Week Ends With DNC List in Limbo

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After a seesaw battle that saw the national no-call list struck down and reinstated, telemarketers ended the week in victory when a federal court again invalidated the list and dealt a blow to the Federal Trade Commission that even Congress couldn't fix.


Siding with the American Teleservices Association and two private plaintiffs in their challenge to the no-call list, Judge Edward Nottingham of the U.S. District Court in Denver issued a ruling Sept. 25 declaring that the registry violated First Amendment free speech rights. ATA executive director Tim Searcy said that as of now, the no-call list would be unenforceable on the Oct. 1 deadline set by the FTC for enforcement to begin.


The FTC also stated that it would not enforce the list because of the judge's order.


Nottingham wrote that because the no-call list exempted certain types of calls, such as nonprofit and political calls, the list represented a government restriction of speech based on content, which previous case law has held to be unconstitutional.


"The registry creates a burden on one type of speech based solely on its content, without a logical, coherent privacy-based or prevention-of-abuse-based reason to support the disparate treatment of different categories of speech," he wrote.


In a statement, FTC chairman Timothy Muris said that the 50 million Americans who registered for the list disagreed with the ruling and that the FTC would take every action possible to uphold the list.


"This court's reasoning, if adopted elsewhere, would effectively cripple virtually every do-not-call registry in the United States, whether state or federal," Muris said. "I do not believe that our Constitution dictates such an illogical result. To the contrary, our Constitution allows consumers to choose not to receive commercial telemarketing calls."


An FTC spokeswoman said the agency still is encouraging consumers to register for the list. The FTC expected to release more information about its plans for enforcing the list over the weekend, she said.


The Federal Communications Commission, which is working with the FTC to launch and enforce the no-call list, called Nottingham's decision "fundamentally flawed." The ATA also has filed a federal court challenge to the FCC's no-call rules, which for the most part parallel the FTC's.


Late Friday, however, the 10th Circuit Court of Appeals in Denver ruled that it would not block the no-call list while it considered the ATA's separate legal challenge to the FCC's no-call rules. The appeals court did not rule on the legality of the no-call list, and its affect on the Denver lower-court ruling that the list was unconstitutional was unclear.


Nottingham's ruling came just hours after Congress passed legislation in reaction to another federal judge's ruling questioning the FTC's authority to launch the list. On Sept. 23, Judge Lee West of the U.S. District Court in Oklahoma City decided in favor of the Direct Marketing Association, which had filed a separate challenge to the no-call list, and ruled that the FTC lacked congressional authorization to launch the registry.


Congress, which took the unusual step of passing legislation in a single day to grant that authority to the FTC, had seemed to undo what first appeared to be a victory for the telemarketing industry. Members of the House and Senate blasted the telemarketing industry and West over the decision before sending the legislation to President Bush to sign, and all expectations were that the list would be launched Oct. 1 as scheduled.


"Unwanted telemarketing calls are less popular than a skunk at a church picnic," said Rep. John Dingell, D-MI. "They are more persistent and obnoxious than athlete's foot."


However, Searcy and Lisa DeFalco, who took over as chairwoman of the ATA board of directors just two weeks ago, spent the day defending their case before media outlets and holding to their position that the no-call list would be ruled unconstitutional.


"Although the press gave us a tough time, we always maintained that this would be the outcome," Searcy said.


Searcy said he hoped the decision would lead to a more collaborative environment in which the industry works with regulators to craft guidelines. When asked about the likely event that the FTC would appeal the decision, Searcy said that the ATA would defend its rights as outlined in Nottingham's ruling.


Despite the ruling, the DMA said it was uncertain what will happen on the Oct. 1 implementation date. It also urged telemarketers to respect consumers who had signed up for the no-call registry regardless of the outcome of court challenges. The association said it will work with the government to resolve the issues raised by the court.


Though Nottingham's ruling was a victory for the industry, some direct marketers urged a cautious approach. Alesco Data Solutions, a database management firm, advised its clients to suppress the numbers on the national no-call list despite the court's ruling.


Alesco has already scrubbed most of its data sources against the list, said Jeff Schneider, account executive with Alesco, Fort Myers, FL. The company wants to be optimistic but must keep in mind the volume of consumers who registered for the list and the possibility that the Supreme Court in the end will side with privacy rights, he said.


"The aggression with which telemarketers have been operating needs to be tempered a bit," Schneider said.


Most telemarketers aren't popping the champagne just yet, said Kathryn Barber, industry veteran and president of Barber Consulting, Atlantic Highlands, NJ. Legitimate telemarketers will respect consumer wishes and honor both the existing state and the national no-call lists.


If the industry prevails in the face of government appeals, telemarketers hope for more balanced rules from regulators and a better relationship with the public, Barber said. The public could become more aware of its existing rights to curb calls to their homes, such as company-specific no-call lists, as a result of the no-call debate, she said.


"When the smoke clears, companies can go out to the public and say, 'We will work with you,' " Barber said.


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