DNC Compliance: It's Not an Easy Thing

By Joan Mullen
September 2004

After the FTC published the rules for the revised Telemarketing Sales Rule, the Direct Marketing Association (DMA) designed a flow chart for "Making a Sale."  When it was shared with a federal regulator, the regulator commented that the document was "too complicated!"  This was but a small glimpse of what we in the telemarketing industry have to deal with almost every time a new law or regulation is passed.  Besides affecting our business or even being an impediment to our business, they tend to be overly complicated.  Let me share a recent example. 

The revised New Jersey Do Not Call (DNC) law was recently passed.  The compliance procedures were made public at the same time as enforcement began.  Getting to a point of understanding all of the requirements is a good example of "how to" be frustrated when you set out to comply with a new or revised law.  I say this as someone with fairly extensive experience having been involved with legislation and regulations affecting the teleservices industry for more than 15 years.  Compliance with the New Jersey revised DNC law took several hours to complete.  The personnel that answered the "Help line" were, for the most part, nice, but not particularly professional and definitely not trained.  Each question had to be escalated and a callback made.  This all contributed to a delay in registering and more importantly, a delay in releasing callable but suppressed names.

As soon as the parameters of the revised law were made public, we had questions and concerns, as did our clients.  The law sounded like a state registration law and up until now, most of these kinds of laws have had a significant number of exemptions.  As we scrambled to understand the requirements and put the process of registration and compliance into motion, we decided to suppress all consumer names for New Jersey – "just in case".

It was quickly obvious that this would be no ordinary "send the fees, name a contact person, and select the format" type of "No Call" registration law.  New Jersey uses the national Do Not Call database but requires registration and compliance with the components of the state law.  In addition, the "existing business relationship" (EBR) exemption is only for existing customers. 

In order to keep our call center in compliance, we decided that a plan was needed.  Our contingencies included:

• Suppressing the New Jersey consumer names

• Finding information about the revised New Jersey DNC law on the New Jersey Website

• Reading the information on the Website and make a list of questions and points that needed clarification

• Contacting the New Jersey state representative to get answers

• Downloading the application, completing it, and submitting it 

• Waiting for acceptance or rejection and proceeding as warranted

• Once approved, releasing callable New Jersey names

The above list can be adapted for all telemarketing legislation that requires your compliance.

A surprise was that New Jersey is an important state for telemarketing, because of the potential number of callable names.  Finding information on the New Jersey state Website was the first challenge and it confirmed that our decision to suppress all New Jersey consumer names as an interim measure was the correct one.  The components of the law made it sound like an anti-fraud or registration law when in fact it is a revised DNC law.

After reviewing the Website, we determined the following.  In addition to completing the registration form and attaching the required information and fee:

1.   Telemarketers (agencies and in-house) must maintain the following records for 24 months:

• National DNC list and date of latest update

• Evidence of "existing customer" status; this is New Jersey's only EBR exemption

• Express written permission to call, if warranted

• A company list of New Jersey DNC requests with date of request

• A list of seller's (client's) in-house customer DNC requests.

• The seller's own list (client list) of New Jersey DNC requests with date of request

• All scripts and written materials

• Agents' names, alias', home addresses, telephone numbers, and job titles

• All phone records for calls into New Jersey

• All training procedures, policies, and other training material

• Evidence of employee training

• If telemarketing sales calls are recorded, the tape recordings of the telemarketing sales calls

• A log which includes the phone number, date, and time of each and every telemarketing sales call

2.   Other components of the law include:

• Any customer request to be put on DNC list must be processed and completed within 30   days

• All sales scripts must state name of caller, company that the caller works for, and the company(s) being represented

• A telemarketer may call an existing customer on the New Jersey DNC list or company specific DNC list provided that the call is limited to the provision of continuing services and does not relate to expanded services, upgrades, products, or other services unless directly related to the particular service or services previously provided.

3.   According to the revised DNC regulations, telemarketers must include the following with their application:

• The name, residence, and business street address of each officer, director, and principal

• The name, residence, and business street address of each person that has ten percent or more ownership in the company.  This was an interesting one.  I called New Jersey for guidance because as a publicly traded company anyone who holds stock worth ten percent or more would qualify for this list.  After three days, they got back to me and agreed to "settle" for the contact information of the top three officers.

• The name, residence, business address, and business telephone number of each person who is a managing agent of the telemarketing business in New Jersey; or, if the managing agent is a corporation, association, or another company, its name, street address and telephone number and the names and addresses of its officers and directors.  Basically this managing agent is someone or some company that can and will represent the telemarketer in New Jersey, should the need arise.

• A disclosure statement that states that "each applicant" must disclose any conviction(s) for a number of first, second, or third degree crimes.  Here we needed to look up the New Jersey definition of applicant.  It means the entity or company that will be making telemarketing sales calls and each officer, director, principal, and owner of the company (thankfully not the telemarketers.)

4.   A letter of authorization to do business in New Jersey, from our managing agent in New Jersey.

The completed registration form was signed by a corporate officer and sent in with the other required documentation and the fee which ranges from $150 to $2,000, depending on how many lines are used to telemarket into New Jersey.  We thought we were set and would be "good to go" in a matter of days.

About a week later, we received a letter stating that we were rejected for incomplete information.  Apparently, we misunderstood one of the questions, which asked about us being a "foreign corporation."  Since there was no definition of "foreign," I mistakenly presumed that they meant "out of the United States."  Since all of our offices are domiciled in the United States, we thought we were okay.  What they meant was that any company incorporated outside of New Jersey was considered a "foreign" corporation and required a letter of authorization (good standing) for New Jersey.

This final hurdle may sound simple enough but there was another "catch."  Once we obtained the letter, we had to get it approved by a totally unrelated department within New Jersey state government, then retrieve it, and submit our registration package again. 

A couple of days later we received a verbal acceptance but by then we decided that it would be best to wait for the letter of acceptance before we released our New Jersey callable names.  The total process took more than two weeks and many hours.  Can you imagine if the process was multiplied by 50?

By the way, New Jersey requires that any changes be sent within 30 days throughout the year and requires an annual renewal!  Any telemarketing company that does not have someone (in-house or contracted) that is responsible for coordinating these activities is taking a chance.  States are looking for additional revenue as well as trying to exercise their authority. 

If there is a complaint that results in an investigation, it is very likely that all of your compliance policies and procedures will be carefully reviewed.  As always, be sure to have your internal legal counsel determine how any new or revised law or regulation applies to your company. 

Joan Mullen is Vice President, Special Projects and Industry Relations for ORC ProTel, Inc.  Questions may be sent to jmullen@mau.opinionresearch.com.

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