If you are tempted to increase
business by soliciting people over the telephone, beware of the traps for the
unwary businessperson. The Telemarketer Registration Act regulates telemarketing
to residential consumers. Telemarketing is defined as "a plan, program or
campaign which is conducted to induce the purchase of goods or services or to
solicit contributions for any charitable purpose, charitable promotion or for or
on behalf of any charitable organization, by use of one or more telephones and
which involves more than one telephone call." See 73 P.S. § 2242.
Telemarketers or telemarketing businesses
employing a telemarketer are required to register and post a $50,000 surety bond
with the Pennsylvania Attorney General's office thirty days prior to offering
"consumer" goods or services for sale through any medium. See 73
Pa.C.S. §2243.
The Act also proscribes various activities
including telemarketing prior to 9 a.m. or after 8 p.m. and calling and/or
soliciting people by telephone who have previously have stated that they do not
wished to be contacted. The company must also keep a list of residential
subscribers who do not wish to be contacted.
If the company obtains or submits for payment a
check, draft or other form of negotiable paper drawn on a person's checking or
savings account, they must first have the person's express verifiable
authorization. Verifiable authorization includes express written authorization,
express tape-recorded oral authorization, or written confirmation sent to the
consumer prior to submitting the negotiable instrument for payment. After
confirming a transaction, the telemarketer or telemarketing business must reduce
any sale of goods or services to writing and receive the person's signature.
There are exceptions to the requirement of a
contract: (1) if the transaction is already governed by other laws; (2) where
the consumer previously visited a merchant operating a retail business
establishment in a permanent location where consumer goods are displayed or
offered for sale on a continuing basis; or (3) where the consumer may receive a
full refund upon the return of undamaged and unused consumer goods within ten
days of receipt of the consumer goods or upon sending a cancellation of consumer
service notice to the telemarketer or telemarketing business within five days of
the transaction. All required contracts must include various provisions relating
to price, description of goods and services, oral or written representations
made, etc.
The Act lists twelve activities that are not
covered under the definition of a telemarketer, including soliciting sales
through catalogs; soliciting without intent to complete the sale at the phone
solicitation stage; book, video or record club contracts; business to business
sales under certain conditions; organizations licensed, certified or registered
by state or federal government; solicitation of previous purchasers; newspapers,
magazines, or general circulation periodicals; retail businesses that have
majority of their business in which buyers are obtaining such products or
services at the seller's location; solicitation when 75% of sales are to exempt
parties; sale of food/produce less than $500; and exempt or registered
securities.
Additionally, there are another seven activities
that are excluded unless a professional fundraising counsel or a professional
solicitor, who is neither registered nor exempt from registration under this
act, is utilized in the particular activity. These include solicitations
involving educational institutions, hospitals, public libraries, senior citizen
centers, nursing homes, parent/teacher organizations, corporations audited by
Department of Defense, and charitable organizations receiving less than $25,000
annually.
The Telemarketer Registration Act regulates
telemarketing activities. The focus is on telephone solicitation calls that are
made with the purpose of soliciting sales of any consumer goods or services.
This term does not include calls in response to requests by consumers or in
relation to consumers in which there is an already existing business
relationship including in relation to existing debts, contracts, payments or
performance. Telephone solicitation calls concerning political candidates or tax
exempt entities are also excluded.
In addition to the Telemarketer Registration Act,
the federal government passed legislation, commonly known as the Telephone
Consumer Protection Act of 1991, which also regulates commercial speech in the
form of advertising. 47 U.S.C. §227 et seq. The Act prohibits companies
from sending unsolicited faxes containing advertisements. An unsolicited
advertisement is defined as "any material advertising the commercial
availability or quality of any property, goods, or services which is transmitted
to any person without that person's prior express invitation or
permission." See 47 U.S.C. §227(a)(4).
The Act also prohibits automated, prerecorded
calls to residences. The Act has survived challenges that it is a violation of
one's First Amendment Right of Free Speech to prohibit these activities. See Destination
Ventures v. FCC, 46 F.3d 54 (CA 9th, Or 1995).
The Act is applicable to both intrastate and
interstate fax advertisements. The majority of the States have interpreted the
Act as conferring to the States exclusive subject matter jurisdiction over
private actions based on the Act. See Aronson v. Fax.com, Inc., 149 PLJ
157, 51 Pa.D&C 4th 421(2001) (Wettick concluding that Pennsylvania state
courts have jurisdiction over private causes of action created by the TCPA). In
these private actions brought by individuals, a corporate officer may be held
personally liable if they had direct personal involvement. See Texas v. American
Blast Fax, Inc., 121 F.Supp.2d 1085 (2000 W.D. Tex).
Recently, the Honorable Judge Horgos of the Court
of Common Pleas of Allegheny County ruled on preliminary objections in an action
brought based on the Telephone Consumer Protection Act, Hicks v. American
Billing Systems, GD 00-14161. In Hicks, the Plaintiff brought suit against
the Defendants alleging she received an unsolicited facsimile transmission from
one or more of the Defendants. Specifically, she received a one-page
advertisement entitled "Start Your Own Profitable Medical Billing
Business." Her legal action survived preliminary objections filed by one of
the Defendants, Fax Source, Inc., arguing that broadcasters such as Fax Source
are common carriers of the facsimiles of other parties and therefore, have no
liability. The Court rejected this argument saying that Fax Source could be held
liable if the carrier had a high degree of involvement or knew sending a fax
transmission would violate the TCPA.
Fax Source also argued that their advertisements
for a "franchise opportunity" were similar to an employment
opportunity. The Defendant was relying on the decision in Lutz Appellate
Services, Inc. v. Curry, 859 F.Supp. 180 (E..D.Pa. 1994) that held that the
TCPA does not prohibit the transmission by fax of unsolicited employment
advertisements. The Court rejected this argument saying the faxes were nothing
more than solicitation for recipient to buy goods and services from ABS.
Please contact our office for an analysis of your
marketing and/or advertising to determine if you may be in violation of either
the state Telemarketer Registration Act or the federal Telephone Consumer
Protection Act.
