Court Rules for DMA in No-Call List Challenge

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A federal judge in Oklahoma City ruled in favor of the Direct Marketing Association in its challenge to the Federal Trade Commission's national no-call list, DM News learned today.

The judge ruled yesterday that the FTC lacks the authority to create a national no-call list and that jurisdiction for creating the list fell with the Federal Communications Commission.

It is unclear how the ruling affects the Oct. 1 implementation of the no-call list. The judge did not include an injunction or order in the ruling regarding the disposition of the no-call list launch.

Other telemarketing rules drafted by the FTC, including new ones governing predictive dialers and pre-acquired account information, were upheld in the decision, according to court documents obtained by DM News.

Eliminating telemarketing fraud and prohibiting deceptive practices are legitimate concerns, the court said. However, it cited prior case law in ruling that without proper authority, the FTC could not create a national no-call provision.

"The basic, and what the court considers to be the dispositive, issue raised by the plaintiffs as to its first challenge to the Final Amended Rule is whether the FTC has the authority to promulgate a national do-not-call registry. The court finds it did not," the court said.

The court did not rule on the First Amendment constitutional issues addressed in the DMA's lawsuit. FTC representatives were not immediately available for comment.

In a statement, the DMA said it was grateful for the decision but that it also acknowledged that millions of consumers have indicated their desire not to receive telemarketing calls by registering for the no-call list. It said it continued to support a national no-call list but believed the FTC acted without statutory authority in creating one.

"The DMA will be working with its attorneys, the FTC and the Federal Communications Commission over the coming days to evaluate the practical implications of yesterday's decision and what it may mean for both consumers and marketers," the DMA said.

A copy of the ruling will be posted on the DMA Web site at after noon EST, the DMA said.

The American Teleservices Association, which is pursuing a similar but separate challenge to the no-call list in U.S. District Court in Denver, was awaiting an order from the judge to follow the ruling and would use the ruling to help its own case, ATA executive director Tim Searcy said.

"We are excited that the DMA has won the first round in the legal process," he said. "We anticipate a similar outcome in our own case in Denver."

The ruling is unlikely to be the final word on the national no-call list, and appeals of the ruling were expected whatever the judge's decision. The ATA is concerned that the judge did not address constitutional issues in the ruling, Searcy said.

Congress approved funding for the no-call list in February, but the judge ruled that funding approval alone did not grant the FTC authority to create the list. However, Congress could pass legislation granting the FTC the authority it needs, Searcy said.

Only a court ruling on the constitutionality of the no-call list will resolve the matter permanently, he said.

"Even Congress cannot avoid the constitutional issues that the FTC and FCC actions have raised," he said.

In June, Jerry Cerasale, senior vice president of government affairs at the DMA, said he expected the DMA to lose its challenge at the lower court level. The DMA's position was that the FCC should have created the no-call list because it has the authority to regulate a broader range of businesses than the FTC. The DMA has not challenged the FCC's no-call provisions, whereas the ATA has.

Other parties that joined the DMA in its challenge to the FTC included U.S. Security, Chartered Benefit Services, Global Contact Services and InfoCision Management.


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