As leads become more expensive and our industry deals with increasingly restrictive telemarketing processes, more and more contractors have been turning to Internet-based lead generation.

The typical structure is one in which a contractor pays a fee to join an Internet group or Web site. The site usually gathers leads coming in from consumers interested in some type of home improvement or remodeling work. Sometimes this is accomplished because the site gets a hit when a consumer searches under certain generic buzzwords; sometimes it is because the site has micro-links to other Web sites, such as a real estate broker's Web page. The consumer enters basic information into the site, and the lead is then passed along to one or more subscribing contractors who then call the consumer to solicit business.

But what if the consumer is listed on the federal Do Not Call registry? Is the contractor legally allowed to make that call? Based on an informal advisory opinion issued by the Federal Trade Commission on July 19, 2006, the answer is a definitive “maybe.” So contractors must be careful about signing up with this type of Internet-based service. Otherwise, if you call someone listed on the DNC, you could be fined between $500 and $1,500 per call, plus the consumer's court costs and legal fees.

Here's what to look for before signing up with an Internet lead-generation service:

  • Make sure the lead-generating Web site discloses to consumers that by entering personal information into the Web site, consumers may receive phone contact from one or more contractors offering the goods or services the consumer is interested in;
  • The site should disclose approximately how many contractors will be receiving the consumer's information, and thus how many contractors the consumer can anticipate hearing from. This gives the consumer some idea of how many calls they may get. Of course, the more contractors the site host is giving the lead to, the less valuable the lead is going to be — so this is good information for the contractor to have as well;
  • Ideally, the Web site should also have available to the consumer a list of the site “members” — the names of contractors who belong to the site and who may call.

    • These disclosures must be made clearly and conspicuously. This information should be set apart from the rest of the Web site text and should be readily apparent, not buried in the fine print. To play it safe, this information should be in a bold font and disclosed to the consumer before he or she fills in contact information. —D.S. Berenson is the Washington, D.C., managing partner of Johanson Berenson LLP (www.homeimprovementlaw.com), a national law firm specializing in the representation of contractors and the home improvement industry; [email protected].

    This article is for informational purposes only and should not be construed as legal advice.