On the Relevance of Door-to-Door Sale Regulation

by Jeff Sovern

As my co-authors and I worked on our forthcoming casebook, one of the issues we faced was whether door-to-door sales regulations are still relevant and consequently worth covering in the book.   Door-to-door sales were more common in the pre-spam, pre-telemarketing era.  In the end we decided to include materials on door-to-door sales for several reasons, including that such sales still occur; the material permits a general discussion of cooling-off period rules (cooling off periods are the law's principal response to door-to-door sales); it sets up the study of spam and telemarketing rules (e.g., should spam and telemarketing sales be subject to cooling off periods?); and because we thought the reduction in telemarketing generated by the "Do Not Call" list might lead to a resurgence of door-to-door sales.  Today's New York Times has a painful article about youthful door-to-door sellers of magazines which confirms not only that such sales still occur but also suggests that the "Do Not Call" list has indeed increased door-to-door selling.  The article focuses on how managers abuse the sellers and how the industry is largely unregulated.  There's a distressing irony in that:  cooling off periods were adopted to protect consumers from hard sells, but it turns out that the sellers may need more protection than the consumers.

Comments

[health leads]

CMS had to cahnge many of their regulations concerning marketing of medicare drug plans because of door to door practices that were targeting the elderly. It is now prohibited.

[Jeff Sovern]

Thanks for this set of interesting comments and particularly the cites (not to mention the haiku!). In response to Andrew Engel's comment, we did indeed elect to keep the materials on door-to-door sales in the book. In response to Rob Bramson, we also inserted in the book a problem and a note on cooling off periods for telephone solicitations, including citations both to states that have statutes providing for cooling off periods for telephone solicitations and states, like California, that have interpreted their door-to-door statutes as applying to such sales (we also included materials on the Do-Not-Call list and telemarketing, but that's a subject for another day). And I think Chris Hoofnagle is right that it will be interesting to watch the rules develop on advertiser liability for third-party marketing.

[david giacaloe]

You can find information about the FTC's Cooling Off Rule here - http://www.ftc.gov/bcp/conline/pubs/buying/cooling.htm

For an interesting look at outlandish door-to-door magazine sales practices, check out David Liss' 2006 novel The Ethical Assassin http://www.amazon.com/Ethical-Assassin-Novel-David-Liss/dp/140006421X .

[Rob Bramson]

Perhaps worth noting in your casebook that California applies its home solicitation rules to telephone solicitations (assuming the call is to the consumer's residence).

[Andrew Engel]

You have to keep teaching door-to-door regulations. Many state laws, as well as the FTC rule, also covers many home improvement contractors, etc. In Ohio, transactions consummated at a residence are covered even if instituted by the seller by phone. That is too big of an area to ignore. One problem with the FTC rule is that it has no private right of action. You must work a violation into a remedy under state law.

[Deepak]

Here's a CNN piece from 2003 on the shift to door-to-door sales following the implementation of the do-not-call list. Some companies whose operations shifted to door-to-door are quoted:

http://www.cnn.com/2003/US/South/11/10/door.to.door.ap/

[Brian]

Interesting point relating door-to-door fraud to the DNC registry. I wonder if there is any way to test that hypothesis.

[Chris Hoofnagle]

I think it's pretty clear that mail and door-to-door will be bigger vectors for fraud because of the do-not-call registry, but also because of demographic changes (Americans getting older).

So, what will also be interesting is advertiser liability for 3rd party marketers. We already have the New York Datran settlement, and the more recent one fining advertisers for spyware advertising. Isn't it obvious that the way to get to these practices is through the magazines or their clearinghouses?