Bill Baker

The National Do-Not-Call Registry recently passed its third anniversary. The first numbers were entered on the list on June 27, 2003. Few developments have had such a major impact on telemarketing in such a relatively short time.

107 Million Numbers
The Do-Not-Call registry was devised by the Federal Trade Commission (FTC) out of its authority to regulate unfair and deceptive trade practices, the premise being that a pattern of unwanted telemarketing calls constitutes an unfair business practice. After industry-led litigation challenged the FTC's authority to establish a national registry, Congress stepped in and, in an uncharacteristic display of expedition, introduced and enacted legislation to ratify the FTC's actions in a single day. After adoption of complementary regulations by the Federal Communications Commission (FCC), the FTC and FCC now share enforcement responsibility for the registry.

As of the end of Fiscal Year 2005, more than 107 million telephone numbers were contained in the Do-Not-Call registry. That fact alone attests to the popularity of the list among the American public. While certain types of calls may still be made to numbers listed in the registry - notably certain non-profit calls, political calls, and those to consumers with whom the caller has an established business relationship -the Do-Not-Call registry can fairly be credited with having caused a significant reduction in unwanted telemarketing. Entities wishing to place telemarketing calls into more than five area codes must pay an annual fee to access the registry, which then enables them to purge their calling lists of registered numbers.

FTC Reports to Congress
The Do-Not-Call Act directed the FTC and FCC to file annual reports to Congress through Fiscal Year 2007 reporting on the effectiveness, operation, and enforcement of the registry. The FTC submitted its report on FY 2005 last month. The FCC has yet to file its report. The FTC report sheds useful light on the current status of the list, its enormous popularity among the Amer-ican public and trends in enforcement.

The FTC report takes evident pride in the success of the registry to date. The report notes that the registry has capably handled the many millions of registered numbers and has not suffered any operational outages. It also cites public opinion surveys indicating that the registry has successfully reduced unwanted telemarketing calls and reported on the progress to date in coordinating the federal list with similar lists maintained by a number of states. Nearly 6,800 entities paid a total of $18,099,304 in fees to access the registry in FY 2005.

Enforcement Trends
Perhaps of the greatest interest to lawyers and their clients that engage in telemarketing is the FTC's summary of its actions taken to date to enforce the registry. The FTC reported that it filed six cases in FY 2005 alleging violation of the National Do-Not-Call Registry. While the actions typically contained other claims, each action included charges that the defendant had made calls, or had caused others to make calls, to telephone numbers on the Do-Not-Call registry.

Several of the actions included claims that the defendant had failed to pay the required fee to access the list before making the calls. Failure to pay the fee is a separate violation of the Do-Not-Call registry rules even if the telemarketer has no intention of purging his to call list against the registry. Paying the fees to access the registry does not ensure that a telemarketer's list is "clean" of listed numbers; separate action is required to purge the list.

Perhaps the most significant recent trend in Do-Not-Call list enforcement is a series of cases in which the FTC has successfully prosecuted companies that had relied on their telemarketing service companies to comply with the list. In other words, the FTC holds the business on whose behalf the telemarketing campaign is conducted - the advertiser, in most cases - responsible for the actions of the telemarketers that actually make the calls, even if the latter are independent contractors. In the leading case on this point, the FTC fined DirecTV nearly $5.4 million for making numerous calls to numbers contained in the national registry. The FTC recently settled charges against one of the telemarketers for $75,000, an amount tempered by the defendant's inability to pay, but with a substantial additional penalty of more than $400,000 if the defendant later is found to have misrepresented its financial condition.

More recently, the FTC brought similar claims against Executive Financial Home Loan, a mortgage broker based in California. Although that case settled for a far smaller amount - $50,000 - the Executive Financial Home Loan decision builds on the DirecTV decision by reaffirming that businesses engaged in telemarketing promotional campaigns cannot delegate the responsibility for compliance to their service companies.

Fees Raised
Finally, in July, the FTC raised the fees charged to telemarketers for accessing the National Do-Not-Call Registry. The agency raised the fee to $62 per area code accessed. The maximum fee, which is assessed to entities that access 280 or more area codes, will be $17,050. As has been true since the inception of the registry, telemarketers will continue to be able to obtain the first five area codes for free, and entities that are exempt from the rule may obtain access for free. The new fees take effect on September 1, 2006.

Bill Baker is a partner in Wiley Rein & Fielding LLP's Privacy and Communications practices. He advises a broad range of U.S. clients on domestic and international privacy and security law, with particular emphasis on online privacy, email, telemarketing and consumer marketing and telecommunications and wireless law. Baker also serves as co-chair of the e-Privacy Law Committee for the American Bar Association Section of Science and Technology.
© 2006 Wiley Rein & Fielding LLP. Reprinted with permission, Privacy In Focus® August 2006 ed. This is a publication of Wiley Rein & Fielding LLP providing general news about recent legal developments and should not be construed as providing legal advice or legal opinions. You should consult an attorney for any specific legal questions.


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