Kara Sears
Delaware has strict laws in place to protect its citizens from solicitation and high-pressure sales tactics. The state's Telemarketing Fraud Act, for example, restricts telemarketing calls to between 8 a.m. and 9 p.m., requires telemarketers to identify themselves and disclose all material information accurately, and prohibits deceptive and abusive practices. Delaware courts also review restrictive covenants in non-compete cases for reasonableness, equity, and the advancement of legitimate business interests, suggesting that they take a critical view of overly broad non-solicitation agreements. While the specifics of Delaware law may not directly prohibit the solicitation of prospective customers, they do provide a regulatory framework that aims to protect consumers from unwanted and unethical sales practices.
| Characteristics | Values |
|---|---|
| Definition of "telemarketing" | An organized activity, program, or campaign by one or more telemarketers that is conducted for the solicitation of a sale of merchandise through the use of one or more telephones to contact customers |
| Prohibited acts | Deceptive and abusive telemarketing practices, including calling outside of 8 a.m. to 9 p.m., not identifying themselves, not disclosing material information accurately, and billing without express consent |
| Exemptions | Solicitations where payment isn't required until after a face-to-face sales presentation, communications initiated by customers, solicitations between businesses, fundraising and noncommercial purposes by religious, charitable, political, educational, labor, or social organizations |
| Enforcement | Federal "Telemarketing and Consumer Fraud and Abuse Prevention Act" to be enforced by state and local officials, with additional requirements in Delaware to protect residents from telemarketing abuses |
| Do Not Call Registry | Customers can add their names and phone numbers to a statewide Do Not Call Registry, and telemarketers are prohibited from calling numbers on the registry after 30 days |
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What You'll Learn
Telemarketing fraud laws
Telemarketing fraud, or phone fraud, refers to any scheme in which a criminal communicates with a victim over the phone to encourage them to purchase goods or services, participate in a contest, make a charitable contribution, invest in a financial product, participate in a business opportunity, commit to a loan, or participate in a fraudulent medical study.
Federal and Delaware laws prohibit deceptive and abusive telemarketing practices and protect consumers from unwanted calls. Under these laws, telemarketing calls are restricted to between 8 a.m. and 9 p.m., and telemarketers must promptly identify themselves and disclose the purpose of their call. They must also provide accurate and complete information about the product or service they are promoting and obtain express consent before billing charges. Telemarketers must also disclose that any sales transaction is not final for 7 business days and inform consumers of their right to cancel.
If a telemarketer is calling about a prize promotion, they must provide consumers with an accurate description of the prize, its market value, all conditions to receive or redeem the prize, the odds of winning, and instructions on how to participate. They must also make it clear that no purchase is necessary to win a prize.
Telemarketing fraud can have serious consequences, including criminal prosecution, lengthy jail sentences, and large fines. Federal law provides for increased penalties when certain vulnerable victims, such as those aged 55 or older, are targeted by scammers. In addition, convicted defendants of telemarketing fraud may be required to pay restitution to their victims and forfeit real and personal property.
Common telemarketing scams include advanced fee scams, where victims are encouraged to advance large sums of money with the promise of a high rate of return, and overpayment scams, where legitimate business names are used to send fake checks to victims and then trick them into wiring back extra money. Fraudulent telemarketers also often pose as calling on behalf of charities to obtain credit card information and make unauthorized purchases.
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Telemarketing sales calls
In Delaware, "telemarketing" is defined as an organized activity, program, or campaign that is conducted for the solicitation of a sale of merchandise through the use of one or more telephones to contact customers. Federal and Delaware laws prohibit deceptive and abusive telemarketing practices and protect consumers from unwanted calls.
Telemarketing calls are restricted to between 8 a.m. and 9 p.m. Telemarketers must promptly identify themselves and disclose the purpose of their call. They must also provide all material information accurately concerning the merchandise and the terms of the sale. Telemarketers must also obtain express consent before billing charges. If calling about a prize promotion, telemarketers must disclose various details about the prize, including its market value, the number of prizes available, and the odds of receiving it. They must also inform consumers that they can cancel the sale within seven business days.
To deter telemarketing fraud, certain acts are illegal in Delaware. For example, telemarketers are prohibited from making unsolicited telemarketing sales calls to customers listed on the quarterly statewide Do Not Call Registry for more than thirty days. Telecommunications service providers are required to inform their customers about their rights regarding telemarketers and the Do Not Call Registry.
However, Delaware's Telemarketing Fraud Act does not apply to all telemarketers. For instance, it does not apply when payment is not required until after a face-to-face sales presentation or when the communication is initiated by the customer rather than through solicitation. The use of telemarketing for fundraising and non-commercial purposes by religious, charitable, political, educational, labor, or qualifying social organizations is also exempt. Additionally, the Act does not apply to solicitations made by licensed insurance brokers, agents, or financial institutions within the scope of their licenses or registrations.
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Non-compete provisions
In the state of Delaware, the enforceability of non-compete provisions is carefully scrutinized by the courts. Delaware courts have demonstrated a reluctance to enforce restrictive covenants that are deemed unreasonable or overly broad. This was evident in the case of Kodiak vs. Adams, where the non-solicitation provision was found to be overbroad as it covered all of Kodiak's customers, clients, and prospective customers, rather than those specifically related to Adams' business relationships within the company.
In another case, Ainslie v. Cantor Fitzgerald L.P., Vice Chancellor Zurn declined to enforce restrictive covenants in the context of a partnership agreement. The court found that the worldwide geographic scope of the non-compete provision was overly broad and that the scope of prohibited activities was unreasonable as it covered entities unrelated to the partner's business involvement. The court also noted that Cantor Fitzgerald could not justify the broad scope as necessary to protect its goodwill and customer relationships.
The trend in Delaware case law suggests a growing reluctance to enforce restrictive covenants, particularly those that are deemed unreasonable or overly broad in scope. This aligns with a broader national trend towards restricting non-compete provisions, as seen in states like California, Oklahoma, and South Dakota, which have already prohibited non-competes in most employment contracts. At the federal level, the FTC has also proposed a rule that would ban non-competes in employment contracts.
While the Delaware Supreme Court has yet to issue a definitive ruling on this issue, the lower court decisions provide valuable insight into how such cases may be handled in the future. It is important to note that each case is unique, and the enforceability of non-compete provisions will depend on the specific facts and circumstances involved.
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Door-to-door sales
In the state of Delaware, the law recognises the basic right of its citizens to be free from high-pressure door-to-door sales tactics. The Home Solicitation Sales Act protects consumers from the inequities found in certain ambiguous or misleading contracts, poor-quality merchandise, and the quick discounting of evidences of indebtedness.
The law requires that any seller or seller's representative who solicits a door-to-door sale at a home must prominently display a door-to-door salesperson identification card obtained from the Department of Finance. This card must be displayed in such a manner that a potential buyer can easily view it during any transaction.
The term "door-to-door sale" includes any sale solicited and consummated via any telephone. "Home" refers to a house, dwelling, condominium, townhouse, apartment, or other residential building in which a person resides.
In addition to regulations for door-to-door sales, Delaware has also implemented laws to deter telemarketing fraud and protect consumers from unwanted calls. Telemarketing calls are restricted to between 8 a.m. and 9 p.m., and telemarketers must promptly identify themselves and disclose the purpose of their call. They must also provide accurate and complete information about the merchandise or services being offered and obtain express consent before billing any charges. Telemarketers are also required to inform consumers about their right to cancel a sale within 7 business days.
Delaware maintains a statewide Do Not Call Registry, which allows residents to opt-out of receiving unsolicited telemarketing sales calls. Telecommunications service providers are required to inform their customers about this registry and the rights they have regarding telemarketers.
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Consumer protection
Delaware has a number of laws in place to protect consumers from unwanted and fraudulent solicitation. The state's Telemarketing Fraud Act prohibits deceptive and abusive telemarketing practices, including restricting telemarketing calls to between 8 a.m. and 9 p.m., requiring telemarketers to identify themselves and disclose all material information accurately, and prohibiting unsolicited telemarketing sales calls to customers on the Do Not Call Registry.
The Delaware Code also includes a "Home Solicitation Sales Act," which aims to protect citizens from high-pressure door-to-door sales tactics and misleading contracts. This Act requires sellers or their representatives to prominently display a door-to-door salesperson identification card obtained from the Department of Finance while soliciting sales at a person's home.
In addition, Delaware law requires telecommunications service providers to inform their customers about their rights regarding telemarketers and the Do Not Call Registry. This includes inserting an annual notice in customers' billing statements and publishing a notice in local telephone directories.
The state's laws also outline specific requirements for telemarketers offering prize promotions. They must provide an accurate description of the prize, its market value, all material conditions for receiving or redeeming the prize, the odds of winning, and instructions on how to participate. Telemarketers must also disclose that any sales transaction is not final for seven business days and inform consumers of their right to cancel.
To further protect consumers, Delaware's Telemarketing and Consumer Fraud and Abuse Prevention Act is intended to be fully enforceable by state and local officials. The state recognizes the need for additional requirements and protections beyond those provided in the federal statute to safeguard residents from telemarketing abuses.
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Frequently asked questions
The Home Solicitation Sales Act is a Delaware law that protects citizens from high-pressure door-to-door sales tactics and misleading contracts, poor quality merchandise, and quick discounting practices.
In Delaware, a "door-to-door sale" includes any sale solicited and completed via telephone.
Yes, Federal and Delaware laws prohibit deceptive and abusive telemarketing practices and protect consumers from unwanted calls. Telemarketing calls are restricted to between 8 a.m. and 9 p.m., and telemarketers must provide certain information and disclosures to consumers.
Yes, you can register for the statewide Do Not Call Registry in Delaware to prevent unsolicited telemarketing sales calls.
Yes, there have been cases such as Ainslie v. Cantor Fitzgerald L.P. and Kodiak v. Adams that dealt with non-solicitation and non-compete agreements in Delaware. These cases set a trend towards restricting non-solicitation and non-compete provisions.
