July 30, 2002

By: Joseph Sanscrainte, General Counsel
jws@callcompliance.com

The Tricky Issue of DNC Exemptions

One of the most important questions facing telemarketers is whether the calls they make for a campaign are exempt under one or more state do-not-call laws. This exemption question is critical given that an incorrect answer can bring substantial fines and penalties, which in turn can tarnish a telemarketer's reputation.

The answer to this question is - it depends. With the recent enactment of DNC legislation in Kansas and Vermont, 25 states have DNC lists in place. To answer the exemption question, each state has the DNC law itself, other related statutes and very often a number of implementing regulations and rules that must be reviewed. In addition, many states have separate laws and regulations governing registration procedures for the privilege of conducting telemarketing within the state.

It is important to note that under many state laws, there are two sets of exemptions: telemarketer registration exemptions and DNC list exemptions. Generally, the former set of exemptions predates and is more numerous than the latter.

Registration exemptions are in place to offset existing registration fees many industries have to pay for the privilege of doing business in a particular state. When enacting telemarketer registration laws, the states took this into account and made these industries exempt from yet another set of fees. DNC list exemptions serve a different and more political purpose, representing the collective wisdom of state legislators regarding the merits of different telemarketing calls.

After identifying which part of the statute relates specifically to the DNC list (a task made easier by states that have launched DNC information Web sites), a telemarketer needs to look at what exemptions have been expressly identified by the state.

Embedded in the DNC list laws and regulations, however, are definitions of such key terms as "telemarketer" or "telephonic solicitation" or "telemarketing." Depending upon the interpretation of these definitions, there may be, and most likely are, other exemptions. A number of states list exemptions on their DNC Web sites that do not appear in the DNC statute itself, based upon the regulatory agency's interpretation of key definitions in the statute. Whether similar "definitional" exemptions exist for other types of calls beyond those already identified by the states is a crucial issue for telemarketers that will be addressed over time.

Finally, the exemptions themselves may have a definitional component as well, which may restrict the applicability of the exemption. For example, most states have expressly exempted calls made to people who have a business relationship with the company responsible for the calls. However, a telemarketer needs to look at how a particular state defines the term "business relationship." The telemarketer also must consider the length of time the state allows between the last transaction with a customer and when the call is being made. For example, a call made to a prior customer who made a purchase 12 months before the call would be exempt in Arkansas, but not in Louisiana.

The sheer number of exemptions, along with associated definitional complexities, can make for treacherous telemarketing waters. Correct navigation, involving a careful review of all pertinent laws and regulations as well as the advice of counsel, will let telemarketers avoid the many compliance pitfalls in today's DNC regulatory environment.