AMARILLO, TX – Most DME suppliers are aware that when calling a Medicare beneficiary, the supplier must comply with the telephone solicitation statute and Supplier Standard #11. However, many suppliers are not aware that telephone calls to consumers are also governed by a number of other federal and state statutes. Part one of this two part article discussed the federal statutes. Part two discusses a sample of state statutes.
State Telephone Solicitation Laws
There are many restrictions and limitations placed on telemarketers and telephone solicitation by the states—the most important of which are registration and bonding requirements and state-specific do not call lists. The following section examines the rules of three states: California, Ohio, and Texas. Registration involves the process of registering with the state as a telemarketer or telephonic solicitor. States also require the telemarketer to execute a surety bond in the event that consumers are injured by the actions or inactions of the telemarketer. Below is a chart that summarizes the registration and bonding requirements of these three states.
In California, telephone solicitation is governed by the California Business and Professions Code. The sections governing telephonic solicitation were enacted in an effort to increase transparency and accountability of telephonic sellers (telemarketers).1 Telephonic sellers are defined as any person who “on his or her own behalf or through salespersons or through the use of an automatic dialing-announcing device…causes a telephone solicitation or attempted telephone solicitation to occur.”2 Although the law provides for various exceptions to this definition, based on the facts presented none of the exceptions appear to be applicable to DME Supplier B; therefore the restrictions and requirements for telephonic sellers would apply.3
Telephonic sellers must register with the state by filing an application with the Department of Justice, paying a $50 application fee,4 and posting a $100,000 bond.5 The registration, which includes the $50 application fee, must be renewed annually. In addition to registration, telephonic sellers are subject to the following requirements:6
1) The seller must identify him/herself individually;
2) The seller must identify that they are calling on behalf of DME Supplier B; and,
3) The seller must state the kind of goods or services being offered for sale.
The bulk of the regulation focuses on when a telephonic seller may contact an individual on the national do-not-call registry.7 Generally, such a call may only be placed where there is a prior existing business relationship between DME Supplier B and Mrs. Smith or where Mrs. Smith has provided express prior written authorization. A prior existing business relationship would arise where Mrs. Smith had purchased, leased, or rented items from DME Supplier B within 18 months prior to the date of the telemarketing call.8 If a telephonic seller calls the number of a person listed on the national do-not-call registry and that individual lives in California, this will likely be considered a violation of both federal and California law.9
In Ohio, telephone solicitation is regulated by the Ohio Telephone Solicitation Sales Act.10 Under this Act, telephone solicitors are defined as a “person that engages in telephone solicitation directly or through one or more salespersons either from a location in this state, or from a location outside this state to persons in this state.”11 There is one potential exception to the definition of telephone solicitor that DME Supplier B may meet – if DME Supplier B publishes and delivers a catalog, at least annually, that meets the following specific criteria, it would be exempt from many of the requirements for telephone solicitors:12
1) The catalog provides the business address of the seller;
2) The catalog contains a written description or illustration of each good or service offered for sale;
3) The catalog has a clear and conspicuous disclosure of the sale price of each good or service; shipping, handling, and other charges; and return policy; and,
4) There are at least 24 pages to the catalog and it is distributed in more than one state to at least 250,000 households.
Assuming the above exception does not apply, this Act provides for a number of requirements and restrictions that telemarketers must adhere to. The requirements applicable to DME Supplier B are as follows:13
1) Telephone solicitors must provide their true name and the company they are calling on behalf of;
2) A solicitor must state, within the first 60 seconds of a call, his or her real name, the company name, the purpose of the call, and the goods or services being sold;
3) If a sale or agreement is made during the call, the telephone solicitor must (verbally) provide the consumer with the following information before requesting payment:
a) Solicitor’s street address and telephone number;
b) Total cost of the goods or services;
c) Restrictions, limitations, or conditions;
d) Refund and/or cancellation policy terms and conditions;
e) For prize promotions, a description of the prize, terms, and conditions; and
f) The consumer’s rights under the law which require the telemarketer to either obtain a signed written confirmation or provide a 7-day notice of cancellation; and
4) Telephone solicitors who intend to offer prizes must provide notice to the Attorney General at least 14 days before making their calls.
All of the disclosures listed above must be given in a “clear and intelligible manner.”14
A telemarketer must file an application with the Ohio Attorney General’s office and pay an application fee of $250.15 This registration must be renewed annually. The telemarketer must also obtain a surety bond in the amount of $50,000.16 The Ohio Telephone Solicitation Sales Act also imposes certain prohibitions of false, misleading, or fraudulent acts in registering and operating as a telemarketer.17
It appears that Ohio follows the federal do-not-call rules and regulations, as we were unable to locate any state specific restrictions.18
Telephone solicitation and telemarketing is regulated by the Texas Business and Commerce Code,19 and is enforced by the Public Utility Commission and the Texas Attorney General’s Office.20 Under §302.001(7) of the Texas Business and Commerce Code, “telephone solicitation” is defined as “a telephone call a seller or salesperson initiates to induce a person to purchase, rent, claim, or receive an item. The term includes a telephone call a purchaser makes in response to a solicitation sent by mail or made by any other means.” Those who solicit purchasers in this state are covered by this law—the call center does not have to necessarily be in the state of Texas for this law to apply.21
Similar to Ohio, Texas law provides for an exception for sellers that distribute merchandise catalogs.22 Additionally, DME Supplier B would not be subject to the restrictions under these regulations if it is a publicly traded corporation registered with the SEC or the State Securities Board, or a subsidiary or agent of the corporation.23 Assuming that DME Supplier B does not fall under either exception, its telephone solicitation activities are subject to the rules promulgated under the Texas telephone solicitation law.
The seller must register with the Secretary of State and pay a $200 application fee.24 This registration process, including application fee, must be performed annually. Additionally, DME Supplier B would be required to file a quarterly report with the Secretary of State that details the registration information for each salesperson that is soliciting or has solicited on its behalf during the previous quarter.25 Along with the registration, the telemarketer must post a $10,000 bond.26
Texas law requires telephone solicitors to adhere to the following regulations:
1) The seller certificates of registration must be “posted in a conspicuous place at the location for which it has been issued,” the registration statement must be available for inspection by a purchaser or government representative, and the seller must also post “the name of each individual in charge of the location.”27
2) The seller/salesperson must provide to a purchaser the complete street address of the location where the call is coming from.28
3) The salesperson must immediately identify himself and the business by name, as well as state the purpose of the call, and if the call is made by an automated dialing device, the device must disconnect within 5 seconds after termination of the call.29
4) No seller/salesperson may represent to a purchaser that it has complied with the provisions of the statute.30
5) A telephone solicitation may not be made except between the hours of 9 a.m. and 9 p.m. on a weekday or Saturday, and after 12 noon and before 9 p.m. on a Sunday.31
6) A seller/salesperson is prohibited from blocking the identity of the telephone number from which the call is made in order to evade caller ID devices and must provide caller identification information in a manner that is accessible by the caller ID service.32
If the seller offers a free item in connection with the solicitation, or one item among several that are designated by the seller, then additional disclosures are required concerning how the item is selected, the odds of receiving the item, any applicable rules and regulations, and the total number of individuals who have actually received the item with the highest value from the seller during the last twelve months.33
In the case of a seller who offers an item represented to be at a price below that usually charged, the name of the manufacturer of the item must be provided to the purchaser.34
The Texas Public Utility Commission has created and enforces the Statewide “Do Not Call” List.35 All Texas telephonic solicitors are prohibited from calling any residential or wireless phone number listed on the Statewide “Do Not Call” List. A seller/saleasperson must not “make or cause to be made a telemarketing call to a telephone number that has been published for more than 60 calendar days on the Texas no-call list.”36 Telemarketers may not contact anyone on either list, unless it is one of the following types of customers:
1) A customer with whom they have an established business relationship;37
2) A customer who requested to be contacted;38 or
3) A customer owes a debt and the call is to collect that debt.39
Texas Public Utility Commission updates and publishes the lists quarterly on January 1, April 1, July 1, and October 1.40
Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato PC, a law firm based in Amarillo, Tex. He represents pharmacies, infusion companies, HME companies and other health care providers throughout the United States. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization, and can be reached at (806) 345-6320 or firstname.lastname@example.org.