State Vs. Federal Control of DNC Lists: Who's in Charge?

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It has come to my attention that there may be some confusion in the industry regarding all the "Do-Not-Call" lists out there. More disconcerting than these rumors is the belief by some that the Federal DNC requirements found in the Telephone Consumer Protection Act of 1991 and its corresponding regulations, the Telemarketing and Consumer Fraud and Abuse Prevention Act of 1995 and its corresponding regulation, and the Telemarketing Sales Rule pre-empt state regulation of DNC lists.

In other words, some teleservices companies believe compliance with the TCPA and the TSR in some way exempts them from the need to purchase and comply with state-sponsored or state-administered lists. Unfortunately for the industry, as it stands now, nothing could be further from the truth.

Both the TCPA and the TSR require telemarketers to keep company-specific DNC lists. Whether a consumer requests not to be called again during a telephone solicitation or writes to a company requesting to be placed on that company's DNC list, the company must honor that consumer's request.

In the case of the TCPA, that request must be honored for a 10-year period. Both federal regulations provide that the seller - the entity on whose behalf the call is made - is responsible for compliance with these requirements. The TCPA allows for clients and service agencies to determine contractually which party will maintain the list. Absent such an agreement, it is ultimately the client's responsibility for compliance.

One key provision of the TCPA and the TSR is the federal government's pronouncement that neither regulation will pre-empt states from enacting more restrictive regulation.

At the time this article is being written, eight states have DNC list provisions: Alabama, Alaska, Arkansas, Georgia, Florida, Kentucky, Oregon and Tennessee. These lists require companies calling consumers in the state to obtain the list and avoid calling consumers on it. Companies must comply whether the call originates and terminates in the same state or originates outside the state.

Since it became fashionable among the industry's detractors to use the TCPA as an income supplement, a number of third-party list agencies have popped up in an attempt to squeeze a few dollars out of the industry. As we have discussed in these pages, the FCC has issued a private letter ruling stating that companies do not have to accept third-party DNC requests. It has been left up to each company to determine under what circumstances they will include third-party lists in their DNC database. Even the third-party list agencies have acknowledged this, and several have resorted to intricate legal maneuvers to distance themselves from the third-party list problem.

Given that background on the DNC list requirements, it should be noted there is a strong argument that the state DNC lists, as applied to interstate calls, are unconstitutional.

When Congress enacted the TCPA in 1991, it established federal standards regarding telephone solicitations applicable to all telemarketers regardless of where they were located. Congress specifically instructed the FCC, in determining whether to require such a national database, to "consider the different needs of telemarketers conducting business on a national, regional, state or local level."

It is apparent from that Congress was aware that independent regulation by the fifty states creating their own "Do-Not-Call" lists would place a ruinous cumulative burden on interstate telemarketers. Congress committed the FCC to determine how best to protect residential telephone subscribers from receiving unwanted solicitations.

Further, Congress spelled out the extent to which states may go in regulating telemarketing by stating, "Except for the standard prescribed under subsection (d) [which deals with fax machines and automated telephone equipment] and subject to paragraph (2) of this subsection [not relevant because the FCC did not create a national "Do-Not-Call" list], nothing in this section or in the regulations prescribed under this section shall pre-empt any state law that imposes more restrictive intrastate requirements or regulations on, or which prohibits ... (D) the making of telephone solicitations."

By declaring that intrastate regulation is not pre-empted, Congress has asserted that interstate regulation is pre-empted. Thus it is arguable that while a state has the authority to impose stricter requirements on intrastate calls, attempts by the same state to regulate interstate calls falls outside carefully tailored exception to the TCPA, and is therefore unconstitutional.

While I believe this argument to be very strong, not a single company to date has stepped up to challenge these laws. This may be the source for some of these rumors regarding federal pre-emption. And again, while they may have merit, until someone initiates a challenge, the states will continue to operate as if their state DNC list covers intrastate and interstate calls equally.

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