattern or practice of calling in violation of the Act. The federal district courts have exclusive original jurisdiction over such actions which also allow recovery of actual monetary damages or fines of $500.00 per violation and treble damages.”(83)

Expect for the few technical standards for fax machines and pre-recorded message systems mentioned above, the Act expressly permits concurrent state regulation that is more restrictive. Thus, most state telemarketing regulations are still valid and enforceable. The variety of regulatory mechanisms employed by the states are examined next.

STATE APPROACHES TO TELEMARKETING REGULATION

Many state telemarketing laws are intended to respond to consumer chagrin about unwanted, intrusive calls in the home. These types of regulations are discussed in section A below. Other statutes extend traditional consumer fraud protections, such as those applying to door-to-door sales, to telemarketing transactions. These are reviewed in section B. In any form of local regulation, the enforcement mechanism often varies dramatically from state-to-state. Telemarketing enforcement under the various state schemes is discussed thereafter. (The appendix to this article provides state-by-state detail of these laws).

“Don’t Reach Out And Touch Us!”

Several states have invoked the “opt off” technique to provide consumer privacy protection from telemarketers. For example, in Florida(84) and Oregon,(85) consumers who want to be relieved of unwanted telephone solicitations may identify themselves as such in the local telephone directory. Telemarketers must refrain from contacting these designated phone subscribers or be in violation of the statutes. In South Carolina(86) and Washington,(87) a consumer who is called can request the caller not call again and the telemarketer must comply. In Washington, this prohibition extends for one year and includes a ban on the caller forwarding the called party’s name to any other seller.(88)

If the FCC had not rejected the option of a nationwide opt-off mechanism under the TCPA, that mechanism would have preempted any alternative state mechanisms.(89) The internal do not call list-keeping requirement, however, does not preempt these state methods. Accordingly, the industry remains obligated to abide by these state opt-off requirements and others that may come in the future. The telephone book mechanism can be particularly burdensome for interstate businesses simply because of the volume of directories in effect in a large state like Florida.

Arguably, a telephone directory mechanism is not even a rational method to protect consumer privacy expectations. A significant lag may exist between the time a consumer registers his request to be “starred” in the phone book until the time the next directory is published. During this time, the consumer will continue to be called without any recourse against the caller who cannot know of the request until the new directory is available. The consumer’s privacy interest will seemingly have been ignored despite the regulation. To date, no state “do not call” mechanism has been challenged. If more states pursue this form of consumer protection, the industry may eventually want to pursue a constitutional challenge to this regulatory scheme (or reevaluate a preemptive, federal opt-off mechanism).

Many states attempt to limit the intrusion caused by telephone solicitation by restricting the time of day during which calls may or may not be made. These restrictions vary between 8 and 9 AM for the morning restriction and anywhere from 5 PM to 9 PM for the night limitation.(90) Because the federal statute expressly permits stricter state regulations, these state time of day limits could prevail as long as they do not expand the calling times beyond the 8 AM to 9 PM hours established by the FCC.(91)

Another state legislative effort to curtail unwanted sales pitches requires callers to “get to the point.” These statutes typically require personal identification of the caller and the name of the business, the purpose of the call and the goods or services being promoted and their price, all within a set limited time, such as ten, thirty or sixty seconds.(92) In some states, the foregoing restrictions only apply to automated calls, which are discussed in the next paragraph. Presumably, these requirements limit the extent of intrusion for the consumer to, those brief seconds when the called party will be able to promptly conclude if it wants to terminate the call. Since these rules do not prohibit communication with the consumer and only dictate certain script requirements for the telemarketer, the “get to point” concept should meet the Fox requirement for a reasonable fit between the consumer privacy interest and the legislative means of protecting it.

Like the federal statute, the most prohibitive state restrictions on telemarketing apply to solicitations using programmed autodialers and pre-recorded messages. Several states prohibit telephone solicitation via autodialers and pre-recorded messages.(93) Other states only restrict calling to those telephone subscribers who are obviously harmed by the random call or the lengthy computerized message: emergency service providers, pagers and cellular phones and toll-free long distance numbers.(94) Still other states limit their time-of-day restrictions and “get to the point” scripting requirements discussed above to autodialed calls.(95)

Because the new federal act expressly permits more extensive state telemarketing regulations, the only state laws that will be effectively preempted are those that are more permissive than the federal restrictions. For example, states that permit pre-recorded messages except during certain times of day would be preempted by the federal act’s outright prohibitions on pre-recorded messages to residences. These state rules on automated systems, however, are the only ones that run afoul of the federal scheme. All other state regulations provide consumer protection over and above the federal statute and, thus, are enforceable.

Only one case has scrutinized a state telemarketing law in light of the commercial speech protections.(96) In State of Minnesota v Casino Marketing Group, Inc.,(97) the appellate court upheld Minnesota’s prohibition on auto-dial calling without a live operator. The statute requires the caller to precede any pre-recorded message with a live operator who explains the name of the caller, the nature of the message and the fact that money will be solicited in the message. The operator must receive the called party’s consent before proceeding to transmit the pre-recorded message. In light of the consent requirement, the Minnesota law is consistent with the federal rules that ban pre-recorded calls to residences, without consent.

Like the federal consent requirement, the live operator requirement could effectively eliminate auto-dial/pre-recorded messaging because the requirement completely diminishes the inherent efficacy of autodial technology. The automated caller cannot randomly dial thousands of numbers and deliver the recorded message thousands of times if a human operator has to intervene when the call is answered.(98)

The lower court applied Central Hudson and Fox and concluded that the requirement of a live operator enhanced the consumer’s ability to protect itself from fraud by being able to ask the operator questions. Further, according to the court, the operator allows the consumer “to decide at the beginning of the call whether the solicitation is worth interrupting her activities.”(99) The court does not explain why the consumer cannot make the same conclusion at the beginning of a computerized voice message that delivers the same information.

The Minnesota Supreme Court affirmed the result but on a different basis.(100) The court seriously questioned whether the live operator requirement advanced the state’s interest in protecting against consumer fraud. While the initial disclosures required by the law are legitimate anti-fraud measures, the requirement that they be delivered by a live operator instead of the recording device was questionable. In fact, according to the court, a live operator might be better able to “subvert the aims of the disclosures if given the opportunity to engage the subscriber in conversation.”(101) Accordingly, the autodial restrictions only incidentally further the state’s anti-fraud interest and could be unconstitutional if that were the only interest the state were trying to protect with the legislation.(102)

On the other hand, the statute is constitutionally sound in its method of protecting consumer privacy. The court stated that automated calls differ from live operator calls in two fundamental ways: (1) their “astonishing” efficiency in reaching the public and (2) their completely indiscriminate delivery of a message to whomever answers the phone, including young children, answering machines, fax machines or cellular phones.(103) In light of these fundamental differences, the statutory requirement of a live operator to introduce the recorded message directly promotes consumer privacy.

As noted above, the operator requirement impedes the inherent efficiency of auto-dialing and, thus, limits the number of calls made. “[T]his reduction in the efficiency with which commercial telephone solicitations are made directly and not unreasonably advances the state’s interest.”(104) Further, the live operator requirement injects human discretion in the decision to deliver the message, which directly advances the privacy interest, according to the court.(105)

The court notes that the state’s chosen method of regulating to protect the privacy interest does not have to be perfect or absolute, only reasonable and narrowly tailored.(106) A dissenter argues that the intrusion of a live operator call or an automated message is the same since both require the consumer to answer the phone’s ring.(107) However, according to this dissenter, the automated message may be easier to hang up on than a live person, so the operator requirement does not reasonably protect privacy.(108)

The dissent ignores the basic premise of the majority opinion: by limiting the ability of telemarketers to efficiently deliver as many calls, the overall privacy environment improves. Although the calls that get through are still intrusive, fewer calls get through and privacy is protected overall, instead of on a call-by-call basis. While admittedly different from the traditional view of protecting privacy from the specific intrusions of any particular call, the logic of this “macro-privacy” protection is undeniable. Fox allows states to limit commercial speech with “reasonable” restrictions, though not necessarily the least restrictive.

The Minnesota approach, that privacy can be protected by limiting the total volume of calls made, would seem to satisfy Central Hudson and Fox.(109) On the other hand, in Discovery Network, the Supreme Court criticized speech regulations that target an isolated part of a problem to improve an overall situation, especially when little distinction could be made between the regulated and unregulated culprits.(110) Discovery Network, however, included a total ban on commercial speech which the court also emphasized in its ruling. The various state and federal automated calling bans include exceptions which may avoid any application of the Discovery Network holding.

The Minnesota “macro” approach to privacy also could be asserted to justify the complete prohibitions on auto-dialed messaging that many states presently employ.(111) New restrictions could include limits on the volume of calls a seller makes in a day, week or month. Such outward dialing restrictions could be implemented through telephone technology, which would require little government enforcement. The Minnesota court may have articulated the constitutional basis for a new regulatory regime to protect privacy by limiting calling volume.

Traditional Consumer Protections Applied to Telemarketing

For years, many states have attempted to protect consumers against potential fraud or overreaching by door-to-door solicitors.(112) Now, that same regulatory philosophy is producing similar legislative protections for telephone transactions. For example, several states have created “cooling-off periods” during which the consumer is entitled to cancel a telephone sale.(113) Many of those same statutes require some written evidence of the transaction, often including the customer’s signature, before the contract for sale is valid and enforceable.(114) However, the individual follow-up required to obtain the signed writing from the customer is antithetical to the telemarketer’s streamlined, low-overhead method of doing business, especially if the telephone “solicitor” was a computerized message. Therefore, the writing requirement often is waived in these statutory schemes if the seller: (1) offers customers an unrestricted right to rescind the sale

An alternative, or additional, consumer protection scheme some states have adopted requires licensing and disclosures by the telemarketing firms and their salespeople. Rather than dictating the terms and conditions of telephone sales, these states attempt to protect their citizens through administrative mechanisms intended to make telephone sellers in the state more accountable and accessible in the event of a subsequent problem with the transaction.

Typically, these licensing and disclosure requirements include such information as the following: owners’, directors’ and officers’ names and addresses

Registration and filing fee requirements indirectly limit speech by restricting sellers who are unwilling to register from accessing consumers. Unlike charitable registration schemes that have failed, however, the telemarketing registration requirements typically do not make qualitative or quantitative judgments about the types of firms that must register, which was one of the flaws in the charitable solicitation registration schemes.(119) Further, all states exempt charitable solicitors from registration to avoid the stricter First Amendment scrutiny given charitable speech. Registration requirements also face no preemption problems with the new federal act because they expand consumer protection, which the federal law expressly permits. In other words, licensing requirements are a classic exercise of state authority over in-state business activities and should be virtually immune from successful challenge.

The efficacy of these new regulatory mechanisms in protecting against consumer fraud or undue privacy assaults may hinge on the strength of enforcement. The variety of enforcement tools adopted by the states are detailed next.

The Wide World Of State Statutory Enforcement

Despite many common threads in the statutory prohibitions noted above, states tend to go their own way regarding approaches to enforcement. The most common approach targets non-registration as a criminal violation, although the states vary in felony versus misdemeanor classification.(120) States that require both registration and privacy protections, such as auto-dialing and time-of-day limits, treat both types of violations as criminal.(121) When privacy restrictions stand alone, violations are classified as crimes in some states and unfair trade practices in others, subject only to civil enforcement.(122) A private claim for damages by complaining consumers is available in a few states imposing the registration requirements or privacy restrictions.(123)

Based on the foregoing, a telephone seller operating in several states will not be able to make many clear-cut predictions about the level or extent of legal exposure the business faces. Each state’s risk must be separately analyzed.

CONCLUSION

Commercial speech protection under the First Amendment has been a contentious issue, as the separate opinions in Discovery Network reveal. Justice Blackmun asserts that the commercial speech doctrine, first articulated in Virginia Pharmacy,(124) established First Amendment protection for commercial speech, to the extent the speech was not false, deceptive, misleading, or coercive. Because fraud was an inherent risk in commercial transactions, the government has an inherent interest in regulating commercial speech to prevent advertising messages from falsehood, deception and coerciveness. This interest in preventing fraud would permit regulation of commercial speech that might not be permissible for non-commercial speech.(125) According to Justice Blackmun, however, the fraud prevention interest is a state’s only interest in regulating commercial speech more stringently than non-commercial speech.(126) Thus, privacy rights that underlie telemarketing legislation or the aesthetic interest of the city in Discovery Network would never justify tighter restrictions on commercial speech, according to Blackmun’s approach.(127)

On the other hand, Chief Justice Relinquist’s dissenting opinion in Discovery Network reiterates the view that commercial speech occupies a “subordinate position in the scale of First Amendment values.”(128) Justice Relinquist heavily relies on language from precedents such as Fox and Central Hudson to conclude that commercial speech can be regulated for reasons, and in ways, that would not stand for non-commercial speech. Cincinnati’s regulation in support of the city’s safety and aesthetic interests is one such defensible example. The Chief Justice chides the majority for its lack of case support for its result in the case.(129) Presumably, these dissenters would reject the Moser analysis of the Telephone Consumer Protection Act because of its extensive reliance on Discovery Network.

Clearly, the Discovery Network majority rejects the “low value” placed on commercial speech by virtue of Cincinnati’s total ban of commercial publications in sidewalk dispensers. The Court, however, continued to refer to the “distinction between commercial and noncommercial speech”(130) and continued to apply the tests from the same cases on which Justice Relinquist relied. Thus, unless the Court subsequently adopts the Blackmun approach specifically (that the government can only restrict commercial speech to protect against fraud) the privacy interest underlying all telemarketing regulation should continue to be a legitimate basis for government to limit this form of commercial speech.

Further, as discussed above, most of the legislative approaches devised by Congress and the states to regulate telemarketing seem to be well-reasoned and consistent with the reasonable fit requirement of Fox, when it comes to the privacy and anti-fraud restrictions.

Although the Moser opinion ruled unconstitutional the pre-recorded message ban in the federal law, its analysis and application of Discovery Network is subject to some challenges. The opinion of the Minnesota Supreme Court in Casino Marketing, that upheld a similar state ban on pre-recorded messaging, however, may run afoul of Discovery Network with its “macro” privacy approach.(131) Nevertheless, all other aspects of state and federal telemarketing regulations seem to be constitutionally sound, even after Discovery Network. The kind of success regulators will have in enforcing their regulations may depend on the extent consumers are aware of the protections and report violators.

For the telemarketing industry, the future regulatory environment may be more and more restrictive until consumer self-help technology, such as call blocking, is widely available for consumers. Considering, however, that the consumer pays for the very phone line that telemarketers now freely use for their profit-motivated speech, such restrictions, in response to consumer demands, are completely appropriate. Industry members need to work with consumer groups and regulators to promote compliance and consumer education. In this way, telemarketers will not waste resources delivering unwelcome messages and only consumers who want to receive these commercial calls will. (1) 47 U.S.C. [sections] 227 note (1991). (2) Id. (3) 47 U.S.C. [sections] 227 (1991). (4) 47 U.S.C. [subsections] 151-613 (1991). (5) See infra notes 56 – 66 and accompanying text. (6) See infra notes 76 – 80 and accompanying text. (7) See infra note 113 and accompanying text. (8) See infra notes 84 – 89 and accompanying text. (9) Consolidated Edison Co. v. Public Serv. Comm’n, 447 U.S. 530 (1980). (10) See, e.g., Austin v. Michigan Chamber of Commerce, 494 U.S. 652 (1990). (11) 447 U.S. at 541. (12) Id. at 542. (13) Id. at 543. (14) Village of Schaumburg v. Citizens for a Better Env’t, 444 U.S. 620 (1980)

Although the FCC’s definition of the “established business relationship” exclusion appears expansive on its face, it has an ironic limitation. The definition states that a consumer can terminate any such relationship by telling the calling party not to call again. Id. Therefore, these calls and callers, which otherwise would have been excluded from the FCC’s “do not call” requirements according to the Act, now must comply with those very requirements because the FCC’s definition of “established business relationship” incorporates those requirements.

The exemption for non-profit organizations are dictated by the First Amendment decisions by the Supreme Court that give charitable solicitors greater protection than commercial speech under the compelling interest standard. See supra notes 9 – 21 and accompanying text. (60) 47 U.S.C. [sections] 227(b)(1)(A)-(B). The term “autodial” is used to refer to equipment that produces, stores and dials telephone numbers at random or in sequence. 47 U.S.C. [sections] 227(a)(1). Autodial equipment can be used with a live operator who picks up and speaks once the called party has answered. Autodial equipment also is often used with a pre-recorded message and no live operator.

The exempt parties mentioned above remain bound to the autodialing and fax advertising bans, but not to the pre-recorded message ban. 57 Fed. Reg. 48,333, 48,334 (1992). (61) See State v. Casino Marketing, 491 N.W.2d 882, 889 (Minn. 1992 (citing James Barron, Junk Phone Calls Danger on the Line?, N.Y. Times, May 21, 1988, 36). (62) See Tony Brennan and Larry Riggs, House Bill Would Create National List Off Limits to Telemarketers, DM News, Apr. 29, 1991, at 1. (63) The prohibition on pre-recorded calls to a residence was permissibly modified by the FCC, to permit non-commercial pre-recorded messages or commercial messages that do not include advertisements for goods or services and “do not adversely affect the privacy rights” of the called party. 47 U.S.C. [sections] 227(b)(2)B). Such calls might be made by a public utility to notify customers about service outages or by employers to notify workers about emergency closings in bad weather, for example. (64) Fundamentally, consumers fund all telemarketing calls, not just those to cellular phones or fax machines. The phone line that carries the advertiser’s message is paid for by the consumer. Further, when the phone line is tied up with a telemarketing call, it is unavailable to the subscriber for uses of this choosing. Accordingly, the same cost-based analysis that supports limits on calls to cellular and paging numbers and fax machines could justify additional bans on telemarketing calls unless commercial callers compensate the phone companies or consumers for the costs associated with the increased volumes they generate.

In a related vein, the FCC recently required inter-exchange (long distance) telephone providers to compensate owners of pay phones for the use of the pay phones for calls placed to the long distance system. All of the usage costs for these long distance calls was going directly to the long distance company through calling cards. The pay phones, however, were tied up during the call and unavailable to generate any coin income for the pay phone owner. The FCC held that the pay phone owner was entitled to compensation for the use of his equipment in delivery of income-producing calls for the long distance provider, in the amount of $6.00 per month, per pay phone. See Policies and Rules Concerning Operator Service Access and Pay Telephone Compensation, 58 Fed. Reg. 57,748 (1993) (to be codified at 47 C.F.R. Part 64). (65) See S. Rep. No. 178,102d Cong., 1st Sess. 2 (1991), reprinted in 1991 U.S.C.C.A.N. 1969. (66) The Act orders the FCC to prescribe certain technical standards for pre-recorded voice systems and for fax messages and newly-manufactured fax machines. Pre-recorded voice systems must: (1) disconnect the called line within five seconds after notification that the called party has hung up

Like the federal statute, several of the foregoing statutes include some exceptions to the outright prohibition, such as when the called party and the solicitor have a preexisting contractual relationship. See supra note 59 and accompanying text. (94) See Me. Rev. Stat. Ann. tit. 10, [sections] 1498 (West 1992)

Blackmun accepts that all speech can be restricted with time, place and manner regulations, presumably to protect state interests including privacy. Time place and manner restrictions, however, must be content neutral

APPENDIX

ALASKA

Alaska Stat. [subsections] 45.63.010-.100 (1993). * Registration Requirements

Telephonic seller must register with Department of Law at least

30 days prior to soliciting * Writing Requirements

Seller may not solicit payment until buyer signs written contract

notifying buyer of buyer’s rights * Prohibited Representations

Seller may not make reference to compliance with statute * Enforcement

Registration violation: class C felony

Written contract violation: class C felony

Prohibited representation violation: class A misdemeanor

Waiver of buyer’s rights: void

ARIZONA

Ariz. Rev. Stat. Ann. [subsections] 13-2919, 44-1271 to -1281 (1993). * Registration Requirements

Filing Fee: up to $500, set by Secretary of State.

Supplemental Statement Fee: up to $25, set by Secretary of State.

Expiration: June 30 each year.

Renewal: 30 days prior to expiration.

Bond: $25,000.

Scope: before soliciting prospective purchasers from locations within

the state. * Writing Requirements / Cooling Off Periods

Cancellation: midnight of third business day after receipt of merchandise.

Written notice of buyer’s right to cancellation must be in standard

format provided by legislature. * Calling Bans

Automated Dialing: total prohibition. * Enforcement

Enforcement Authority: Attorney General

State Criminal Actions

Failure to register: class 5 felony.

Incomplete registration: contempt of court.

Releasing information obtained by telephone solicitation: class A

misdemeanor.

Violation of auto-dial calling ban: class 2 misdemeanor. State Civil Actions

Injunctive relief.

Civil penalties: $10,000 per violation.

Attorney fees. Private Claims

Rescission.

Monetary damages and attorney fees.

ARKANSAS

Ark. Code Ann. [subsections] 4-95-101 to -108, 4-99-101 to -112, 5-63-204 (Michie 1993). * Seller Registration Requirements

Telephonic seller must register with Consumer Protection Division

of the Office of the Attorney General not less than 10 days prior

to doing business in the state.

Filing fee: $100.

Valid for one year.

Renewal fee: $100.

Bond: $50,000.

Material changes must be filed within 10 days of change.

Changes in salespersons updated quarterly.

Registration must be displayed at each of seller’s business locations.

Scope: soliciting purchasers from locations in the state or purchasers

who are located in the state. * Salesperson Registration Requirements

Must register with Consumer Protection Division within 72 hours

of accepting employment.

Filing fee: $10.

Valid for one year.

Renewal fee: $10. * Auto-Dial Restrictions

Automated telephone solicitation prohibited * Writing Requirements

Agreement not enforceable unless:

written

contains signature of consumer

contains the following information:

name, address & telephone number of promoter

material terms/fees

date of transaction

detailed description of product

disclosure that consumer not obligated unless contract signed

and returned.

Scope: telephone contact at a site within the state. * Enforcement

Registration violations

Salesperson soliciting for unregistered seller: Class A misdemeanor

Unfair or deceptive act or practice

Willful violation of registration requirements: Class D felony.

Auto-dial violations

Class B misdemeanor

Injunctive relief.

Civil action: attorney’s fees and court costs.

Writing requirement violations.

Criminal penalties:

Class B misdemeanor

Amount solicited > $200: Class D felony.

Civil penalties:

Injunction.

Unfair or deceptive act or practice.

Enforcing Authority: Attorney General

CALIFORNIA

Cal. Bus. & Prof. Code [subsections] 17500.3, 17511 (Deering 1993)

File with Justice Dept. not less than ten days prior to doing

business in the state.

Filing Fee: $50.

Registration valid for one year.

Renewal Fee: $50.

Material Changes must be updated within 10 days.

Changes in sales personnel must be updated quarterly.

State’s written confirmation of registration must be displayed at

seller’s business locations.

Exemption Filing: $50.

Bond: $50,000.

Scope: solicitations made from locations in the state or to prospective

purchasers located in the state. * Sales Pitch

Before soliciting a sale, caller must state:

the identity of the person making the solicitation

the trade name of the person represented

the kind of goods or services being offered for sale. * Auto-Dial Restrictions

No ADAD calls between 9 p.m. and 9 a.m.

Person called must have given prior consent to receiving such calls

from the person calling.

Must be preceded by an unrecorded, natural voice announcement

which must state the nature of the call and the name, address

and telephone number of the organization being represented

must also inquire as to whether the person called consents to

hear the prerecorded message.

Must disconnect upon termination of the call by either party.

Application to use ADAD must be made to the telephone corporation

servicing the area from which such calls are to be made. * Enforcement

Unregistered Seller

Misdemeanor: not more than six months imprisonment, and/or

Fine: not more than $2,500.

Violation of Auto-Dial Restrictions:

Fine: not more than $500 per violation, and/or

Disconnection of telephone service to ADAD.

Any Other Violation:

Fine: not more than $10,000 / unlawful transaction, and/or

Imprisonment: not more than one year

COLORADO

Colo. Rev. Stat. [subsections] 6-1-301 to -304, 18-9-311 (1993). * Registration Requirements

Must register with the attorney general at least ten days prior to

conducting business.

Filing Fee: not to exceed $250, determined by attorney general.

Effective for one year from date of filing.

Renewal Fee: not to exceed $100, determined by attorney general.

Material changes: update must be filed within ten days

Scope: solicitations made from locations in the state or to prospective

purchasers located in the state. * Cooling Off Periods / Disclosure Requirements

Seller must disclose during telephone solicitation that the purchaser

may cancel any purchase or agreement to purchase prior

to three business days after receipt of such goods unless the

transaction is one in which the consumer obtains a full refund

for the return of undamaged or unused goods or a cancellation

of services by giving notice to the seller within seven days after

receipt and the seller processes the refund or cancellation within

thirty days

by telephone and in writing. * Calling Bans

Automated dialing prohibited unless there is an existing business

relationship and the person called consents. * Enforcement

Automated dialing violation: Class 1 petty offense.

DISTRICT OF COLUMBIA

D.C. Code Ann. [sections] 43-1418 (1993). * Calling Bans

No automated solicitations. * Auto-Dial Restrictions

Disconnect within ten seconds after termination. * Enforcement

State Civil Action

First offense: no more than $1,000.

Each subsequent offense: no more than $5,000.

Corporation Counsel of the District of Columbia shall prosecute

violators.

FLORIDA

Fla. Stat. Ann. [subsections] 501.059, 501.601-.626 (West 1992). * Registration Requirements

Seller’s License

Filing fee: not more than $1,500, set by the Department of

Agriculture and Consumer Affairs.

Scope: telephone solicitations from a location within the state or

of purchasers located in the state.

Must be renewed annually.

Renewal fee: $10.

License must be displayed at business location.

Failure to display license: cease and desist order.

Bond: $50,000 minimum.

Any material change in application information before the renewal

date must be submitted along with a $10 fee.

Changes in script, outline, presentation, sales information, or

address or status of licensee must be submitted within 10 days

Exemption: Any commercial telephone seller claiming to be exempt

must file with the dept. an affidavit of exemption, a copy

of which must be displayed at business location.

Salesperson’s License

Each salesperson must apply to the Department of Agriculture

and Consumer Affairs for a license.

Fee: not more than $50 per salesperson.

Fee must be paid within 14 days after applicant begins working

as a salesperson.

License must be displayed at business location.

Failure to display license: ordered to leave office.

Must be renewed annually.

Renewal fee: not more than $50 per salesperson.

Any material change in application information before the renewal

date must be submitted along with a $10 fee.

Changes in script, outline, presentation, sales information, or

address or status of licensee must be submitted within 10

days. * Writing Requirements / Cooling Off Period

Cancellation period: within 7 days of receipt

Refund requirements:

If defective

If not as represented

If not received as promised.

Cannot waive consumer’s rights to refund.

Telephone solicitation must be followed by signed written agreement. * Calling Bans

No automated dialing systems unless system can exclude numbers

of those who do not want to be solicited and put number in

quarterly listing.

No unsolicited calls to those listed in published quarterly listing.

Cost is $10 initially and $5 annually to get name on list.

List is handled by Department of Agriculture and Consumer

Affairs.

List is available to solicitors for a fee.

No calling unlisted numbers in phone directory. * Sales Pitch Content Requirements

Within 30 seconds:

State salesperson identity

State company identity

Identify consumer goods being sold * Enforcement

Enforcing Authority: Dept. of Agriculture & Consumer Affairs,

Dept. of Legal Affairs, attorney general or any criminal prosecuting

agency.

State Criminal Actions

Soliciting without a company license: 3rd degree felony.

Employing a non-licensed seller: 3rd degree felony.

Selling without a license: 3rd degree felony.

Falsifying application 3rd degree felony.

Any subsequent violation: 2nd degree felony.

State Civil Penalties

No more than $10,000 per violation.

Attorneys’ fees and costs of the state

Remedies

Declaratory judgment.

Action for damages.

Injunctive relief. * Date of Repeal

Sections 501.601 – 501.626 repealed effective October 1, 2001, subject

to review

GEORGIA

Ga. Code Ann. [subsections] 46-5-23 to -24 (Michie 1993). * Registration Requirements (ADAD)

Permit must be obtained from Public Service Commission.

Fee: set by Commission.

Renewed biennially. * ADAD Restrictions Solicitation through use of ADAD equipment prohibited where:

Written consent not received prior to call. (A person may give

consent to a call introduced by a live operator, but that consent

shall apply only to that particular call)

Use is before 8 a.m. or after 9 p.m

Equipment operates unattended

Call fails to disconnect within 10 seconds of termination

Recorded message fails to state name and telephone number of

person or organization initiating call within first 25 seconds

and at conclusion of call

Calls are made to emergency numbers or numbers omitted from

telephone directory.

Use in any association with 976 numbers prohibited. * Enforcement

Criminal: misdemeanor.

Non-Criminal Sanctions:

Suspension/revocation of permit.

Disconnection of telephone service:

Enforcement Authority: Public Service Commission.

HAWAII

Haw. Rev. Stat. [sections] 445-184, 468-1 to -5 (1993). * Registration Requirements

Solicitors must obtain permit from Director of Commerce and

Consumer Affairs.

Scope: soliciting orders for delivery of merchandise within the

state from places either within or without the state. * ADAD Restrictions

Telephone solicitation using ADAD equipment prohibited. * Enforcement

Any violation

Fine: $1,000, and/or

Imprisonment: not more than one year.

IDAHO

Idaho Code [sections] 48-1001 to -1010 (1993). * Scope

Telephone solicitations either to or from locations within Idaho. * Registration Requirements

Must register with attorney general ten days prior to doing business.

Registration valid for one year.

Filing fee: $50.

Renewal fee: $25.

Changes in application information must be reported within two

weeks of the change.

Certificate must be prominently displayed at solicitor’s principal

business location. * Written Requirements

Seller must send written confirmation (form provided in statute)

to purchaser, UNLESS purchaser has unqualified right to return

or cancel and receive full refund.

Consumer has three business days to cancel order.

Payments must be returned within ten business days after seller

receives cancellation notice. * Sales Pitch Requirements

Provide registration number upon request.

Inform consumer of right to cancel.

Provide street address, including telephone number if sale is completed. * Liability of Minors

Minors may disaffirm within a reasonable time.

Parent or guardian shall not be liable. * Statute of Limitations

Two years after the cause of action accrues.

A cause of action accrues when the party bringing the action

knows or reasonably should have known about the violation. * Enforcement

Any violation is an unlawful, unfair and deceptive act or practice

in trade or commerce under Idaho consumer protection act,

chapter 6, title 48.

Enforcing Authorities: attorney general and district court.

Private Actions

Any violation results in a null, void and unenforceable contract.

ILLINOIS

Ill. Rev. Stat. ch. 815, para. 305/1-/30, 505/2Z (1993)

No telephone solicitation between 9 p.m. and 8 a.m. * Sales Pitch Requirements

Solicitor must obtain consent and state:

his or her name

name of the business or organization being represented

purpose of call. * Auto-Dial Restrictions

Disconnect within 30 seconds after call terminates.

Where disconnection within 30 seconds is not technically feasible,

live operator must comply with above sales pitch requirements. * Enforcement

Customer

Recovery of damages (up to 3 times actual damages).

Reasonable attorney fees and costs.

Attorney General

Unlawful practice under Section 2Z of Consumer Fraud and

Deceptive Business Practices Act.

INDIANA

IND. CODE Ann. [sections] 24-5-12-1 to -24, 24-5-14 (Burns 1993). * Registration Requirements

Register with consumer protection division of the office of the

attorney general.

Filing fee: $50.

Annual renewal fee: $50.

Material changes: update must be filed when they occur.

Scope: soliciting from a location in Indiana or a prospect located

in Indiana * Writing Requirements

All written materials must include registration number

Buyers can void contract if:

untrue, misleading or deceptive

nondelivery within 4 weeks of placing order

buyers give written notice within 90 days of contract * Auto Dial Restrictions

Automated Dialing-Announcing Devices banned unless subscriber

consents to receiving the message.

Must disconnect within 10 seconds after call terminates.

No ADAD calls before 9 A.M. or after 8 P.M. * Sales Pitch Requirements (ADAD)

If a live operator precedes a recorded message, the operator must

disclose:

the name of the business

the purpose of the message

the identity of the goods or services promoted

that the message intends to solicit payment or the commitment

of funds (if applicable). * Enforcement

State Criminal Actions

Registration noncompliance: class D felony.

Deceptive act: $500.

ADAD noncompliance: class C misdemeanor and deceptive act.

Enforcement Authority: attorney general.

Venue: circuit or superior court of Marion County.

Private Actions

Injunction.

Actual damages, court costs and attorneys’ fees.

Venue: circuit or superior court of county of residence of petitioner.

IOWA

IOWA CODE [sections] 476.57 (1993). * ADAD Restrictions

ADAD equipment prohibited with limited exceptions.

Where allowed, call must terminate within 10 seconds after termination. * Enforcement

Violation is a serious misdemeanor.

KANSAS

KAN. Stat. Ann. [sections] 50-670 (1992). * Writing Requirements

Any verbal solicitation agreement must be followed up by a signed

contract.

Consumer has option to cancel sale at any time if no written

contract accompanied payment.

Written contract not needed if:

consumer may obtain full refund within 7 days after receipt

and

seller processes refund within 30 days of returned merchandise. * Auto Dial Restrictions

ADAD must disconnect within 25 seconds of termination of call. * Sales Pitch Content Requirements

Solicitor must:

immediately state purpose of call

within 30 seconds, inquire whether person called is interested in

listening to presentation. * Enforcement

Any violation is an unconscionable act or practice under the Kansas

consumer protection act.

KENTUCKY

Ky. Rev. Stat. Ann. [sections] 367.461-.469 (Baldwin 1993). * Registration Requirements (ADAD)

Obtain permit prior to using automated calling equipment.

Bond: $10,000.

Scope: calls to telephone numbers in the state. * Auto Dial Restrictions

ADAD banned unless:

consumer consents

message clearly states:

name

telephone number of caller within 25 seconds

device disconnects within 10 seconds after call terminates.

no random or sequential dialing.

no calling unlisted or emergency numbers.

calls only made between 8 A.M. and 9 P.M.

system only operates with an attendant. Use of ADAD to solicit persons to call a telephone number with a

charge attached to calling it is prohibited. * Enforcement

Any violation is an unfair, false, misleading and deceptive act or

practice.

Enforcing Authority: attorney general.

LOUISIANA

LA. Rev. Stat. Ann. [sections] 45:810-:817, 45:821-:830, 45:1166, 9:2711.1, 9:3538-:3541 (West 1992). * Registration Requirements [sections] 45:813)

Must register with Public Service Commission prior to using ADAD

equipment or live operators to make telephone solicitations.

Filing fee: prescribed by Commission.

Renewed annually.

Renewal fee.

Bond: $10,000.

Scope: calls to persons in the state. * Registration Requirements ([sections] 45:823)

Telephonic seller must register with Consumer Protection section

of Department of Justice not less than 10 days prior to doing

business in the state.

Filing fee: $150.

Bond: $50,000.

Registration valid for one year.

Renewal fee: $150.

Material change must be reported within 10 days of change.

Changes in salespersons updated quarterly.

Registration must be conspicuously displayed at each of seller’s

business locations.

Name of individual(s) in charge of each location must be displayed

with registration.

Seller claiming an exemption to registration must file with consumer

protection section of Department of Justice.

Scope: soliciting purchasers from locations in the state or purchasers

who are located in the state. * Calling Bans

Use of ADAD equipment or live operator to make telephone

solicitations unlawful when:

Consent not received.

Calls made before 8 a.m. or after 8 p.m. (Monday through

Saturday)

Calls made on state holiday or Sunday

ADAD equipment operates unattended

ADAD call does no

Recorded message fails to state name and telephone number

of person or organization making call within first 25 seconds

Calls made to numbers omitted from telephone directory y

customer request or emergency numbers.

Telephone subscribers may request to be included in “opt off” list

maintained by telephone company.

Use of ADAD equipment to solicit persons to call any seven-digit

telephone number for which a fee is charged for each call. * Sales Pitch Requirements

At the time of solicitation and prior to consummation of sale, seller

must provide the following:

street address of location from which salesperson is calling

street address

Cancellation: midnight of third business day after consumer signs

agreement.

Seller must provide to consumer and obtain his signature to a

written agreement, which must contain a statement of consumer’s

right to cancel. * Enforcement

Registration ([sections] 45:813) and Calling Ban Violations

Criminal Penalty

Fine: not more than $500.

Imprisonment: not more than 30 days.

Injunctive relief.

Attorney fees.

Civil Penalty

Fine: $1,000 per violation.

Necessary expenses and reasonable attorney fees

Registration ([sections] 45:823) and Sales Pitch Violations

Fine: not to exceed $10,000 per violation

Imprisonment: not more than one year.

Salesperson soliciting for unregistered seller misdemeanor punishable

by:

Fine: not exceeding $2,500

Imprisonment: not more than six months.

MAINE

Me. Rev. Stat. Ann. tit. 10, [sections] 1498-1499 (West 1992). * Registration Requirements (ADAD)

Register with Secretary of State.

Filing fee: Secretary of State may charge a fee sufficient to cover

the cost of registration.

Changes to registration information or discontinuance of the calling

program must be reported within 30 days. * Auto-Dial Restrictions

No automated calls except weekdays between 9 A.M. and 5 P.M.

Must disconnect within 5 seconds following termination of call.

Automated device must be able to distinguish between authorized

and unauthorized numbers.

No more than one call to a given number in an 8 hour period.

No automated calls to numbers of customers who have notified the

telephone company and requested not to receive such calls. * Sales Pitch Content Requirements (ADAD)

Must identify within first minute:

name

address

telephone number. Enforcement

All violations are considered unfair trade practices.

Enforcement official: attorney general

MARYLAND

Md. Ann. Code art. 78, [sections] 55C (1993)

Must be reduced to writing before valid.

Must contain:

name, address and telephone number of seller

total price of contract

detailed description of goods or services. * Auto-Dial Restrictions

Automated calls with prerecorded messages prohibited.

Calls must disconnect within 5 seconds after termination. * Enforcement

Auto-Dial Offenses

First offense: misdemeanor with a fine up to $1,000.

Subsequent offenses: misdemeanor with a fine up to $5,000.

Other Offenses

Unfair & deceptive trade practice under Title 13, Subtitle 3.

MASSACHUSETTS

Mass. Gen. L. ch. 159, [sections] 19B-19E (1993). * ADAD Restrictions

Persons using automatic telephone dialing systems may not dial

numbers of telephone customers who have notified telephone

company that they do not wish to receive such calls.

ADAD calls must disconnect within 5 seconds after termination. * Sales Pitch Requirements

Upon initial contact, solicitor must state:

identity of person making solicitation

trade name of person represented

kind of goods or services offered.

MICHIGAN

Mich. Comp. Laws [sections] 445.111-.117, 484.125, 750.540e (1992). * ADAD Restrictions

Use of recorded message prohibited without consent of person

being called.

Use of automated dialing device prima facie evidence of intent to

violate. * Writing Requirements / Cooling Off Period

Cancellation: midnight of third business day after agreement signed.

Seller must provide written agreement substantially similar to one

provided by legislature explaining right to cancel. * Time of Day Restrictions

No unsolicited commercial calls between 9 p.m. and 9 a.m. * Enforcement

ADAD Violations

Private Action

Damages of not more than $250.

Attorney’s fees.

State Criminal Action

Misdemeanor.

Fine of $1,000 and/or imprisonment for 10 days.

Time of Day Violations (malicious)

Misdemeanor.

Imprisonment for not more than 6 months

$500 fine.

MINNESOTA

MINN. Stat. [subsections] 325E.26-.31 (1993). * ADAD Restrictions

ADAD prohibited unless:

subscriber consents

message immediately precede by live operator.

Must disconnect within 10 seconds after call terminates.

No ADAD calls before 9 A.M. or after 9 P.M.

Scope: calls to subscribers in the state. * Sales Pitch Requirements (ADAD)

If message preceded by live operator, operator must disclose:

name of business

purpose of message

identity or kinds of goods or services

intent to solicit payment or commitment of funds (if applicable). * Enforcement

Private right of action to recover damages.

MISSISSIPPI

Miss. Code Ann. [subsections] 77-3-451 to -459 (1993)

Telephone solicitors must register with Attorney General.

Bond: $50,000 (through 6-30-94).

Bond: $75,000 (from and after 7-1-94). * Time of Day Restrictions

Unsolicited telephone sales only between 8 a.m. and 9 p.m., Monday

through Saturday (no calls on Sunday). * Sales Pitch Requirements

Solicitor making unsolicited telephone sales call must immediately

identify himself or herself by true first and last names and the

business represented

disconnect call if person called expresses disinterest. * Writing Requirements Contract made pursuant to telephonic sales call must:

be in writing and signed by consumer

identify goods or services

contain name, address and telephone number of seller and price

of contract

contain statement that consumer is not obligated unless signs

and returns contract. * ADAD Restrictions

No ADAD calls between 9 p.m. and 9 a.m.

Unsolicited telephone sales by ADAD prohibited.

No ADAD calls unless person called has given prior consent.

ADAD equipment must be operated by a person who shall:

state nature of call

state name, address and telephone number of business or organization

being represented

inquire whether person called consents to hear prerecorded

message

disconnect device upon termination of call (no time given).

Must apply to telephone corporation within whose service area

telephone calls will be placed. * Enforcement

ADAD Violations

Civil offense subject to:

fine not to exceed $500 per violation

phone service to ADAD.

Enforcing Authority: Public Service Commission.

Other Violations.

Civil penalty: not to exceed $10,000 per violation.

Injunctive relief.

Other relief as court deems appropriate.

Reasonable attorney’s fees and costs.

Enforcing Authority: Attorney General.

MONTANA

Mont. Code Ann. [sections] 45-8-216 (1993). * ADAD Restrictions

Automated telephone solicitation prohibited. * Enforcement

Fine: no more than $2,500.

NEBRASKA

1993 Neb. Laws 121

Must obtain permit from Public Service Commission.

Application fee: $500 per device.

Valid for two years.

Renewal treated as new application.

Any person using ADAD other than for telephone solicitation must

register without a fee. * ADAD Restrictions

All ADAD telephone solicitation messages must:

identify person making call at beginning of message

state telephone number or address of such person.

No ADAD calls before 8 a.m. or after 9 p.m.

Caller must maintain list of persons who do not wish to receive

telephone solicitations.

Must disconnect within 5 seconds after termination of call. * Enforcement

Enforcing Authority: Public Service Commission

Any violation subject to:

cease and desist order

revocation or suspension of permit

fine not to exceed $1,000 per violation.

Any person in violation shall be guilty of a class II misdemeanor.

NEVADA

Nev. Rev. Stat [subsections] 598.075, 599B (1993). * Registration Requirements

Seller’s License

Fee: $6,000.

Bond: $50,000 (may be increased to not more than $250,000).

If under an assumed name:

additional fee: $6,000.

additional bond: $50,000.

License must be prominently displayed at place of business.

Must renew annually and update within 10 days if material

change occurs.

Renewal Fee: $6,000.

Salesperson’s License

Fee: $100.

Must renew annually and update within 10 days if material

change occurs.

Renewal Fee: $100.

License must be prominently displayed at place of business.

Apply to consumer affairs division of the department of business

and industry.

Scope: soliciting from a location in the state or soliciting persons

in the state from a location outside of the state. * Writing Requirements

Written summary of refund guidelines established in [sections] 599B.190

must be supplied to buyers within 3 days of purchase or delivery,

whichever is later. * Auto-Dial Restrictions

Use of automatic dialing and recorded message prohibited. * Other Restrictions

No salesperson may be associated with more than one seller at

the same time.

Salesperson or seller cannot disclose name or address of any buyer

except in limited circumstances. * Sales Pitch Requirements

Salesperson must disclose:

name

employer

purpose of call

any charge associated with the sale. * Enforcement