Law MeMo
Communicate, Don’t Inundate                   ...
Arts Law Memo

ACross stAtE LiNEs                          from a live operator, through use of        organizations are ...
Arts Law Memo

                 E-mail marketing: is it outreach or is it spam?
A    little publicized provision of the ne...
Council, a state agency; and the Missouri Arts Council, a state agency.
            Whitaker Foundation; Regional Arts Com...
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Telemarketing and E-mail Marketing


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Telemarketing and E-mail Marketing

  1. 1. WINTER 2001 Law MeMo Communicate, Don’t Inundate Published by the St. Louis Volunteer Lawyers and Accountants Y ou sit down to dinner and the phone rings. It’s another pesky telemarketer trying to sell you light taken action to protect consumers from abuse and deception. This issue of Arts Law Memo describes Missouri’s new No for the Arts (VLAA), Arts Law Memo is mailed, free of charge, to more than 650 Missouri and Southwestern bulbs, insurance, a new roof, long Call law. It also summarizes two federal Illinois arts organizations, VLAA distance service, or a vacation home. Or regulations, the Telephone Consumer volunteers, and corporate sponsors. the call might be a charitable solicitation Protection Act and the Telemarketing VLAA helps artists and arts or a pitch for season tickets. Sales Rule. Finally, it provides guidance organizations solve and avoid legal Telemarketing is a highly effective on developing e-mail marketing lists. and accounting problems by: sales tool and, because it brings such Do Not Disturb • Making referrals to lawyers and good results, consumers are inundated Enacted during the last legislative accountants; • Mediating arts-related disputes; with calls…and have eaten way too many session, the No Call law (Senate Bill No. • Publishing Arts Law Memo and cold dinners. Some say telemarketing 763) prevents some telemarketers from concise how-to guides; invades their privacy. Others, especially calling Missourians who sign up to be on • Sponsoring seminars and public the elderly, worry about fraud. a list that is maintained by the Attorney forums; According to the National Consumers General. Consumers can register their • Arranging for guest League, American consumers lose an home phone numbers by calling a toll- speakers; estimated $40 billion annually through free phone number (1-866/662-2551) or • Maintaining a telemarketing fraud. A Lou Harris survey by filing electronically on the Internet reference library; conducted for the league found that 92 ( There is • Operating an arts space clearinghouse; percent of adults reported receiving no charge to register. • Supplying model The Attorney General started contracts and other compiling the database in late December. arts law and business materials; Missouri’s new No Call law More than 100,000 consumers signed up • Facilitating meetings; prevents some during the first week. • Conducting and disseminating To comply with the new law, research on issues affecting the arts; telemarketers from calling telemarketers must purchase a copy of • Contributing articles to publications; consumers who register the No Call list, which will be published • Collaborating on arts advocacy in an electronic format. The first list will initiatives; their numbers with the be available on June 1. The Attorney • Matching volunteers with arts Attorney General’s office. organizations seeking board General’s office will provide updated members; and versions every three months. • Providing access to the national VLA fraudulent telephone offers. And the FBI Telemarketers must submit a request network. estimates that there are 14,000 illegal for the list and a $25 payment for each This issue was written by Sue Greenberg, telephone sales operations scamming quarter. The application is available in VLAA’s executive director. Special thanks consumers in the United States every day. both PDF and html versions on the to Jerry Cerasale at the Direct Marketing While many legitimate companies, Attorney General’s website. Association, and Philippa Gamse, Cyberspeaker. including nonprofit arts organizations, Under a confidentiality agreement use the telephone to sell goods and that must be filed as part of the This publication is distributed with the understanding that VLAA is not engaged services, complaints about the invasive application, telemarketers must agree that in rendering legal or accounting counsel. practice abound. the information will be used only to We urge you to seek professional services to address your specific needs. In response, the Direct Marketing comply with the law and will not be Association (, an shared. In addition to limiting calls, the st. Louis Volunteer Lawyers and industry group, publishes lists of new law requires telemarketers to clearly Accountants for the Arts consumers who do not wish to receive identify themselves and to spell out the 3540 Washington St. Louis, MO 63103 solicitation calls. It admits that terms of their offers. 314/652-2410 registration reduces the number of The telemarketers covered by the law FAX 314/652-0011 unsolicited calls placed to residences but must stop calling those on the list by July does not stop all unwanted calls. 1 or they will face civil penalties of up to State and federal government also has $5,000 for each knowing violation. © St. Louis Volunteer Lawyers and Accountants for the Arts, 2001
  2. 2. Arts Law Memo ACross stAtE LiNEs from a live operator, through use of organizations are membership based. The No Call law applies to automatic dialing and announcing Typically, the board of directors simply businesses outside of Missouri that equipment or by any other means for perpetuates itself. place calls to residences in this state. the purpose of encouraging the In an effort to close the No Call Arts organizations that make calls to purchase or rental of, or investment in, statute’s various loopholes, Attorney neighboring states should be aware that property, goods or services,” there is a General Jay Nixon predicts that it will Kansas and Illinois have passed their limited exemption for tax-exempt be revisited this year. If state officials own telephone marketing laws and that organizations. hear from enough nonprofits, the “bona further legislation is pending. Not covered by the law are fide member” requirement could be ExEmPtioNs communications made “by or on behalf changed. Critics, such as AARP, complain of an entity pursuant to Chapter 501(c) ComPLiANCE & GooDwiLL that too many powerful industries are (3) of the United States Internal Your organization’s reputation and exempt from the new law. They include Revenue Code, while such entity is stature in the community are its most telephone and insurance companies. engaged in fund raising to support the valuable assets. So full compliance with There also is an exemption that charitable purpose for which the entity the telemarketing lawswill foster allows telemarketers to call potential was established (italics added) provided goodwill. In other words, if an customers if a face-to-face meeting is that a bona fide member of such exempt individual asks not to be called, the required to close the deal. That loophole organization makes the voice ethical practice would be not to call that exempts home improvement contractors communication.” individual. and vacation home salesmen. Another Rules drafted to help implement the A CALLiNG tiP important exemption covers companies No Call law define bona fide member in The effectiveness of telemarketing with which the consumer already has a accordance with Missouri’s nonprofit campaigns is related to the demeanor business relationship. statute. In this arena, members are those and knowledge of the caller, whether NoNProfits who vote for the board of directors; in-house or professional. One Under Section 407.1095(3) of the they are not volunteers or “friends” of recommended practice is to begin the new law, which defines telephone the organization who purchase annual call by asking the prospective patron if solicitation as “any voice memberships or make donations. it is a convenient time to talk. communication over the telephone line Few Missouri nonprofit arts Two Federal Rules GovernTelemarketing There are two somewhat overlapping federal laws inbound or outbound interstate telephone calls to sell that regulate telemarketing to residences. They are the goods or services. Telephone Consumer Protection Act of 1991, which is Like the TCPA, it requires telemarketers to honor a regulated by the Federal Communications consumer’s requests not to be called again. Commission (FCC), and the 1994 Telmarketing and Charitable organizations are exempt from Consumer Fraud Abuse Prevention Act, which is Telemarketing Sales Rule when they are soliciting regulated by the Federal Trade Commission. The charitable donations. But the rules do apply to regulations implementing the latter are known as the commercial transactions (such as selling Telemarketing Sales Rule. subscriptions). In most cases, they also apply to for- The Telephone Consumer Protection Act (TCPA) profit telemarketing companies making calls on behalf focuses on the use of telephone lines. It requires of nonprofit organizations. telemarketers to take consumers off their lists on Under the Telemarketing Sales Rule, telemarketers request. It also requires them to maintain a written are required to make clear and conspicuous oral policy for maintaining do not call lists. disclosures including: the seller’s identity; that the Calls by or on behalf of tax-exempt organizations purpose of the call is to sell; the nature of the goods are not required to comply with the do not call list and services offered; and that no payment or purchase requirements. Also exempted are calls with whom the is necessary to win if a prize promotion is offered. For caller has an established business relationship. transactions, the cost of the goods or services offered In addition, the TCPA restricts the use of FAX and any policy of not making refunds or exchanges machines and puts some limits on recorded messages also must be disclosed. and automatic dialing devices. Both laws restrict calling hours. With some The Telemarketing Sales Rule is designed to exceptions, telemarketers can only make calls to minimize scams. It governs businesses that use either residences between 8:00 a.m. and 9:00 p.m. St. Louis Volunteer Lawyers and Accountants for the Arts
  3. 3. Arts Law Memo E-mail marketing: is it outreach or is it spam? A little publicized provision of the new No Call law addresses commercial e-mail communication. It prohibits a person or entity conducting business in affirmative action constitutes consent, which is the foundation of permission marketing. The other, somewhat controversial method is known Missouri from sending or causing commercial e-mail to as opt-out. It gives the receipt the option of be sent without including a toll-free telephone number discontinuing further communication by checking a box or valid return e-mail address that the recipient may use or sending an e-mail message. to notify the sender not to send further e-mail PRIVACy POLICIES: THE BASICS advertising. Posting a privacy policy is considered a critical step The junk e-mail problem touches on several ethical in building trust with audiences and donors. It assures concerns. They incluce the protection of commercial them that their private information will be respected. speech under the First Amendment, the practicality of Generally, policies state that the organization is regulating the free flow of information on the Internet committed to maintaining the individual’s privacy and andprivacy rights. will safeguard all personal information. Policies explain THE BENEFITS OF E-MAIL how the collected information will be used and promise E-mail is an increasingly powerful medium for that the organization will not sell or disclose the exchanging information and is probably the primary information to outside parties without consent. explanation for the Internet’s The On-line Privacy success. Numerous surveys online Privacy Law Anticipated Alliance (www.privacy have documented the The new Congress is expected to pass a law, an international exponential growth in the providing basic protections for consumer online coalition of companies and number of e-mail users and privacy. According to a recent article by Carolyn Duffy associations, recommends the importance that it plays Marsan, which was posted on, the that policies contain at least in their lives, both at work legislation will address four principles: these specific elements: and at home. • Notice. Web site operators will be required to • Notice and Disclosure. The For nonprofit arts explicitly notify customers about personal information policy should be easy to find, organizations, e-mail can being gathered and how the information is used. read and understand. It complement traditional direct • Choice. Consumers will be able to opt-out of should include the mail, telemarketing and information collection. organization’s contact advertising. And it offers • Access. Consumers will be able to see in information information (a phone number unparalled, low-cost gathered about them and correct errors. and e-mail address). opportunities for building • Integrity. Web site operators will be required to • Choice/Consent. relationships with current ensure that consumer information is protected from Individuals should be given a and potential audiences, unauthorized use. choice regarding how their volunteers and donors. Currently, approximately 97 percent of U.S. sites identifiable information is SPAM IS AN INTRUSION collect personal information, but only 20 percent used when the use is While sending unsolicited provide notice, choice, access and integrity. unrelated to the purpose for commercial e-mail is easy which it was initially and relatively inexpensive, collected. loss of goodwill and legal uncertainty are not worth any • Data Security. Organizations that create, maintain, cost. Simply stated, don’t be a spammer. use or disseminate individually identifiable information According to Internet folklore, the term spam was should take appropriate steps to assure its reliability. derived from a Monty Python sketch set in a cafe where They also should take reasonable precautions to protect the menu consists almost exclusively of Spam, the the information from loss, misuse and alteration. These canned luncheon meat. On the Internet, spam is precautions should be explained in the policy. regarded as an electronic nuisance. Most Internet • Data Quality and Access. Organizations should take Services Providers (ISP) have a policy that forbids spam. steps to assure that the collected information, especially Of course, not all bulk e-mail is spam. If the account information, is accurate and complete. information is requested or your organization has an Individuals should be given assurance that mistakes will existing relationship with the recipient, the message is be corrected promptly. probably not a breach of “netiquette.” There are many excellent examples of policies (e.g., CREATING AN ELECTRONIC MAILING LIST Metropolitan Museum of Art, There are many ways to compile an e-mail database. that can be tailored to meet your organization’s needs. The recommended method is known as opt-in. It makes use of printed or on-line registration forms. Taking this St. Louis Volunteer Lawyers and Accountants for the Arts
  4. 4. Council, a state agency; and the Missouri Arts Council, a state agency. Whitaker Foundation; Regional Arts Commission; the Illinois Arts Publication of Arts Law Memo is made possible by grants from the REQuEStED ADDRESS SERViCE St. LOuiS, MO 63103 3540 WAShingtOn PERMit nO. 3363 St. LOuiS, MO PAiD u.S. POStAgE nOnPROFit ORg. resources MEASURING WEB SItE trAffiC Some organizations use sophisticated logs to provide insights into the use of their Web sites and help improve the site’s design and content. The logs give an aggregate breakdown of the numbers of visitors, whether the visitor arrived from an external link, search engine or bookmark, how long the visitor stayed and more. One provider of this analysis is Hitbox. The service is free if the subscriber places the company’s banner or button on its site. Alternatively, for those who don’t want to host the advertisement, it is available for a small monthly fee. For more information, visit HitBox ( booKs & PErioDiCALs Fisher, Michael A. “The Right to Spam? Regulating Electronic E-Mail.” Columbia-VLA Journal of Law & the Arts, Spring 2000. This scholarly article addresses restrictions on commercial speech under the First Amendment, the history of the regulation of unsolicited advertising and the various measures being used to minimize spam. Grobman, Gary. The Nonprofit Organization’s Guide to E-Commerce. This is a practical guide designed to help nonprofits maximize results on the Internet. It tells how to add an e-commerce component to your site and discusses legal issues, fund raising and Web site publicity. The book sells for $19.95, plus $3.50 for shipping and handling. Credit card orders: 717/238-3787. Kinnard, Shannon. Marketing with E-Mail. This book provides a step-by-step guide through the process of creating and implementing an e-mail marketing plan that will meet your organization’s specific needs. VLAA LibrArY Many books on arts law and business practices are available at the St. Louis Volunteer Lawyers and Accountants for the Arts library located within the Regional Arts Commission office, 3540 Washington, in Grand Center.