REALTORS The Do-Not-Call Law Means You Telemarketing

REALTORS® … The Do-Not-Call Law Means You Telemarketing e-Mailing Faxing Greater Lansing Association of REALTORS® Lansing, Michigan September 23, 2005

Part One: Do Not Call

Telemarketing Definitions • Seller: any person who offers to provide goods or services to the customer in exchange for consideration. • Telemarketing: a plan or program or campaign which is conducted to induce the purchase of goods or services. . .

Early Telemarketing Laws: • Telephone Consumer Protection Act of 1991 (TCPA) and accompanying FCC regulations. • Telemarketing and Consumer Fraud and Abuse Prevention Act of 1994 and accompanying FTC regulations.

Early Telemarketing Requirements: • Calls may only be made between the hours of 8: 00 a. m. and 9: 00 p. m. • Callers must disclose all material information about the goods or services they are offering and the terms of the sale. • Companies are required to maintain their own company-specific “do-not-call” list and honor consumer requests to be placed on the list. • Companies are required to have written policies on maintaining their do-not-call lists.

Do-Not-Call Implementation Act of 2004 • Congress gave the FTC a mandate to create a National Do-Not-Call Registry for residential numbers. • Telemarketers are required to “scrub” their calling lists against the Registry at least once every month. • Telemarketers and sellers are prohibited from calling a phone number listed on the Registry.

Existing Business Relationship Exemption … • A business relationship based upon a transaction between the company and the consumer within the previous 18 months. • Or, within 3 months of an inquiry, application or request by the consumer. • Prior written permission to call.

Creating Consumer Expectations … • A “Reasonable Expectation” of a call back is the standard referenced in the comments accompanying the DNC Rules. • If you register consumers at open houses be sure to have in big bold letters: “BY PROVIDING MY NAME AND PHONE NUMBER BELOW I AGREE TO RECEIVE A CALL-BACK FROM THIS AGENCY”. • If you use an automated system that provides information on homes and captures the number of the caller (an inquiry) you are allowed to call-back for up to three months.

• If you have a VOW and in the "Terms of Use" agreement state: "by registering at this site you agree to receive calls from this agency" it is possible you could call as long as you meet the DNC requirements for signed consent. • You will need the consumer's signature and phone number for written consent to receive calls and the consumer must have a clear indication that they are consenting to receive calls from the brokerage. • Electronic signatures are a state law issue, work with an attorney.

February 18 th FCC Order … • Prohibits calls to FSBOs whose numbers are on the Do-Not-Call list unless the real estate professional is representing a potential buyer and the purpose of the call is to discuss the potential sale of the property to the represented buyer. • Real estate professionals are not permitted to call expired listings (with whom they do NOT have an existing business relationship) or FSBOs for the purpose of offering services if these numbers are on the Do-Not-Call list.

Home Business Phones • Your call to a home-based business should be related to the actual business being conducted in the home if the number is in the DNC Registry.

FCC February 18 th Order: • In issuing this Order, the FCC made a strong statement indicating its unwillingness to consider further exemptions from the Do. Not-Call rules.

The Truth About Cell Phones and the DNC … • Unsolicited autodialed or prerecorded calls are prohibited to any cell phone even if there is an established business relationship. • Personal cell phone users may add their numbers to the DNC registry.

Exempt … • Charities • Tax-exempt non-profit organizations (c)(3) not (C)(6) • Political campaigns • Surveys • Polls Note: The regulations only apply to residential phone numbers.

Compliance Requirements …

Telemarketers Must Register … • www. telemarketing. donotcall. gov • Provide name, address, Federal ID (“organization profile”) • Designate a “Contact Person” • Certify that your company is in compliance with all telemarketing laws. • Select up to five area codes.

Database Access … • You will be given a “Subscription Account Number” (SAN) and a password. • You may download the full lists of five area codes and purchase software to scrub the FTC lists against the numbers you wish to call. (or) • You may interactively check up to 100 numbers within your selected area codes (per log-in) in groups of ten numbers at a time.

Cost … • First 5 area codes are free additional codes $40 each • Instant access to lists when paid by a credit card • Must renew subscriptions annually

Cost of Access • 16 C. F. R. 310(8)(c) "A person accessing the National Do Not Call Registry may not participate in any arrangement to share the cost of accessing the registry, including any arrangement with any telemarketer or service provider to divide the costs to access the registry among various clients of that telemarketer or service provider. "

Warnocks/Landvoice • One cannot offer a product enhanced by the Registry without first obtaining the client’s SAN. • One can only offer this service for area codes for which the client has subscribed. • If a REALTOR calls a FSBO on the DNC list the FTC will go after the REALTOR. • The FTC believes - "telemarketers should know better than to buy products and services from contact providers who do not ask for SAN numbers. "

Transmit Your Name and Number: • The FTC requires telemarketers to transmit their telephone number and, if possible, their name to consumers’ Caller ID services for all interstate calls. • A telemarketer’s use of calling equipment that can’t transmit Caller ID information is no excuse for failure to transmit the required information. • the FCC rules prohibit blocking of company information through a caller identification service. The Rules further require that a business must provide a number in the caller ID where consumers can call the business during normal business hours and make a business-specific do-not-call request.

Safe Harbor Provision: “calls made in error” • You will not be held liable if you have in place and practice the following seven point office policy:

Office Policy … • Register with the FTC and create an “Organization Profile” on line. • Adopt written office procedures for making sales calls. • Train your office and sales staff. • Require your agents to “scrub” any numbers they have against a current FTC list before making sales calls. • Check agent compliance periodically. • Maintain your own agency do-not-call list. • Be able to show proof of a registry update within last month. “Starting January 1, 2005, telemarketers and sellers are required to search the registry at least once every 31 days and drop from their call lists the phone numbers of consumers who have registered. ”

Proof of Registry Update: • The FTC knows exactly when registered telemarketers last accessed their account. • Using the interactive search instead of downloading gives the FTC (and you) a record that you are checking "at least once every 31 days" as required by the rule.

Is There a Limit? • There is no number limit to the "safe harbor" protections. However, note that safe harbor is for "inadvertent” calls to a number on the Registry, since the company's policy should prevent all calls to these numbers. So, if there are numerous "inadvertent" calls, then the Company probably doesn't have a very effective office policy and so is at risk for being liable for violating the Rules.

Statistics … • 100, 000 numbers have been registered by 70, 000 Americans as of August 2005. • In 2004 …. 960, 927 numbers were registered in Michigan. • In 2004 there were 20, 111 reported violations in Michigan. • 78% are reporting “far fewer calls” or “none at all” since they registered. • Since the regulations were enacted residential calls have been reduced from an average of 30 per month to 6.

Upheld … US Supreme Court October 4, 2004 • A telemarketer’s right to free speech is not violated by the government’s do-not-call list. • The do-not-call registry “directly advances government’s important interest in safeguarding personal privacy”.

Consumer Complaints • www. donotcall. gov • by phone: 1 -888 -382 -1222. • Consumers must report the date of the call and either the name or the phone number of the company that called.

Penalty … • Telemarketers who disregard the registry may be fined up to $11, 000 per call.

A Recent Example … … Phoenix based Dynasty Mortgage was cited by the FCC for 70 calls to 50 homes and fined the maximum of $11, 000 per violation ($770, 000) • March 2005 • Dynasty had been warned in December of 2003

Preemption of State Law • Portions of State DNC regulations which are more restrictive than the Federal DNC laws apply. • In 2002 Michigan has enacted a State DNC law (PA 612): http: //www. michigan. gov/donotcall • Michigan has adopted the Federal Trade Commission's Do Not Call Registry as the state's Do Not Call List. When you sign up with the Federal Registry, you are automatically placed on Michigan's Do Not Call list.

State Law Example: • Wisconsin does not add its DNC list to the "Federal DNC Registry, " so Wisconsin REALTORS have to scrub the Wisconsin DNC list and the Federal DNC list separately. • A telemarketer registering with DATCP must pay the following annual fees, or an annual fee of $20, 000 whichever is less: • An annual registration fee: $700 (first year) and $500 for each year thereafter. • An annual fee of $75 for each telephone line used by the registrant (or the registrant's employees or individual agents) to make telephone solicitations. • An annual fee of $1, 000 for each copy or additional address to which the registrant requests DATCP to send the No Call List in hard copy print form ($25 if e-mail or CD format).

Wisconsin Experience: “The most effective exemption is to secure advance permission to call the home -- and now the cell -numbers of the consumer. The agents tend to work with e-mails, calls to office phones, snail mail, personal visits, etc. There is no easy exemption here! We have had agents who relied heavily on telephone prospecting leave the industry, a few brokers selling or downsizing their businesses, etc. It is truly awful!” Debbi Conrad Director of Legal Services WRA

Beware … • A handful of REALTORS have reported that title companies and lenders are printing out DNC lists (from the FTC Registry) and giving them to real estate professionals (as a marketing tool). • Our members are taking these printouts and thinking they are doing the right thing by not calling numbers that appear on the [title company or lender] generated DNC printout. • Unfortunately, members who rely on such printouts are violating the TCPA - - telemarketers must access the registry themselves or if they use a 3 rd party compliance company, they must register and obtain a SAN (subscription account number). • Additionally, it is likely that accepting DNC lists is a RESPA violation because it is a "thing of value.

Part Two: CAN SPAM

CAN-SPAM Legislation • Effective date January 1, 2004. • CAN SPAM (Controlling the Assault of Non-Solicited Pornography and Marketing Act) • Sought by retailers, marketers and ISPs seeking a single set of rules to preempt 35 state spam laws.

Unlike Do-Not-Call • CAN SPAM does not ban any solicited or unsolicited emails. (Congress authorized but the FTC did not create a do-not-spam registry. ) • CAN SPAM identifies practices to be followed by those who send commercial e-mails originating in the US. • CAN SPAM bans certain fraudulent or deceptive practices and criminalizes techniques used by spammers to avoid detection. • CAN SPAM pre-empts state spam laws except portions of state law that prohibit falsity or deception in any e-mail or attachment.

Key Definition: “Commercial Electronic Mail Message” • Any electronic mail message the “primary purpose” of which is the commercial advertisement or promotion of a commercial product or service.

Exempt … “transactional or relationship e-mails” whose primary purpose is to: 1. 2. 3. 4. 5. Facilitate, complete or confirm a commercial transaction that the recipient has previously agreed to enter into with the sender. Provide warranty information, product recall information or safety or security information for a product or service purchased or used by the recipient. Provide information of a change in the terms, features, status, …, membership, …ongoing purchase or use of products or services offered by the sender and used by the recipient. Provide information directly related to an employment relationship or benefit plan in which the recipient is enrolled. Deliver goods or services that the recipient is entitled to receive under the terms of a transaction that the recipient has previously entered into with the sender.

How to determine: “primary purpose” • 1) E-mail content solely advertises or promotes a product or service it is commercial. • 2) E-mail contains both commercial and “transactional or relationship content” it is commercial if either: a) recipient deems from the subject line that the email advertises or promotes a product or service b) transactional or relationship content is not located at or near the beginning of the e-mail.

• 3) E-mail contains both commercial and non -commercial content it is commercial if: a) recipient concludes from the subject line that the e-mail is commercial. b) recipient concludes from the text that the main purpose of the e-mail is to advertise or promote a product or service.

If you send a commercial e-mail it must include: • A “clear and conspicuous notice” that the message is an advertisement or solicitation. • A “legitimate” return e-mail address. • A valid postal address. • An Internet-based mechanism by which the recipient may “opt-out” of future commercial email messages. The opt-out address must remain active for 30 days after the transmission of the email (don’t let your mail box fill up) and opt-outs must be honored within 10 days.

XXX Board of REALTORS®, Inc. VOL. X, Issue 31 August 11, 2005 JJJJJJJJJJJJJJJJJJJJJJ Last call for reservations for our Awards Night and Crab Feast at the Wellwood on Monday, August 22. Awards Program at 6 pm. Crab Feast immediately following. It will be important that everyone “check-in” when you arrive. You will need a special badge to be able to eat. In the event of inclement weather, we will be inside. $35 person for all you can eat steamed crabs, fried chicken, pit beef, salads, sliced tomatoes, corn on the cob, fresh fruit and sodas. Cash bar available. DJ provided courtesy of Prudential Carruthers, Chase Home Finance, People’s Bank of XXX and Key Title, Inc. Please check our up-to-date CE schedule at www. XXXrealestate. com for upcoming classes. We have six hours coming up on Wednesday, August 17. GRI 200 begins on Thursday, October 20, and the following four Tuesdays ending on Tuesday, November 15. Less than 10 seats left. If you are interested, send us your deposit soon. SUPRA has advised us that they have terminated approximately 25 Dis. Play keys for non-payment. If you have not paid your bill that was due in June, you will need to pay so your service can be restored. We cannot restore your service. Brokers/Managers/Board of Directors members. Please register for the Brokers/Managers meeting with Gar Anderson on Wednesday, August 24, at 9 am. Gar is from NAR. He will be speaking on “Do not call” and other legislation that affects real estate licensees and companies. He will also be discussing IDX and VOW’s. We hope to have some more definitive information on real estate licensees selling mobile homes (not real property. ) We will have some info on the new Property Disclosure/Disclaimer form. If the Broker or Manager cannot come, we hope you will send someone in his/her stead. Please register as soon as possible. Mark the date of Tuesday, October 18, for our Second Annual Fair Housing Day. 4. 5 hours of CE, lunch, 2 breaks—all for $35. Vincent White and Alvin Monshower, Jr. , Esq. , will be the featured speakers. Watch for registration information in the mail.

What’s Right/Wrong With this E-Mail? • Given that 4 out of the 7 submissions require some form of payment in order to attend/participate, this e-mail would be considered "commercial. " • There is no “clear and conspicuous notice” that the message is an advertisement or solicitation. • There is a “legitimate” return e-mail address. • There is a valid postal address. • There is no Internet-based mechanism by which the recipient may “opt-out” of future commercial e-mail messages.

Enforcement: • FTC • Federal and State Regulators • ISPs (may sue for injunctive relief and damages)

Safe Harbor … • There is no “Safe harbor” and the FTC did not provide a blanket exemption for nonprofit associations.

Civil and Criminal Penalties: • $250 per violation ($750 if willful) • 3 years in prison for deception, falsifying header information, hacking, sending large numbers of commercial e-mails or falsifying registration. • 5 years in prison if committed in furtherance of a felony

September th: 16 • The Federal Trade Commission gave limited endorsement to offering cash rewards to people who help track down e-mail spammers

Also … • You may not harvest e-mail messages automatically or purchase harvested e-mail addresses. • Once a recipient opts-out of e-mail communication, the Act prohibits the sale, lease, exchange, transfer or release of that person’s e-mail addresses to anyone else for any purpose.

Spam Facts … • There are some 95, 000 spam messages sent every day. • 1 in 63 have a virus. • 15% of all opt-out buttons are fake. • 80% of all spam is sent by 600 people. • Can-Spam compliance rose from one-half of one percent in December ’ 03 to 7% in December ‘ 04.

A Typical REALTOR CANSPAM Violation: 08/20/2005 07: 40 AM From: XXXX Subject: Country living update MLS # 10032999 $129, 900 6281 St. Rd. 48 West Sunday 2: 30 – 4: 30 In listening to the comments for State Road 48 home, we have called in a mold and mildew remediation company, they have worked this week in cleaning up the odors, finding the problems and coming up with solutions for moisture smells and odors. This home is now available at $10, 000 less and is clean, vacant and ready for a new owner. Stop in Sunday 2: 30 to 4: 30 and see for yourself, or send your buyer. This is a stones throw from Highland Village, but it seems like country, its close to Ivy Tec, the west side shopping and grocery stores and highway access makes it a quick trip to downtown. The yard is spacious, the style is contemporary tri-level with three bedroom 2 baths, nice deck and back yard and huge 12 X 25 family room. Stop in and see for yourself, a great buy. Ms. X, ABR, GRI, CRS, e-Pro, SRES XXX Blvd XXX, IN 47401 800 -837 -XXX XXX@XXX. com

What’s Wrong? • • • Ms. X apparently uses some e-mail service that has tapped into NAR's staff e-mail directory or has employed a program that scourers the internet for "realtor" e-mails. Her subject line is deceptive. This not a "country living update" but rather an update on a listed property. The FTC takes deceptive subject lines very seriously! She does not have a functioning opt-out mechanism There is no notice of the opportunity to opt-out She does not include a notice that the content is an advertisement or solicitation. Penalty: 1) $250 per violation (i. e. per e-mail) or treble for willful violations, 2) CAN SPAM criminalizes deceptive header information which is punishable by a max. of 3 years imprisonment if the violation meets certain volume and damage thresholds.

Part Three: Do Not FAX!

Legislative Background • Telephone Consumer Protection Act of 1991 (TCPA) prohibits the sending of unsolicited facsimile advertisements to a business or residence without the express permission or invitation of the recipient. • PL 102 -243 bans sending unsolicited commercial faxes unless there exists an “existing business relationship” with the

Established Business Relationship (EBR) Examples: REALTOR to client REALTOR to REALTOR Association to REALTOR

A Proposed FCC Rule Would Have Eliminated the EBR and Required Prior to Sending a Fax: • 1) express “written” permission from recipient, • 2) the recipient’s specified “fax number” • 3) “signature” of the fax recipient

Impact … • NAR testified that the FCC rules would have caused REALTORS to create and store 66 million permission forms to support the 6 million home sales last year. • US Chamber estimated the FCC regulations would have cost the average small business $5, 000 the first year and $3, 000 every year thereafter.

S. 714 to the Rescue • June 27 th the FCC issued a “stay” of the fax rules until January 9, 2006. • June 28 th the House passed S. 714 • June 24 th the Senate passed S. 714 • July 9 th President Bush signed S. 714 into law

S. 714 Compliance … • Unsolicited commercial faxes may be sent without prior permission as long as: • An “established business relationship” predates the enactment of the Junk Fax Prevention Act, or • In the case of a new “established business relationship”, the fax number was provided voluntarily by the recipient or is publicly available in a published directory, advertisement or website to which the recipient gave the fax number for publication. • One may not purchase fax list from third parties

• The fax bill requires that all unsolicited commercial faxes include an opt-out provision on the first page of the fax. The opt-out mechanism will need to be made available 24 hours/7 days and at no cost to the consumer. Examples of a cost-free op-out mechanism include an email address to which to reply, a local phone number with message option, and an 800 number with message option. A phone number that is a longdistance or toll call would not meet the bill's requirements. Expect further clarification via rulemaking. • The bill clarifies that verbal permission to fax is an allowed means of granting express permission to fax.

• Despite adoption of this Federal law, state laws on the sending of unsolicited faxes are NOT preempted. Senders must comply with both the Federal law and with any applicable state laws. The Federal law will not allow an unsolicited fax to be sent where doing so is prohibited by state law.

FCC Proposed Penalties : • $500 per fax • $1500 per blast fax to strangers

FCC Proposed Enforcement … • Consumer may sue sender directly • State AGs office may bring action • Complaint filed with the FCC: (888 -225 -5322) or http: //www. fcc. gov/cgb/complaints. html

Existing Enforcement Actions… • • Charter One Bank … $1, 800, 000 Hooters … $12, 000 Fax. com … $5, 380, 000 Seventeen Motors … $7, 000 • Visit www. tcpalaw. com

Class Actions …

MI Washington Mtg. Co. , v. Instant Response Marketing, Inc. , 2004 TCPA Rep. 1374 (2004) (order denying Def. MTD. )

The NAR Action Center www. naractioncenter. com The REALTOR Location to Take Grassroots Action

RESPONDING TO A CALL FOR ACTION It Takes Just Seconds to Respond. The Outcome Can Last A Lifetime • Using NAR’s Action Center is the easiest way for you to personally influence Congress – from your home or office • NAR will email a Call for Action (CFA) requesting your immediate response on an important real estate or housing issue. • NAR Action Center gives you a Pre-written letter to send to your Representative or Senators in just three clicks.

Michigan REALTORS® … • Membership: 31, 968 • Registered with Action Center as of July ’ 05: 5, 250 (16. 42%) • Average response to Call-to-Action: 639 (2. 0%)

Thank You