2020 Delaware Code
Title 6 - Commerce and Trade
Chapter 25A. Telemarketing Registration and Fraud Prevention
§ 2503A Registration of sellers, telemarketers and telemarketing businesses.
(a) Unless exempted under this section or § 2505A of this title, no person shall transact any business with any customer who is located in the State through telemarketing as a seller or a telemarketing business without having first obtained a certificate of registration from the Director of the Consumer Protection Unit of the Department of Justice (hereinafter “Director'') in accordance with this section.
(b) Any person required by this section to obtain a certificate of registration (hereinafter “registrant” ) shall apply to renew the registration no less than 30 days before the end of the effective term as indicated on the certificate.
(c) A registrant applying for a certificate of registration or renewal must include the following information in his or her application:
(1) The registrant's true name, current address, telephone number and principal place of business, including each fictitious or business name under which the registrant intends to engage in telemarketing;
(2) Each occupation or business that the registrant has engaged in for 2 years immediately preceding the date of registration;
(3) With respect to the registrant, any person employed by the registrant as a telemarketer, manager or director and, if the registrant is not a natural person, the registrant's owners; whether any person so designated has been convicted of or pled guilty to or is being prosecuted in any jurisdiction for racketeering, violation of state or federal securities laws, theft, fraud, forgery or any other offense involving falsehood or deception;
(4) With respect to the registrant, any person employed by the registrant as a telemarketer, manager or director, and if the registrant is not a natural person, the registrant's owners; whether any person so designated is or has been subject to any pending or final cease and desist order, assurance of discontinuance, injunction, restraining order or judgment under this chapter or Chapter 25 of this title or in any other civil or administrative action in any other jurisdiction involving telemarketing, consumer or securities fraud, deceptive trade practices, racketeering or any other civil enforcement statute involving fraud or deception;
(5) With respect to the registrant, or if the registrant is not a natural person, the registrant's owners or directors; whether at any time during the previous 7 years any person so designated has filed for bankruptcy, been adjudged bankrupt, or been reorganized because of insolvency;
(6) When disclosing matters under paragraph (c)(3), (4) or (5) of this section, the registrant shall include the following information:
a. The name and address of the court having jurisdiction in the matter;
b. The name and address of any governmental agency, prosecutor's office, probation office or law-enforcement agency involved in the matter;
c. The case, docket or identification numbers as used by the court having jurisdiction over the matter; and
d. Where relevant, whether and to what extent the registrant is on probation or owes any restitution, fines, penalties or assessments to any person or governmental authority;
(7) If the registrant is a seller, the legal name, address, phone number, business name and state of incorporation (including name, address and phone number of any registered agent) of any telemarketing business hired by the registrant for telemarketing to customers located in the State; if the registrant is a telemarketing business, the legal name, address, phone number, business name and state of incorporation (including name, address and phone number of any registered agent) of the seller that has hired the telemarketing business to engage in telemarketing to customers located in the State;
(8) Where pertinent, the names, including any fictitious names, current home addresses, dates of birth and Social Security numbers of the following persons employed by the registrant:
a. The owners and directors of any telemarketing business;
b. All telemarketers employed by the registrant; and
c. All persons participating in or responsible for the management of the telemarketing business or telemarketing activities;
(9) The name and address of every financial institution where proceeds of telemarketing sales are to be deposited;
(10) Representative copies of any scripts, outlines or presentation materials to be used by the telemarketer when soliciting and representative copies of all written materials to be provided by the seller to a customer in connection with any solicitation; and
(11) A sworn and notarized statement that the information contained in the application is the product of a diligent and reasonable investigation and is true and accurate to the best of the registrant's information and belief.
(d) Security requirements:
— Every registrant shall file with the Director a corporate surety bond in the principal sum of $50,000 in a form satisfactory to the Director with surety provided by a corporation authorized to do business in this State. The bond shall run to the Director and shall be conditioned upon the registrant's compliance with the provisions of this chapter. The bond shall pay to customers all moneys that become due and owing for violations of this chapter. The aggregate liability of the surety on the bond shall in no event exceed the amount of such bond. In lieu of requiring the filing of a surety bond, the Director may, at the Director's discretion, accept from a registrant a letter of credit in the amount of $50,000 running in favor of the Director for payments to customers of all moneys that become due and owing for violations of this chapter, with draws available by sight drafts thereunder in amounts determined by the Director, up to the aggregate amount of $50,000, if the registrant shall fail to comply with this chapter. Any such letter of credit shall be issued by a financial institution and shall be in a form satisfactory to the Director.(1) The surety bond or letter of credit shall remain in effect for 3 years from the period the person ceases to operate in this State. A registrant who or which has ceased operating in this State may apply to the Director in writing for a waiver of this residual security requirement. In deciding whether to grant a waiver, the Director shall consider the length of time said registrant has operated in this State, the record of said registrant's compliance with this chapter, and the nature and frequency of complaints concerning the registrant's operations within or outside of this State.
(2) The certificate of registration of any person shall be deemed to be lapsed if, at any time, the surety bond or letter of credit expires or becomes ineffective for any reason.
(3) A customer's claim against a bond or letter of credit shall be deemed payable as “due and owing” upon entry of a final judgment of civil liability in favor of the customer or the issuance of a criminal sentencing order awarding restitution to the customer pursuant to Chapter 41 of Title 11. A customer may make claims against such bond or letter of credit for the amounts awarded as compensatory damages in any civil action under this chapter or as restitution pursuant to § 4106 of Title 11.
(e) This section shall not apply to any corporation having shares of stock that are traded on any public exchange or subsidiary of any corporation when not less than 60 percent of the voting power of its shares is owned by the qualifying corporation or corporations or to any not-for-profit corporation within the exemption of § 501(c)(3) or (6) of the United States Internal Revenue Code [26 U.S.C. § 501(c)(3) or (6)], provided that 1 of the following 2 conditions is and remains satisfied:
(1) The corporation is organized and existing under the laws of the State; or
(2) The corporation is a foreign corporation authorized to do business in this State and has complied with all of the requirements of §§ 371, 372, and 374 of Title 8, irrespective of any available exceptions under § 373 of Title 8.
(f) This section shall not apply to any telemarketing business engaging in telemarketing for or on behalf of a corporation exempted from this section, provided the telemarketing business is engaging in telemarketing under and in accordance with a written contract or agreement whereby the telemarketing business expressly agrees and is obligated under its terms to engage in telemarketing only in conformance with all prevailing laws, rules and regulations of this State or of the United States pertaining to telemarketing. A telemarketing business shall not be entitled to this exemption if 25 percent or more of its gross revenue from telemarketing services in any 12-month period beginning on January 1 of each year is derived from sellers required to be registered and bonded under this section.
(g) This section shall not apply to:
(1) A seller or telemarketing business that solicits contracts for the maintenance or repair of merchandise previously purchased from the seller authorizing the solicitation.
(2) A seller or telemarketing business operating within the jurisdiction of the Public Service Commission.
(3) A seller who has been operating for at least 1 year a retail business establishment situated in this State under the same trade name as that used in telemarketing, and both of the following conditions are satisfied:
a. Merchandise is displayed and offered for sale at the business establishment; and
b. Greater than 50 percent of the seller's annual sales of merchandise in any calendar year is derived from the sale and delivery of merchandise at the seller's business location.
(4) A seller of books, videotapes, audio recordings or multimedia products under a contractual plan or multimedia club otherwise regulated by the Federal Trade Commission's regulation concerning “use of negative option plans by sellers in commerce” or which provider for the sale of books, audio recordings, videos, multimedia products or other goods, including continuity plans, subscription arrangements, standing order arrangements, supplements and series arrangements under which the seller periodically ships merchandise to a consumer who has consented in advance to receive such merchandise on a periodic basis.
(5) A seller of food products, where the actual or intended cost of the food product sold to a single address does not exceed $100.
(6) A person subject to and licensed by the Delaware Real Estate Commission acting within the scope of his, her or its active and valid license.
(7) A seller soliciting the sale of services provided by a cable television system operating under authority of a franchise or permit.
(8) A seller primarily soliciting the sale of a magazine or newspaper of general circulation, either by the publisher or the publisher's agent by written agreement.
(h) The following are deemed violations of this chapter and of § 2513 of this title:
(1) Failing to satisfy the registration or security requirements of this section.
(2) Submitting false or misleading information in an application.
(3) Failing to disclose any information required to be disclosed in an application.
(i) Any person required by this chapter to submit an application for a certificate of registration or renewal shall submit with each application an administrative fee of $100 made payable to the “Consumer Protection Fund'” to cover the costs of registration.
(j) Obligation to update information:
— A registrant shall notify the Director within 30 calendar days of the registrant's discovery of any material change in any information required to be disclosed by this section. For the purpose of this section, a registrant discovers a material change in information when the registrant or any person employed by the registrant as a manager or director of the registrant knows or should know of the material change in information. 72 Del. Laws, c. 262, § 1; 70 Del. Laws, c. 186, § 1; 80 Del. Laws, c. 227, § 1;
