Overview Of The Do Not Call List Requirements

The national Do Not Call registry is up and running, after a series of legal challenges. Telemarketers/sellers who are currently making solicitation calls must access the FTC database at www.telemarketing.donotcall.gov by October 17, 2003, or will be subject to fines of up to $11,000 per call. The following memorandum, prepared by John Przypyszny of Drinker, Biddle & Reath, summarizes the provisions of the new rule.

OVERVIEW OF THE DO-NOT-CALL-LIST REQUIREMENTS

In March, 2003, Congress passed and the President signed into law the Do-Not-Call Implementation Act. This legislation amended the FTC's Telemarketing Sales Rule ("TSR") implemented pursuant to the Telemarketing and Consumer Fraud and Abuse Prevention Act (15 U.S.C. § 6101, et seq.)and facilitated the implementation of the Do-Not-Call Registry (the "Registry") to further restrict the number of unwanted solicitation calls by telemarketers.

The rules are being implemented and enforced by the FTC and the FCC and apply to both interstate and intrastate commercial telemarketing calls. Under the regulations, "telemarketing" is defined as a plan, program or campaign which is conducted to induce the purchase of goods or services or a charitable contribution, by use of one or more telephones and which involves more than one interstate call. It does not include calls to conduct surveys, market research, political polling or a call with a religious speech purpose. The rules apply to both telemarketers and sellers. Further, "telemarketer" is defined under the FTC rules as any person who, in connection with telemarketing, initiates or receives telephone calls to or from a customer or donor. "Seller" is defined under the FTC rules as any person who, in connection with a telemarketing transaction, provides, offers to provide, or arranges for others to provide goods or services to the customer in exchange for consideration. Under these definitions, initial solicitation calls made by for-profit institutions of higher education to potential students (whether by the institution itself or by a third-party on the institution's behalf) would be subject to the TSR. In short, the rules:

· Create a "Do-Not-Call" Registry of U.S. consumers who have requested not to receive telemarketing calls. Telemarketers and sellers are required to search the Registry at least quarterly and drop from their call lists the phone numbers of consumers who have registered.

· Prohibit denying or interfering with a consumer's Do-Not-Call request.

· Prohibit misuse of Do-Not-Call lists.

· Require telemarketers to transmit the telephone number, and, if technically feasible, the telemarketer's name so they will be displayed on phones with Caller ID.

Exemptions

There are a number of important exemptions to the coverage of the Act:

· Non-profit, tax-exempt organizations are exempt from the provisions of the Act. Thus, the Act does not apply to non-profit, 501(c)(3) institutions of higher education. However, the rules would apply to charitable solicitations placed by for-profit, third-party telemarketers who call on behalf of a non-profit entity. Such telemarketers must comply with the requirements of the Do-Not-Call provisions, but are exempt from relying on the national Do-Not-Call Registry provisions. Instead, these telemarketers must keep their own Do-Not-Call lists, and honor donors' requests not to be called.

· The rules create an "established business relationship" exception to the National Do-Not-Call provisions so that a company may call a consumer with whom it has such a relationship, even if the consumer's number is on the Registry. Under the "established business relationship" exemption, a telemarketer or seller may call a consumer with whom it has an established business relationship for up to 18 months after the consumer's last purchase, delivery, or payment, even if the consumer's number is on the Registry. Further, a company may call a consumer for up to three months after the consumer makes an inquiry or submits an application to a company. However, if a consumer asks a company not to call, the company may not call, even if there is an "established business relationship."

· The rules allow a telemarketer to call a consumer who has given the company express permission to call, even if the consumer's number is on the Registry. A telemarketer may not call a consumer to request express permission. Express permission can only be granted in writing. A for-profit institution could provide a permission form on its website or an application for admission.

· The Act and rules exempt some businesses from the TSR, including long-distance phone companies and airlines, and insurance companies operating under state regulations. However, any telemarketers hired to call on their behalf are required to comply.

· The rules clarify that facsimile transmissions, electronic mail, and similar methods of delivery are direct mail and exempt from the Do-Not-Call provisions of the Act.

Recent Court Cases and Implementation

Since enactment of the Do-Not-Call Implementation Act and adoption of the new TSR provisions, there have been a number of court actions brought by the trade associations representing telemarketers. A Federal district court in Oklahoma halted enforcement of the statute, finding that the FTC did not have appropriate jurisdiction to enforce the Act. In reaction, Congress passed and the President signed into law on September 29, 2003, H.R. 3161 (P.L. No. 108-82) which declares that the FTC is authorized under the Telemarketing and Consumer Fraud and Abuse Prevention Act to implement and enforce a national Do-Not-Call Registry and ratifies the Registry provision of the Telemarketing Sales Rule which was promulgated by the Federal Trade Commission, effective March 31, 2003.

The second decision, issued by a Federal district court in Colorado, halted enforcement of the Act, finding it unconstitutional on First Amendment grounds. On October 7, 2003, the U.S. 10th Circuit Court of Appeals stayed this district court's order, thereby allowing the statute to go into effect, while further court consideration continues.
As a result of the Appeals Court action to stay the Colorado Federal district court order, the FTC, in conjunction with the FCC, will immediately begin implementing the new rules with regard to the Registry. As of Friday, October 10 at 8:00 a.m. EDT, telemarketers may access the Registry at http://www.telemarketing.donotcall.gov. Telemarketers/sellers who disregard the Registry may be fined up to $11,000 per call. Telemarketers/sellers who are currently making solicitation calls must access the FTC database by October 17, 2003. Telemarketers/sellers will be required to pay an annual fee of $25 per area code for access to the Registry, with a maximum annual fee of $7,375 for the entire U.S. database.

The National Do-Not-Call Registry requirements provide a baseline. Because most telemarketing calls are part of nationwide, interstate advertising campaigns, they are likely covered by the National Do-Not-Call Registry. In addition, there are many states with their own telemarketing laws and state registries. In addition to complying with the Federal Do-Not-Call rules, institutions should ensure that they remain in compliance with similar state requirements.

For further information please contact John R. Przypyszny or Jennifer Blum of Drinker Biddle & Reath at (202) 842-8800.

This article is intended to provide basic information regarding the Do-Not-Call List requirements. It is not intended to constitute legal advice regarding any specific legal problems or specific questions and should not be relied upon as such. © 2003 Drinker Biddle & Reath LLP.

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