NEW JERSEY REGISTER
VOLUME 41, ISSUE 11
ISSUE DATE: JUNE 1, 2009
LAW AND PUBLIC SAFETY
DIVISION OF CONSUMER AFFAIRS
Proposed Readoption with Amendments: N.J.A.C. 13:45D
Authorized By: Division of Consumer Affairs, David Szuchman, Director.
Calendar Reference: See Summary below for explanation of exception to calendar requirement.
Submit written comments by July 31, 2009 to:
David Szuchman, Director
The agency proposal follows:
The Division of Consumer Affairs of the Department of Law and Public Safety (the Division) is proposing to readopt N.J.A.C. 13:45D with amendments. This chapter was originally promulgated in 2004 to provide procedures for the regulation of telemarketers and to facilitate enforcement of New Jersey's Telemarketing Do Not Call law (the Act), N.J.S.A. 56:8-119 et seq. Pursuant to Executive Order No. 66 (1978) and N.J.S.A. 52:14B-5.1c, these rules are scheduled to expire on November 13, 2009. In compliance with the Executive Order, the Division [page=2210] undertook a thorough review of the existing provisions of N.J.A.C. 13:45 D in order to delete unnecessary rules and clarify existing provisions. The Division believes that the rules proposed for readoption with amendments are necessary, reasonable, understandable and responsive to the purpose for which they were originally promulgated. The following is a summary of the rules proposed for readoption with amendments.
N.J.A.C. 13:45D-1.1 and 1.2, set forth the purpose and scope of the rules proposed for readoption with amendments. N.J.A.C. 13:45D-1.3 sets forth the chapter's relevant definitions and N.J.A.C. 13:45D-1.4 contains the registration fee scale for telemarketers based on simultaneous outgoing call capacity. Subsection (b) states that the Division will distribute the do-not-call list to telemarketers as part of the registration fee if the Division discontinues use of the National Do-Not-Call Registry. The Division is proposing to amend that subsection to add the words "in the future" after "If' to make clear that, although the Division currently uses the National Do-Not-Call Registry, it will provide a New Jersey do-not-call list if it discontinues uses of the National registry.
Subchapter 2 provides that the no telemarketing call list contains the telephone numbers of New Jersey customers on the National Do-Not-Call Registry created and maintained by the Federal government. When these rules were adopted, N.J.A.C. 13:45 D-2.1 was reserved for placement of the bidder qualifications requirements proposed at 35 N.J.R. 3757(a). Since the Division decided to adopt the National Do-Not-Call Registry as its no telemarketing call list, the rules proposed at 35 N.J.R. 3757(a) were not adopted. Therefore, "Bidder Qualifications" has been removed from the subchapter heading and N.J.A.C. 13:45D-2.2 has been recodified as N.J.A.C. 13:45D-2.1.
Subchapter 3 contains the registration requirements for telemarketers. N.J.A.C. 13:45D-3.1 prohibits a telemarketer from making unsolicited telemarketing sales calls to a customer in New Jersey unless the telemarketer has registered with the Division. N.J.A.C. 13:45D-3.2 requires each telemarketer to register annually with the Division by completing and submitting a registration application. In the registration application, the telemarketer must provide all of the information listed in N.J.A.C. 13:45D-3.2(a)1 through 9. N.J.A.C. 13:45D-3.3 requires each applicant to file a disclosure statement indicating whether an officer, director, principal or owner has been convicted of any of the enumerated violations of the "New Jersey Code of Criminal Justice," Title 2C of the New Jersey statutes or an equivalent offense under the laws of any other jurisdiction. The Director may use this disclosure statement as a basis for denying, suspending or revoking a telemarketer's registration. The rule further provides for the opportunity for an administrative hearing after denial, suspension or revocation of a registration under this section. N.J.A.C. 13:45D-3.4 requires the telemarketer to update its registration application or disclosure statement by filing a notice in writing with the Director within 30 business days of a change in the application information or 30 calendar days of a change in the disclosure information. N.J.A.C. 13:45D-3.5 requires the telemarketer to submit the registration fee specified in N.J.A.C. 13:45D-1.4(a) with its annual registration application. Under N.J.A.C. 13:45 D-3.6 , a telemarketer must provide any assistance or information, produce any records requested by the Director, and cooperate in any inquiry, investigation or hearing conducted by the Director. N.J.A.C. 13:45D-3.7 lists the circumstances under which the Director may refuse to issue or renew or suspend or revoke a telemarketer's registration and allows for an opportunity to be heard before any action is taken. N.J.A.C. 13:45D-3.8 provides that the registration number issued to a telemarketer remains the property of the State and is to be immediately returned to the Director upon the suspension, revocation or upon the refusal to renew the telemarketer's registration. N.J.A.C. 13:45D-3.9 sets forth the requirement that telemarketers and sellers maintain certain lists of existing customers who have asked to be placed on a do-not-call list. The section also sets forth the time period by which the telemarketer or seller must abide by the customer's request. N.J.A.C. 13:45D-3.10 lists the records to be retained by telemarketers and sellers who use a registered telemarketer to make telemarketing sales calls on their behalf. Sellers who make their own telemarketing sales calls must comply with the recordkeeping requirements for telemarketers and sellers who use registered telemarketers. All records must be retained for a period of two years. Under N.J.A.C. 13:45 D-3.11 , telemarketers must establish and implement written procedures that comply with the Act and this chapter and train their employees in telemarketing rules and procedures consistent with the provisions of the Act and this chapter.
Subchapter 4 deals with prohibited activities and the penalties that may be assessed for a violation of the provisions of this chapter. N.J.A.C. 13:45D-4.1 specifies the prohibited activities. N.J.A.C. 13:45D-4.2 sets forth the circumstances under which telemarketing sales calls may be made to a customer listed on the no telemarketing call list, unless the customer, pursuant to N.J.A.C. 13:45D-3.9, specifically has requested that he or she not receive telemarketing sales calls. N.J.A.C. 13:45D-4.3 sets forth the information that a person making a telemarketing sales call must disclose within the first 30 seconds of the call. N.J.A.C. 13:45D-4.4 permits calls by a telemarketer to an established customer to whom the telemarketer has been providing a continuing service. N.J.A.C. 13:45D-4.5 sets forth the defenses that a telemarketer may assert to a charge that telemarketing sales calls have been made to a customer on the Division's no telemarketing call list. N.J.A.C. 13:45D-4.6 provides that the penalties for a violation of the Act or this chapter are those contained in the Consumer Fraud Act at N.J.S.A. 56:8-13 and 14.3.
Subchapter 5 provides the manner by which a customer may register for or have his or her telephone number removed from the no telemarketing call list. The websites referenced in N.J.A.C. 13:45D-5.1(a)3 have been deleted, since they no longer exist and a proposed amendment has been made, indicating where the information currently can be found on the Division's website.
The Division has determined that the comment period for this notice of proposal is 60 days; therefore, pursuant to N.J.A.C. 1:30-3.3(a)5, this notice is excepted from the rulemaking calendar requirement.
On May 21, 2003, New Jersey's do-not-call law was enacted. At the time of enactment, as well as today, the do-not-call law impacts both customers and telemarketers. The law had several important purposes. First, the law required the registration of telemarketers who solicit customers in New Jersey. Only registered telemarketers are permitted to contact New Jersey customers. Second, the law required the establishment of a do-not-call list of New Jersey customers. Finally, although the law limited the ability of telemarketers to contact New Jersey consumers, it permits telemarketing calls to existing and continuing service customers, as well as those customers whose telephone numbers are not on the do-not-call list. At the time of enactment, the Legislature expressed the view that the law was necessary to limit, and in some cases prohibit, the ever increasing number of telemarketing calls to New Jersey residents.
The rules proposed for readoption with amendments will continue to prohibit unsolicited telemarketing sales calls from the 785 registered telemarketers to customers at the 5,644,538 New Jersey phone numbers listed on the National Do-Not-Call Registry, as well as those existing and continuing service customers who have asked to be placed on a telemarketer's company specific do-not-call list. Although some calls are prohibited, the rules proposed for readoption with amendments still allow telemarketing sales calls to existing customers of the telemarketer or those receiving a continuing service from the telemarketer or seller on whose behalf the telemarketer is calling. The ban on calls to wireless telephones continues to benefit customers by prohibiting calls to their wireless phones, and thus, preventing charges to the customer.
Telemarketers and the businesses that use telemarketers may continue to raise concerns about the rules proposed for readoption with amendments. In August 2004, American Teleservices, Inc. filed a Petition for Declaratory Ruling with the Federal Communications Commission (FCC) challenging several rules in this chapter, as well as the Act. The Division's counsel filed a response. The FCC has not issued its decision.
Overall, the rules proposed for readoption with amendments will continue to have a positive social impact on New Jersey residents because the rules have successfully met the Legislature's goal to protect families and individuals from unsolicited interruptions, without unreasonably restricting telemarketing activity.
[page=2211] Economic Impact
The rules proposed for readoption with amendments continue to have an economic impact on telemarketers; however, they do not have an economic impact on the general public. The 785 telemarketers registered with the Division still will be required to pay the annual registration fee. Those fees are used to cover the costs of administering the Act and this chapter.
Telemarketers are further impacted by the requirement to maintain certain records, which may result in storage fees or other costs of maintenance. However, any cost imposed on the telemarketer for record storage is outweighed by the benefit to both the Division, in having these records available for enforcement and the telemarketer, for use as a defense to an alleged violation.
The rules proposed for readoption with amendments will have a financial impact on newly registered telemarketers. In addition to the registration fee, they will be required to establish and implement written procedures to comply with the Act and these rules and train their employees in the telemarketing rules and procedures. Existing registered telemarketers will be required to maintain these procedures and train new employees.
The Division does not believe that the rules proposed for readoption with amendments will have any economic impact on the general public since the registration fees are used to offset the costs to enforce the provisions of the Act and this chapter.
Federal Standards Statement
A Federal standards analysis is not required because the rules proposed for readoption with amendments are not proposed under the authority of, or in order to implement, comply with or participate in any program under Federal law. The rules are proposed under the authority of New Jersey law, P.L. 2003, c. 76, which does not incorporate or refer to Federal law, standards or requirements, although the rules use the National Do-Not-Call registry.
However, to the extent that the rules promulgated by the Federal Trade Commission (FTC) at 16 CFR §310 and the rules promulgated by the FCC at 47 CFR §§64 and 68 may be considered Federal standards, the Division believes that the rules proposed for readoption with amendments impose some requirements on telemarketers that supplement the standards imposed by the Federal regulations. For instance, New Jersey's do-not-call law provides for a different approach for identifying the type of relationship that will enable a business to call customers. Rather than using the Federal "established business relationship," the Division has effectuated the Legislature's intent to look at the nature of the relationship between the telemarketer and customer by establishing the definitions of "continuing services" and "existing customer." The intent of the Act and the rules proposed for readoption with amendments is to provide the broadest protections to New Jersey residents from unsolicited telemarketing sales calls.
Telemarketers and businesses that represent telemarketers may disagree that the New Jersey rules supplement the Federal rules. As set forth in the Social Impact statement, telemarketers and businesses that use telemarketers that have challenged N.J.A.C. 13:45D and the Act have suggested that portions of the rules and the Act, including the definitions set forth above, should be preempted.
Some of the Federal rules are more restrictive than those in N.J.A.C. 13:45D. For example, the FTC rules make it a violation for a telemarketer to allow more than two seconds to pass from the time a customer answers the telephone to the time when a sales representative connects to the call. No specific State provision relates to this issue, but the Division is authorized by 16 CFR §310.7 to enforce the Federal rules.
Whether any additional costs beyond the registration fee have been encountered by telemarketers is speculative. Even if there are additional costs, those costs are outweighed by the benefit received by New Jersey residents who no longer are bombarded with unsolicited telemarketing calls.
Current technology allows customers and telemarketers to meet the standards set forth in the rules proposed for readoption with amendments. Customers may register or remove their numbers from the do-not-call list by telephone or the Internet. Telemarketers will continue to use the National Do-Not-Call Registry database for New Jersey numbers. The need for professional services, if any, and the cost of compliance will vary among the telemarketers.
The Division does not believe that there will be a gain or loss of jobs under the rules proposed for readoption with amendments.
Agriculture Industry Impact
The rules proposed for readoption with amendments will have no impact on the agriculture industry in the State.
Regulatory Flexibility Analysis
If, for purposes of the Regulatory Flexibility Act, N.J.S.A. 52:14B-16 et seq., any of the 785 registered telemarketers are considered "small businesses," then the following analysis applies. The rules proposed for readoption with amendments do not impose any reporting requirements, but they do contain the same recordkeeping and compliance requirements previously imposed on telemarketers.
The recordkeeping requirements are as follows. N.J.A.C. 13:45D-3.10 requires telemarketers to maintain the records listed in subsection (a) for at least two years. In addition, N.J.A.C. 13:45D-3.10(b) imposes the listed recordkeeping requirements on sellers who use a telemarketer to make telemarketing sales calls on their behalf. Those records also must be maintained for at least two years. A seller who makes its own telemarketing sales calls must comply with the recordkeeping requirements imposed on both a seller and a telemarketer.
The rules proposed for readoption with amendments impose the following compliance requirements. N.J.A.C. 13:45D-1.4 requires telemarketers to pay a registration fee to the Division. The fee schedule is graduated and is based on the telemarketer's simultaneous outgoing call capacity. N.J.A.C. 13:45D-3.1 requires telemarketers seeking to make residential telemarketing sales calls to register with the Division by submitting the registration application required by N.J.A.C. 13:45D-3.2. N.J.A.C. 13:45D-3.3 requires each applicant to file a disclosure statement with the Division. N.J.A.C. 13:45D-3.4 requires that a registrant make any changes to the registration application or the disclosure statement within 30 business days or 30 calendar days, respectively. N.J.A.C. 13:45D-3.5 requires the registrant to submit annually the registration fee required by N.J.A.C. 13:45D-1.4 when renewing a registration. N.J.A.C. 13:45D-3.6 imposes a continuing duty upon telemarketers to provide any assistance or information, and to produce any records requested by the Director, as well as requiring them to cooperate in any inquiry, investigation or hearing. N.J.A.C. 13:45D-3.8 requires the immediate return to the Director of any registration number that the Director fails to renew or revokes. N.J.A.C. 13:45D-3.9 requires telemarketers and sellers to maintain a list of customers who have asked to be placed on the telemarketer specific no call list. Under subsection (e), a seller who contracts with a telemarketer to make telemarketing sales calls on its behalf must provide the list to the telemarketer. N.J.A.C. 13:45D-3.11 requires telemarketers to establish and maintain written procedures that address the requirements imposed upon them by the Act and this chapter and to train their employees in these rules and procedures. N.J.A.C. 13:45 D-4.1 sets forth certain prohibited activities, while N.J.A.C. 13:45 D-4.3 sets forth requirements that must be fulfilled within the first 30 seconds of the telemarketing call.
Telemarketers may continue to incur costs for storage of records required in N.J.A.C. 13:45D-3.10 and for training telemarketers as required by N.J.A.C. 13:45 D-3.11 . The need for professional services, if any, and the cost of compliance, varies among the telemarketers.
In order to ensure that the protections afforded by the Act and this chapter are available to all New Jersey residents, the rules proposed for readoption with amendments will continue to be applied uniformly to all telemarketers without regard to size, with the exception of the registration fee.
Smart Growth Impact
The Division does not anticipate that the rules proposed for readoption with amendments will have any impact on the achievement of smart growth or on the implementation of the State Development and Redevelopment Plan, otherwise known as the State Plan.
[page=2212] Housing Affordability Impact
The rules proposed for readoption with amendments will have an insignificant impact on affordable housing in New Jersey and there is an extreme unlikelihood that the rules would evoke a change in the average costs associated with housing because the rules proposed for readoption with amendments concerns the regulation of telemarketing in the State of New Jersey.
Smart Growth Development Impact
The rules proposed for readoption with amendments will have an insignificant impact on smart growth and there is an extreme unlikelihood that the rules would evoke a change in housing production in Planning Areas 1 or 2 or within designated centers under the State Development and Redevelopment Plan in New Jersey because the rules proposed for readoption with amendments concerns the regulation of telemarketing in the State of New Jersey.
Full text of the rules proposed for readoption may be found in the New Jersey Administrative Code at N.J.A.C. 13:45D.
Full text of the proposed amendments follows (additions indicated in boldface thus; deletions indicated in brackets [thus]):
SUBCHAPTER 1. GENERAL PROVISIONS
13:45D-1.4 Fees; no telemarketing call list
(a) (No change.)
(b) If, in the future, the Division does not use the Federal Do Not Call Registry and establishes its own no telemarketing call list, the list shall be distributed to registered telemarketers quarterly as part of their registration fee.
SUBCHAPTER 2. [BIDDER QUALIFICATIONS;] NO TELEMARKETING CALL LIST
13:45D-[2.2]2.1 (No change in text.)
SUBCHAPTER 5. CUSTOMER REGISTRATION FOR NO TELEMARKETING CALL LIST
13:45D-5.1 Customer registration
(a) A customer who wishes to be placed on the no telemarketing call list shall register by:
1.-2. (No change.)
3. Registering on-line by using the Division website, www.njconsumeraffairs.gov/, A-Z list, "Do Not Call" information, which links to the National Do Not Call Registry[, www.njnocall.org or www.njnocall.net].
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