Sweeping New Telemarketing Regulation Becomes Effective in New York

Effective November 12, 2012, sweeping new telemarketing legislation is now in effect in New York. While some of the statutory changes are merely stylistic, the two primary changes implemented by the statute will have substantive impacts upon the telemarketing industry. The first change eliminates the largest exemption to New York's telemarketing registration requirements. The second change significantly tightens New York's restrictions on robocalls.

For some time, out-of-state telemarketers were exempt from New York's registration requirements. General Business Law § 399-pp(10)(a)(5) provided that all businesses "licensed, registered, chartered, certified or incorporated with or by any state or Federal agency" were not obligated to register with the Secretary of State. This effectively exempted nearly all telemarketers from registration. In August 2012, only 22 telemarketers were registered in New York. By contrast, Pennsylvania had 213 registered telemarketers, Vermont had 333, and New Jersey had 557.

The exemption for out-of-state telemarketers has now been repealed in its entirety. New York's legislature feared that if the registration requirements were not expanded, telemarketers could continue to do business in New York without being subject to enforceable penalties. While businesses "licensed, registered, chartered, certified or incorporated with or by any state or Federal agency" remain exempt from New York's fee and bonding requirements, they must now register with the Secretary of State before placing telemarketing calls to customers located within New York. See General Business Law § 399-pp(10-a). This change is the legislature's attempt to "level the playing field" by making all telemarketers equally subject to fines and criminal penalties, as well as revocation, suspension, and denial of renewal of registration.

Robocalls are now also subject to several burdensome requirements. A "robocall" is a telemarketing sales call conducted by means of a pre-recorded message. Pursuant to the newly enacted provisions of General Business Law § 399-z, New York's "Do-Not-Call" law, telemarketers must now obtain written consent from customers before soliciting them with robocalls. The written agreement must clearly and conspicuously disclose that the purpose of the agreement is to authorize the seller to make telemarketing calls to the customer, and it must include the customer's telephone number and signature. Moreover, the seller may not require the customer to sign the agreement as a condition of purchasing a good or service. Id. at § 399-z(6).

Where possible, the robocall must also include automated opt-out mechanisms. Pursuant to General Business Law § 399-z(7), robocalls must now include an interactive voice or keypress opt-out mechanism that will allow customers to automatically add their number to the seller's do-not-call list and immediately end the call. If the robocall could be answered by an answering machine or voicemail service, the message must also include a toll-free contact number that connects the customer directly to an automated interactive voice or keypress opt-out mechanism. Id. at § 399-z(8).

These new laws should be expected to significantly change the way telemarketers operate in New York. Businesses with questions about New York's new robocall restrictions, or who would like assistance in registering with New York's Secretary of State, should contact Olshan's Advertising, Marketing & Promotions Group for assistance.

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