article

Using Technology Marketing Tools Within theRules

Posted: 11/1999

Using Technology Marketing Tools Within the
Rules

By Edwin N. Lavergne

Marketers are always looking for new ways to reach consumers. With the evolution of
technology, new tools have become available to target consumers in their homes, but
federal and state regulators concerned about privacy, fraud and harassment have responded
by enacting a host of statutes and regulations governing telemarketing, unsolicited faxes
and unsolicited e-mails. Read on to ensure that your company’s marketing department is
aware of key requirements and developments in this area.

Telemarketing

Federal issues. Telephone solicitations are subject to regulation by the Federal
Communications Commission (FCC) and the Federal Trade Commission (FTC). Most of the FCC’s
requirements are not applicable when telephone calls are made to a consumer with whom the
calling party has an established business relationship. However, because there is no
business relationship exemption in the FTC’s regulations, the FTC’s requirements generally
will apply.

Among other things, the FTC requires specific disclosures, prohibits misrepresentations
and sets limits on the times calls can be made (such as no calls before 8 a.m. or after 9
p.m.). The FTC also requires telemarketers to adopt written procedures to ensure that
sales calls are not made to persons who do not wish to receive such calls. In addition,
certain business records must be stored by telemarketing firms for at least two years.

State issues. More than 40 states have enacted telemarketing laws. Compliance
with these differing state requirements can be a challenge–to say the least. Some of the
more common state requirements include:

* Registration and bonding. Many states require telemarketers to register and post a
bond before initiating calls to consumers.

* Cancellation rights. Many states require telemarketers to adhere to certain
cancellation or refund procedures. For example, Colorado requires telemarketers to
disclose the purchaser’s cancellation rights during the telephone solicitation. Nevada
requires sellers to provide a refund or replacement within 14 days of receiving a written
request for a refund or replacement.

* Time-of-day calling restrictions. Some states have enacted time-of-day calling
restrictions that are different than those adopted by the FTC. For example, Kentucky
allows calls only from 10 a.m. to 9 p.m.; Mississippi prohibits calls on Sundays; and
Texas requires that calls be made from 9 a.m. to 9 p.m. Monday through Saturday, and from
noon to 9 p.m. on Sundays.

* Caller ID. Some states prohibit telemarketers from circumventing caller ID devices.
These states include Alabama, Arizona, Georgia, New York, Oklahoma, Tennessee, Texas and
Utah.

* Signed contract. Some states, such as Connecticut and Maryland, require that a signed
contract be received from the consumer before charging the consumer’s credit card.

* State-maintained lists. Some states, such as Florida, Georgia and Kentucky, prohibit
calling people whose names appear on a state-maintained list of residents who do not wish
to receive telephone solicitations.

* Age restrictions. A few states prohibit telephone solicitations to persons less than
age 18.

Unsolicited Faxes

With the proliferation of fax machines in our homes, marketers now have an additional
way to reach consumers. However, the federal government and the states have responded
relatively quickly to consumer concerns.

Federal issues. The FCC prohibits the use of a fax machine, computer or other
device to send an unsolicited advertisement to a fax machine. An "unsolicited
advertisement" is defined as advertising material concerning the commercial
availability or quality of any property, goods or services that is transmitted to a person
without that person’s prior express invitation or permission. The FCC has issued citations
to several companies this summer for violations of this regulation.

State issues. More than 30 states have enacted laws governing unsolicited faxes.
In addition, some states have enacted statutes that prohibit harassing or fraudulent
faxes. Although many states prohibit unsolicited advertising via fax machines, some states
such as Maine, Nevada, New York and Virginia contain exemptions if the marketer has a
preexisting business relationship with the person being faxed. An exemption also may exist
if the fax is sent as a follow-up to a sales call, such as in Louisiana and South
Carolina.

Unsolicited E-Mails

With the explosion in the use of e-mail, companies have discovered yet another method
of direct marketing. Due to the low cost and relative ease of such advertising, e-mail
solicitations are growing dramatically. But as the volume of commercial e-mail increases,
so do consumer complaints. Common complaints against junk e-mail are that it wastes time,
is an invasion of privacy and can be offensive.

Federal issues. While the federal government has not enacted any statutes
directly targeting commercial e-mail solicitations yet, the follow legislation is pending:

* Inbox Privacy Act of 1999 (S. 759). This bill would prohibit the transmission of
unsolicited commercial e-mail to an individual who has requested not to receive such
messages. It also would prohibit sending e-mail to any address served by a domain if the
domain owner has elected not to receive such mail at that domain.

* Internet Growth and Development Act (H.R. 1685). This bill would restrict the
transmission of certain e-mail advertisements in violation of an e-mail service provider’s
policy against use of its equipment for the initiation of unsolicited e-mail
advertisements.

* Internet Freedom Act (H.R. 1686). This bill is designed to protect against fraudulent
unsolicited e-mail.

* E-Mail User Protection Act (H.R. 1910). This bill would prohibit abuses in the use of
unsolicited bulk e-mail, such as messages containing a false or misappropriated name of
the sender, e-mail return address or name and telephone number of a contact person.

* Can Spam Act (H.R. 2162). This bill would permit an e-mail service provider to sue
spammers that use the service provider’s equipment to send unsolicited commercial e-mail
in violation of the service provider’s policy.

State issues. Eight states (California, Connecticut, Iowa, Nevada, Oklahoma,
Virginia, Washington and West Virginia) have enacted statutes specifically regulating
e-mail solicitations. Some key requirements to be aware of in these states are:

* Advertising restrictions. Some states target the sending of unsolicited bulk e-mails.
Others impose specific content requirements on all e-mail solicitations. For example,
California requires e-mails containing unsolicited advertising materials to contain a
toll-free number or a valid return address to which the recipient may call, write or
e-mail to notify the sender not to e-mail any further unsolicited documents. The subject
line of the e-mail must include a designation that the e-mail contains unsolicited
advertising materials (i.e., "ADV:" or "ADV:ADLT"). Similarly, Nevada
requires unsolicited commercial e-mail messages to identify the message as a promotion or
advertisement, to disclose the sender’s name, address and e-mail address, and to include
instructions for declining to receive further e-mails.

* Fraudulent or harassing e-mails. Several states, including Arkansas, Hawaii and
Maryland, have enacted statutes that prohibit harassing or fraudulent e-mails.

Due to the ever-changing pace of technology, marketers now can reach consumers with
unprecedented ease. However, new technology and new marketing techniques inevitably are
followed by new legislation. As novel methods of communication continue to evolve and
businesses find new ways of targeting consumers, federal and state regulators will attempt
to keep pace.

Edwin N. Lavergne is a partner in the Washington office of Shook, Hardy and Bacon
LLP. He concentrates on Internet, telemarketing, marketing and promotion law issues. He
can be reached at +1 202 783 8400.


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