Court gives power to FTC on no-call list

Enforcement allowed while challenge proceeds

`This is an important victory'

Agency can fine violators $11,000 for each action

October 08, 2003|By Andrea K. Walker | Andrea K. Walker,SUN STAFF

A federal appeals court ruled yesterday that the Federal Trade Commission can enforce the much-publicized do-not-call list while the constitutionality of the national registry designed to restrict telemarketing calls to consumers is decided.

The decision by the 10th U.S. Circuit Court of Appeals in Denver allows the FTC to fine telemarketers $11,000 each time they call any of the 51 million people who have signed up for the list, at least until the case makes it way through the courts.

Oral arguments are scheduled for Nov. 10 in Tulsa, Okla.

"This is an important victory for American consumers," said Timothy J. Muris, the trade commission chairman. "We believe the rule fully satisfies the requirements of the U.S. Constitution, and we will now proceed to implement and enforce the do-not-call registry."

Yesterday's ruling was the latest in a series of verdicts that began shortly before the national list was to take effect a week ago and that turned up the heat on a politically volatile issue.

On Sept. 24, U.S. District Judge Judge Lee R. West of Oklahoma City ruled that the FTC lacked authority to enforce the list. The next day, Judge Edward Nottingham of the U.S. District Court in Denver struck down the constitutionality of the list because it applied to commercial telemarketers, but not to charities, political pollsters and some others who use the phone to solicit.

Congress and President Bush moved quickly to mold a new law that would pass muster. With the FTC's hands tied by the court rulings, another federal agency, the Federal Communications Commission, began tracking complaints last week but with limited enforcement power.

Instead of filing complaints through an automatic system set up by the FTC, consumers had to call the FCC, which was manually handling complaints. The FTC also couldn't share its list of businesses that had downloaded the do-not-call list, making it difficult to penalize companies.

The FCC received about 2,000 complaints during the past week, but did not fine any companies, it said.

"Before, if somebody said you can't sue me because I wasn't able to download the list, that could have been a problem," FCC spokesman David Fiske said yesterday. "We were going to do as much enforcement as we could under a manual basis, now we have the automatic system and the registry is back in place."

Many telemarketers had publicly agreed to abide by the list even as they opposed its merits.

The Direct Marketing Association, a trade group that represents 80 percent of the companies making sales calls, didn't return calls yesterday or release a statement.

Another major group, the American Teleservices Association of Indianapolis, declined to comment directly about the appeals court's decision. Its members run telemarketing call centers for other companies.

"We are pleased with the court's decision to protect the right of free speech guaranteed under the First Amendment," Tim Searcy, the group's executive director, said in a statement. "We are committed to working with the federal government toward a measure that respects consumers across the country, without infringing on the basic right of free speech."

In making its ruling, the three-judge panel said the FTC has a good chance of winning its case.

"In light of this record, it appears the FTC is likely to succeed on its argument that the distinction ... between commercial and noncommercial solicitation passes muster," the ruling said.

The court also said that the list does not fully exempt noncommercial speech because a consumer has a choice to sign up for the list.

"This is not a regulatory scheme that will affect a `minute' portion of problematic speech because the great majority of all telemarketing calls - and therefore the preponderant source of the problem of invasion of privacy and abusive calls - are commercial calls which are covered by the FTC's rule," the court wrote.

The court said it would consider combining the case that came before Nottingham with other pending lawsuits.

Responding to one lawsuit, President Bush signed into law Sept. 29 legislation that gives the FTC authority over the list after a judge ruled the agency didn't have jurisdiction.

One telecommunications attorney said last night that he wasn't surprised by the appellate court's decision.

"The government rules are narrowly tailored," said Robert Jackson, an attorney with the Washington office of Reed Smith. "It's not a total ban on calling people."

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