Industry Awaits FTC No-Call Action

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An enforcement action under the national no-call list is imminent, Federal Trade Commission officials said last week, but one telemarketing industry representative is asking what has taken the agency so long.


In the six months since the no-call list launched, the federal government has issued no fines for violations. The Federal Communications Commission, which has joint enforcement authority over the list, has issued nine written warnings but no fines.


States including California and Ohio have brought civil suits against telemarketers seeking penalties for alleged violations of the national no-call list. But so far the FTC has taken no public action.


When the FTC announced a $20-per-area-code increase last week to the fee telemarketers pay for access to the no-call list, American Teleservices Association executive director Tim Searcy noted that the FTC hadn't even filed a complaint yet. Searcy asked what the FTC had been doing with the money it had collected from telemarketers for the list so far.


"There's no proper accounting for the money received so far, nor proper accounting for the money to come," he said.


The FTC has collected only $10 million to $12 million of the $18 million in fees it needed to fund the national list this year, said Lois Greisman, associate director with the FTC's bureau of consumer protection in charge of the list. Though that shortfall led to the fee increase, a lack of funds is not the reason the FTC has yet to file a no-call enforcement action.


The FTC said it has logged 300,000 complaints from consumers of alleged list violations, up from 150,000 in February. However, FTC officials note that the complaints represent a small percentage of the total telephone numbers registered to the list, nearly 60 million.


According to the FCC, telemarketers attempt around 104 million calls a day. Industry compliance with the no-call regulations has been good, which is part of the reason there has been no enforcement action yet, Greisman said.


No-call list costs, including data maintenance and enforcement, are funded by Congress, which must be repaid with fees collected from telemarketers. Greisman said she had no estimate on how much of the no-call budget is earmarked for enforcement.


The agency added no personnel to enforce the list. Instead, Greisman said, it redirected resources within its existing enforcement and legal staff, making no-call enforcement a priority.


"There's a lot of stuff going on behind the scenes," she said. "We let people know we're watching."


A major part of the job involves sifting through the complaints and identifying which deserve extra attention. The tendency of some companies to use different business names complicates the process, and existing-business-relationship exemptions take time to validate.


The FTC also considers the nature of the offer and the number of complaints a telemarketer has generated in deciding when to do follow up. Telemarketers with more than 100 complaints, of which there were 44 as of Feb. 17, get extra scrutiny.


The FTC's experience is somewhat comparable to that of the Pennsylvania attorney general's office, one of the most active enforcers of state-run no-call lists. Like the FTC, the office did not add permanent staff when it launched its list in November 2002.


Also like the FTC, Pennsylvania authorities have had to separate enforceable consumer complaints from ones that are unenforceable because of exemptions or lack of information. Of the 21,905 complaints received by the state as of last week since the launch of the list, 10,884 were unenforceable.


However, Pennsylvania has pursued 48 enforcement actions for list violations and collected $450,000 in civil penalties, 10 percent of which go to the consumers who received the calls.


The state has a lower enforcement threshold than the FTC, starting investigations after receiving as few as five complaints about a telemarketer. Pennsylvania's list has 3.2 million telephone numbers.


Early in the program, consumers misunderstood no-call laws and complained about every call, even legitimate ones, said Barbara Petito, spokeswoman for the state attorney general. Unenforceable complaints have diminished as time passed and consumer understanding grew.


Privacy advocate Jason Catlett said he would prefer to see the FTC make more examples of wayward telemarketers but doesn't have a problem with the pace of the agency's enforcement. It took a similarly cautious approach with the debut of the Children's Online Privacy Protection Act, waiting months to wrap up a solid investigation before filing a complaint.


"In the case of new laws, they're not trigger happy," Catlett said.


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