AG issues telemarketing clarifications

By Kim Greene
KPA General Counsel
Dinsmore & Shohl

It’s almost here . . . that magic moment when the laws passed by the 2002 General Assembly go into effect. July 15 is that date. Among other things, it is the date when the telemarketing bill, with its “No Call” list goes into effect.

Any of you who do telephone solicitations for subscriptions (or who hire telemarketing companies to do the telephone solicitations for you) should have a copy by now of the first No Call list. (We were all used to calling it the “zero call” list, but the Attorney General website instructions refer to it as the “No Call” list.)

If you are going to do telephone solicitations (as that term is defined in the statute) you must obtain a copy of the No Call list. To get a copy of the list you must complete an application form and sign a confidentiality agreement. (The law prohibits using the No Call list for any thing other than its intended purpose.) You can get a copy of the application form by writing the Attorney General:

Office of the Attorney General, ATTN: No Call, 1024 Capital Center Drive, Frankfort, Kentucky 40601, or from his website: www.kycall0.net. The list is free if you down-load it. There’s a small charge for a paper or CD copy. You will have to obtain an updated list every three months, on this schedule: List Available Effective Date June 15 July 15 - October 14 September 15 October 15 - January 14 December 15 January 15 - April 14 March 15 April 15 - July 14

Only those who have applied to the Attorney General may have a copy of the No Call list. That means, you are not free to borrow anyone else’s list or share yours with anyone else. The Attorney General wants to make sure that everyone who possesses the list has signed the confidentiality agreement.

What does the No Call list mean? It means you cannot make telephone solicitations to people whose names appear on the list. Remember, though, that “telephone solicitation” is a defined term in the statute.

According to the law, a telephone solicitation is a live or recorded communication sent by telephone or facsimile to a person’s telephone number for the purpose of: (1) soliciting a sale; offering an investment, business or employment opportunity; or offering a consumer loan; (2) obtaining information that may be used for those purposes, or (3) offering the person called a prize or gift if he or she must pay money in order to receive the prize or gift; or (4) offering the person called a prize or gift to attend a sales presentation for consumer goods or services, an investment or business opportunity, or a consumer loan.

It is also a telephone solicitation to call (or telecopy) persons who respond to letters you sent them if your letter: (1) indicated the recipient had been specially selected for this notification, (2) indicated the recipient would receive a prize or gift if the recipient called you or your telemarketer, or (3) indicated that if the recipient bought one or more items from you, the recipient would receive additional items at no additional cost or for less than the regular cost of the items. The rule in this paragraph applies to your calls to people with whom you have no prior business relationship. That is, they have not previously purchased goods or services from you and they have not previously requested credit from you.

On the other hand, there are some calls which are not “telephone solicitations” under the law. Those are: (1) a telephone call made in response to an express request of the person called, unless the request was made during a prior telephone solicitation, (2) a telephone call made to the debtor or a party to a still pending contract in connection with the payment of an existing debt or performance of that contract, (3) a telephone call to any person with whom you have a prior or existing business relationship, (4) a telephone call made by you or your telemarketer from Kentucky to a location outside of Kentucky, and (5) a telephone call made by one merchant to another.

Lots of you have been wondering exactly what is a “prior or existing business relationship?” The new Attorney General regulations say that the Attorney General will consider the following five factors:

1. Whether the relationship was formed prior to the telephone solicitation, by a voluntary two-way communication between the merchant/telemarketer and the consumer;

2. Whether the relationship involves commercial or mercantile activity, including goods or services;

3. Whether the relationship involves a mutual exchange of consideration;

4. Whether the relationship has been previously terminated by either party, including the consumer’s termination of the relationship by informing the merchant/telemarketer that he or she no longer wishes to receive telephone solicitations from the merchant or telemarketer (this one raises questions for KPA members); and

5. Whether a reasonable consumer would expect the business relationship to extend to related business entities or organizations of the merchant/telemarketer, including parent or subsidiary corporations, partnerships or affiliates.

These factors are helpful, but they don’t answer the question we’ve heard most often: Can we call someone who used to be a subscriber but isn’t anymore? Before the Attorney General’s regulations came out, we assumed we had a “prior business relationship” with that person and, therefore, could call that person. The only unknown was what if the subscription stopped ten years ago? Did that lapse of time make it unlawful to place the call? Where will the law draw that line?

Now, with the Attorney General’s factor #4 it appears you cannot call a former subscriber who has cancelled his or her subscription, since that probably amounts to terminating the relationship between you and the subscriber. This would not effect calls to people you’ve given trial subscriptions where they simply haven’t contacted you after the trial period. They haven’t actually cancelled a subscription or terminated a relationship; they’ve merely let it lapse. But it looks like a different ballgame with subscribers who actually cancelled their subscription. We are going to need more clarification from the Attorney General on this one.

Until someone obtains that clarification, be careful about making calls to people who previously cancelled their subscriptions. If their names appear on the No Call list it would be wise not to call them unless and until the Attorney General clarifies factor #4.

On the other hand, if their names
do not appear the No Call list then you may make the telephone solicitation call, so long as you follow the dos and don’ts outlined in the Act (and published in this column in April 2002).

Why do you want to be so cautious? The law provides a penalty for any merchant or telemarketer making a telephone solicitation to someone on the No Call list. That penalty can be up to $5,000 for each offense.

The Attorney General regulations leave unanswered another question several people have had about the penalty provision. Under the law, a merchant or telemarketing company who knowingly and willfully calls a telephone number of the No Call list three times in one calendar year is guilty of a Class D felony. The way the regulation is written it is difficult to tell whether that is a total of three knowing and willful calls or whether that means three knowing and willful calls to the same number. Until we have clarification on that, you’d be wise to read it conservatively: A total of three knowing and willful calls in one year could lead to a Class D felony charge.

None of that should be a problem, of course, for any newspaper which obtains the No Call list each quarter and makes a diligent, good faith effort to comply. That will mean having good procedures in place for your telemarketers, training everyone who will make or supervise telephone solicitations and doing your own periodic audits of your procedures.

If you have questions about the telemarketing law, feel free to call your Hotline attorneys: Jon L. Fleischaker: (502) 540-2319, Kimberly K. Greene: (502) 540-2350, R. Kenyon Meyer: (502) 540-2325.