February 2012 : Registration Rules : A Descent Into the Maelstrom *
by Joseph Sanscrainte, an attorney with Bryan Cave, LLP, specializing in telemarketing law.
One would think that since state telemarketing registration rules have been in place for well over ten years, that most of the confusion surrounding them would have been dispelled by now. Luckily for me, since I happen to be in dire need of a topic for this article, confusion on the topic of registration still reigns!
The first step in figuring out whether you need to register isn't looking at the exemptions, and it isn't figuring out whether you're doing inbound and/or outbound calling - it's trying to figure out who YOU are in the grand scheme of things. There are four categories of entities that may be covered by any state's registration rules:
- Seller Outsourcer: a Seller that outsources all of its telemarketing;
- Seller Internal: a Seller that does all of its telemarketing internally;
- Seller Hybrid: a Seller that outsources and calls internally; and,
- Service Bureau: a Service Bureau that does telemarketing on behalf of Sellers.
I'm showing 33 states that have registration rules on their books. Right off the bat, let's take Washington, DC out of consideration, since it never quite got around to actually ... well, putting together a registration form (shhhhhh! Don't tell!) So, we're down to 32 "registration" states. 30 out of the 32 registration states clearly cover Seller Outsourcers; 31 out of 32 states clearly cover Seller Internals; and 31 out of 32 states cover Seller Hybrids.
Why the difference with Seller Outsourcers? The state of Alaska's rules state: "A person may not sell property or services by telephonic means ... unless the telephone seller is registered with the Department of Law." If a Seller outsources all of its calling, is it "selling by telephonic means"? What if the Seller requires its outside Service Bureau(s) to register with Alaska? Wouldn't that cover things? (And for those keeping score at home, the lone outlier here is Kentucky, which ONLY requires a Service Bureau to register.)
For Service Bureaus, the question of the day is - what percentage of your client Sellers have to register in the state? Why is that important? Because of the 30 states that have registration rules covering Service Bureaus, 12 of them will exempt you if 75% of your business comes from Sellers who are themselves exempt from the registration rules; and 3 of these states will exempt you if only 50% of your business comes from exempt Sellers.? (How exactly do you measure the percentage here? Dollar value of the business? Number of contracts/entities? Number of campaigns? Number of sales? Sorry, but you gotta go state by state, folks.)
14 states require you to register irrespective of whether you're working with exempt Sellers, and two states (California and Indiana) do NOT require you to register at all. Of course, that leaves one state (again, Alaska), but the question now becomes - do you have to register as a Service Bureau if all of your Seller clients are registered? Good question.
Moving on , the next question is what type of calls are you making? All of the 32 registration states' rules cover outbound calls, but there are 25 states that have rules that apply to inbound calls as well, i.e., if you accept inbound calls from residents of the state in question, and you offer goods or services for sale to said consumers, you have to jump through the commercial registration hoop. Most telemarketers are surprised that the number is this high, but please don't shoot the messenger (i.e., me, Joe Sanscrainte, the author) - but what the heck, feel free to shoot the publisher of this fine missive.**
On average, each commercial registration state has about 20 exemptions to the commercial registration requirements (doing the math, that's 640 exemptions to work with overall). Accordingly, loopholes abound. Inbound calling, however, as we learned above, is not somehow an automatic exemption!? Navigating your way through the maze of exemptions is well nigh impossible, but I'd rather light a candle than curse the darkness here, people. Contact Center Compliance's Registration ExemptionMaster incorporates all elements of registration laws and exemptions, including the inbound calling requirements.? Anyone looking for the easiest, most cost-effective way to figure out registration requirements should sign up immediately for the Compliance Guide. The ExemptionMaster is worth the cost all by itself!)
*"A Descent Into the Maelstrom" is a short story by Edgar Allan Poe.
** Mr. Sanscrainte disclaims any and all liability in the event anyone actually shoots any person associated with the publisher, Contact Center Compliance, including Ryan Thurman (who by the way lives at 124 Cherry Blossom Lane, Santa Rosa, CA.)