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Introduction to Telephone Marketing
 
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Copyright © 2004 Zegarelli Law Group. All rights reserved.

 


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.

 
 

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