Understanding No-Call List’s Investigation Process

The federal do-not-call list, in place since mid-October, appears hear to stay following an appeals court ruling last week against the American Teleservices Association and Direct Marketing Association in their appeal of the list.

Given that, it is important to understand the substance of the law, which is just starting to become known.

It often takes years for the full effects of a rule to be known. The first place I look is the text of the law, but this is just the beginning. Sometimes the text can be interpreted differently by different readers. For the new no-call list rules, the readers include businesses (and their attorneys), consumers, the state and federal agencies charged with enforcement and, ultimately, the courts.

The Federal Communications Commission and Federal Trade Commission have begun taking action in the past month based on alleged violations of the Telemarketing Sales Rule and the new Telephone Consumer Protection Act regulations, issuing requests for information to many telemarketers and the businesses that hire them.

As is often the case with regulators, these investigations are triggered by complaints. The problem is that people making complaints often have not read the rules prior to filing a complaint, thus the resulting investigation could be based on a consumer’s mistaken belief as to how the national no-call list works.

Calls to a business’ customers, for example, are exempt from the list, as are calls to business telephone numbers. I have seen formal requests for information from both the FCC and FTC, however, based on complaints that were not valid, either because the complainant was a customer of the caller or the call was placed to a business line.

So far, both agencies have taken the reasonable stance that complaints might be wrong and given businesses the chance to produce records proving the complaints were wrong.

I also have reviewed the Memorandum of Understanding between the FCC and FTC regarding how the agencies will enforce the list. The agencies have overlapping, but not identical, enforcement authority.

The memorandum does nothing to reconcile substantive differences between the FCC and FTC rules (e.g., monthly or daily measurement of abandonment, regulation of fundraising calls, etc.). It does state that the agencies will work to avoid duplicative enforcement actions, which is a plus for businesses working to comply with the regime. If you receive a request for information from one agency, this memorandum could prevent a duplicative request from the other.

Federal agencies are not the only regulators interpreting the new telemarketing laws. State courts and attorneys general also are investigating alleged violations, and sometimes have taken different views of how their laws relate to the federal telemarketing laws than Congress and federal agencies.

When it passed the TCPA, Congress found that a federal telemarketing law was needed because “… States do not have jurisdiction over interstate calls. Many States have expressed a desire for Federal legislation to regulate interstate telephone calls to supplement their restrictions on intrastate calls.” S. Rep. No. 102-177 (1991).

The FCC made a similar statement in July 2003 when it proposed the new TCPA rules, noting that differing state requirements would frustrate the idea of national regulation of interstate communications: “We therefore believe that any state regulation of interstate telemarketing calls that differ from our rules almost certainly would conflict with and frustrate the federal scheme and almost certainly would be preempted.”

This has not stopped some states from trying to enforce differing state laws against interstate calls, nor have states conceded that they lack this jurisdiction.

Two commonly invoked areas of difference are state standards for established business relationship (which can have different time periods than the federal three-month inquiry/18-month purchase definition) and laws regarding recorded-voice telephone calls, which may have fewer exemptions than the TCPA. The TCPA allows recorded calls to businesses, established customers and/or if the call does not contain an advertisement or is placed by or on behalf of a nonprofit.

Our firm recently argued a court decision in Utah regarding the last exemption. A state court judge dismissed a lawsuit filed by Utah based on an interstate call placed on behalf of a charity. This call, legal under the TCPA, was banned by Utah law at the time the call was placed, which I argued did not apply because it was an interstate call. The judge agreed, but the question was somewhat moot as the Utah legislature had since changed the law to allow recorded-voice calls by or on behalf of charities.

This question is not resolved, as many state attorneys general argue that their no-call list laws apply to interstate calls. They argue that they need state law to protect their citizens even though the TCPA and TSR let them enforce federal law if it is violated by callers into their states.

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