Brokers beware. The prospects on your cold-calling lists might be more than cold. Some may be hostile, especially if they have taken the time to put their names on one of a growing number of state no-call lists.
Georgia is the fourth state to enact a law establishing a no-call list. Consumers there pay $5 to join the list for two years. About 100,000 Georgians signed up before the law went into effect Jan. 1, 1999. Florida, Oregon and Alaska already have similar rules.
Such consumer-oriented laws are political darlings, according to a spokesperson at the Direct Marketing Association (DMA) in Washington, D.C. Eighteen other states, including Connecticut, Maryland, Texas and Virginia, have introduced legislation for consideration this year.
Politicians like the laws since they make consumers happy, but the DMA and the Securities Industry Association oppose the laws since they add to telemarketers burden and somewhat duplicate the effect of federal telemarketing rules.
Under those rules, a person contacted by a company can request to be put on that companys no-call list and can voluntarily participate in the Telephone Preference Service, a national no-call list maintained by the DMA.
[The proposed laws are] a very serious concern, says Daniel Barry, SIA vice president and counsel, state government affairs. The no-call issue was something that appeared in a lot of states four or five years ago, and now it has heated up again.
Barry says the laws limit brokers marketing ability. He adds that the need for such laws is questionable, since consumers are increasingly using technology, such as caller identification and call blocking, to achieve the same effect. The SIA is actively lobbying against the bills.
An A.G. Edwards broker in Georgia says he hasnt felt the impact of the new law. He thinks the law was passed to stem calls from mortgage banking, credit card and phone companies, not securities firms. We rarely get a request from someone to be put on our no-call list, he says.
Under the four existing state laws, the onus is on the telemarketer to obtain the no-call lists and honor the requests of call-averse consumers. In Georgia, violators face a $2,000 fine for each call to someone on the list. However, Georgias law also includes a safe harbor provision that enables firms to defend against fines if they can show they have a no-call system in place.
Floridas law does not have such a provision and its fines are $10,000 for each call placed to a person on the state no-call list. Although he did not have specific figures, Barry says securities firms have been prosecuted in Florida.
The application and enforcement rules in the proposed no-call laws vary by state. These laws are something that brokers should be aware of and take care to comply with their companies procedures, Barry says.
