Issue
Will states continue to enact more bonding and registration requirements for the teleservices industry as a condition of doing business?

Importance
Increasingly burdensome bonding and registration requirements may significantly increase the cost of doing business for telemarketing companies. Excessive bonding levels and unreasonable registration requirements may serve to create an anti-competitive barrier to business.

ATA Position
ATA accepts the right of states to impose reasonable bonding and registration requirements in order to regulate commerce within their borders, provided such requirements are applied in a fair and equitable manner across the board to other industries in a like manner.

ATA opposes bonding and registration requirements that primarily serve to impose unreasonable or punitive burdens on industry. Requirements that cannot be related to legitimate regulatory issues may constitute an illegal restraint on trade.

Background
A number of states have imposed bonding and registration requirements on businesses engaged in telemarketing activities within their borders. The rationale advanced has been that consumer concerns and the potential for fraud warrant the regulation of such companies. In the event of consumer complaints and/or judgments against a company, authorities must be able to locate the company or its agents and safeguard the ability of the state to exact compensation from offenders. Most state attorneys general offices do not have the resources to obtain this information for every business within a state. Imposing registration requirements satisfies the first need; bonding requirements ensure the presence of financial assets to satisfy the second.

A total of 27 states now require some level of bonding and registration.

• Alabama
  
• Alaska
  
• Arizona
  
• Arkansas
  
• California
  
• Colorado
  
• Delaware
  
• Florida
  
• Hawaii (repealed)
  
• Idaho
  
• Indiana
  
• Kentucky
  
• Louisiana
  
• Maine
  
• Mississippi
  
• Montana
  
• New York
  
• Nevada
  
• North Carolina
  
• Ohio
  
• Oklahoma
  
• Oregon
  
• Pennsylvania
  
• Rhode Island
  
• Texas
  
• Utah
  
• Washington
  
• West Virginia

Many of these state laws provide for exempted categories. These tend to differ from state to state, creating a significant compliance burden on businesses that operate in multiple states. Some annual registration fees run as high as $20,000. Bond requirements for businesses operating in all 27 states total $1.7M.

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