The Law & You: Prospecting Alert

Careless cold calling could be costly.

April 1, 2002

Whether they purchase leads from a list broker or simply call area residents periodically on their own, many real estate salespeople depend on cold calling for acquiring listings and leads.

However profitable cold calling might be, it’s important to understand how new laws may affect your right to call potential clients.

Since 1998, 26 states have passed do-not-call laws, which limit when and to whom sales calls can be made and assess penalties to violators. In 2001 alone, eight states—Colorado, California, Indiana, Louisiana, Texas, Virginia, Wisconsin and Wyoming—passed do-not-call laws, and all the remaining states have legislation pending.

Some recent do-not-call fines have made national headlines, as in the case of New York’s $224,000 fine of the Psychic Friends Network. But large entities aren’t the only ones being penalized. Missouri, which instituted its do-not-call law in July 2001, received more than 13,000 complaints from consumers in the first six months and has assessed fines of more than $450,000, primarily on small and sometimes local companies marketing services such as home improvement, lawn care, and vacation packages.

Do-not-call legislation is a phenomenon that began in the early ’90s with two federal laws that required companies to keep a list of consumers who requested no further contact, instituted a telemarketing curfew from 9 p.m. to 8 a.m., and granted the Federal Trade Commission the authority to enforce the laws with fines of up to $11,000 per infraction. The FTC also has the authority to seize phone records—which can be extremely troublesome, since they could potentially reveal further violations beyond the complaints being investigated.

Generally, the ensuing state laws establish do-not-call lists on which consumers may register. State laws often further protect consumers by expanding call curfews, as is the case in Kentucky, where the call curfew is 6 p.m. to 10 a.m. State violations can result in fines ranging from $2,000 (New York) to $25,000 (Oregon).

States often exempt certain types of callers, including charities, non-profits, and political groups from their do-not-call law.

A few states—Alaska, Arkansas, and Indiana—have specifically exempted real estate salespeople (sometimes referred to as “state licensees”). And other state exemptions may apply to the real estate industry. The most common state exemption permits calls to consumers if a prior business relationship existed within a certain time period, up to as long as three years ago in some cases.

However, even if real estate salespeople are exempt from the law in your state, take heed. Consumers registered on do-not-call lists aren’t likely to be aware of these exemptions and may believe that your call violates the law. Making calls to these already irritated consumers could hurt your business.

In January 2002, the FTC proposed eliminating specific business exemptions for interstate calls. The FTC will most likely vote on the changes in 2003.

How to protect yourself

Here are precautions you can take to avoid fines:

  1. Know the laws. It’s your responsibility to be aware of applicable state and federal laws, including specifics such as call curfews, dinner hour restrictions, and Sunday and holiday curfews. Up-to-date state information—including who is managing your state list, how to purchase the list, and whether there are relevant exemptions—is now posted at RealtorMagOnline (see box). If you’re licensed in more than one state, note that you must follow the laws of the state you’re calling.
  2. Obey the laws. Not only will a do-not-call violation cause a painful financial sting, but it can also affect your reputation and branding effort. Some enforcement authorities of the do-not-call program even publish press releases of recent violators. So it’s important for both brokers and salespeople to take responsibility. Brokers should maintain an up-to-date copy of the state do-not-call list. If you mistakenly call registered consumers, assure them that they won’t be called again by your company. Even if your call was technically exempt from the laws, the consumer is unlikely to appreciate the distinction.
  3. Train your salespeople. Brokers should ensure that procedures and policies are clearly spelled out and aggressively address violations and consumer complaints. They should also train salespeople to obtain permission for follow-up calls to potential clients and immediately add consumers who ask not to be called to the company no-call list.
  4. Document your list. Federal law requires that a request to be put on a do-not-call list be recorded immediately, with records maintained for the next 10 years. Brokers should keep thorough records of the people who have requested not to be called and proof that the company and its salespeople are using the list.
  5. Outsource the compliance. Local companies, sometimes called “list scrubbers,” can cross check numbers that are registered on a state no-call list against your prospect list. Also, products such as Gryphon Networks’ Do-Not-Call service block calls to registered consumers, automatically remove consumers who request to be removed from your call list, and prevent anyone in your office from accidentally calling no-call names again.

Keith Fotta is the founder of Gryphon Networks, whose services help telemarketers comply with state and federal do-not-call laws. For more information, call 781/255-0444, or visit www.gryphonnetworks.com.

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