Do-Not-Call Rules Enforcement Begins

Posted: 2/2004

Do-Not-Call Rules Enforcement Begins
By Gregory E. Kunkle, Esq., and Thomas K. Crowe, Esq.

Amid ongoing legal challenges, the federal do-not-call list is up and running and being enforced.

The FCC reports at least 2,000 consumer complaints were filed in the first week following the lists Oct. 7 debut. The high level of complaints prompted the creation of an FCC do-not-call enforcement task force lead by the deputy chief of the Telecommunications Consumers Division of the FCCs Enforcement Bureau.

In November 2003, the FCCs Enforcement Bureau issued a proposed fine of $780,000 (assessed at $10,000 for 78 apparent violations) against AT&T for violations of the do-not-call rules. In December 2003, the FCC cited CPM Funding Inc. for allegedly violating the new anti-telemarketing restrictions, but stopped short of imposing financial penalties. CPM Funding was accused of making eight telemarketing calls to people who had put their phone numbers on the national do-not-call registry. Because the company does not hold an FCC license, it will not be fined unless the alleged violations persist, the agency said. The FCC is permitted to fine a company up to $11,000 per violation.

This is a landmark enforcement step  the first FCC action to enforce our new national do-not-call rules, Enforcement Bureau Chief David H. Solomon said in a statement. This citation demonstrates our resolve to ensure consumers are not bothered by unwanted, intrusive calls to their homes.

Solomon told the Washington Post the FCC has many other investigations underway and has sent warning letters to 40 companies. He says the agency is focusing its investigations on companies in industries where the FTC does not have jurisdiction, such as telecommunications, banking and airlines.

The FCCs zeal to enforce the donot- call rules means telecom service providers employing telemarketing must make sure they comply with the new rules. For this reason, it is critical providers are aware of the restrictions imposed by the rules and the ways in which to avoid liability under them.

Issued in July 2003, the FCCs rules essentially mirror the FTCs rules, although there are slight differences between the two. The most important difference for telecom providers is telemarketing conducted on their behalf is restricted only by the FCCs do-not-call rules. Thus, telecom providers that use telemarketing and telemarketers that offer services on their behalf will need to focus on the FCCs rules regarding the national do-not-call list.

The information below details the FCCs do-not-call list rules and modifications to the Telecommunications Consumer Protection Act (TCPA) telemarketing rules as prescribed in the FCCs July 3, 2003, Report and Order. Telecom service providers and telemarketers should review their procedures to ensure they are in compliance.

THE RULES

The FCCs rules state no person or entity shall place a telemarketing solicitation to a residential subscriber who has placed his or her number on the national do-not-call list. Companies planning to conduct telemarketing to residential customers will need to obtain the official donot- call list and scrub any potential contacts from the list. In order to access the do-not-call list for the first time, each company (i.e., telecom service provider or telemarketer) will have to provide contact information including company name, address, contact person and his/her address and telephone number. If the entity accessing the system is a telemarketing company accessing the registry on behalf of a telecom provider, that provider also must be identified. An annual fee will be assessed based on the number of area codes requested ($29 per area code or $7,250 for access to the entire data base. There will be no charge to access up to five area codes). Each entity will have to pay this fee via credit card or electronic funds transfer. Each companys copy of the registry needs to be updated every three months.

The FCCs rules state no person or entity may sell, rent, lease, purchase or use the national do-not-call database for any purpose except compliance with FTC, FCC, state or other federal laws set to prevent telephone solicitations to people on the list. The rules also state telemarketers may not sell the list to others or divide the cost of accessing the list among various sellers. In other words, each telecom service provider must purchase the database, or that portion on which it intends to base its telemarketing campaign, from the do-not-call list administrator. For example, if a telemarketer is accessing the database on behalf of multiple long-distance provider clients, each client also will be subject to the fee.

The rules do provide a safe harbor against violations. Anyone making telephone solicitations will not be liable for violating the do-notcall list requirement if the violation is an error and if the company can prove that, as part of its routine business practice, it meets the following requirements:

1. It has established and implemented written procedures to comply with the national donot- call rules;
2. It has personnel trained in these procedures;
3. It has maintained and recorded a list of telephone numbers the seller may not contact;
4. It has documents proving it uses a process to prevent solicitations to any number on the do-not-call list (as updated within three months); and
5. It uses a process to ensure it does not sell, rent, lease, purchase or use the list for any purpose other than complying with national donot- call registry rules.

Telemarketing Providers. Effective Jan. 1, any telecom carrier providing service to any entity for the purpose of telephone solicitation must make a one-time notification to that entity of the do-not-call requirements; however, failure to receive such notification will not serve as defense to any entity making a telephone solicitation in violation of the donot- call rules.

Effect on state do-not-call lists. The federal rules and registry constitute a floor and supercede any less restrictive state do-not-call rules. Many states may have their own registries and rules regarding intrastate telemarketing, however, any telephone numbers within that state on the national registry also must be placed on the state registry. Telemarketers placing intrastate telemarketing calls must also be aware of these state registries and regulations to prevent violating state-specific rules. The FCCs rules do not specify whether federal regulation will preempt state regulation of interstate telemarketing calls.

EXEMPTIONS

The FCCs order identifies several cases where the national do-not-call registry rules will not apply. These exemptions are described below.

Established Business Relationship. The FCC defines established business relationship as 18 months from a purchase or transaction or three months from an inquiry or application. This exemption allows a telemarketer to contact a customer with an established business relationship for this duration of time unless the customer requests to be placed on a company-specific do-not-call list, in which case he or she may not be contacted. This exemption applies to all products offered by a company. The exemption also applies to affiliates of the company with whom the customer has an established business relationship only if the customer would reasonably expect the affiliate to be included given the nature and type of goods.

Prior Express Permission to Contact. In the case where an agreement is signed by the customer stating he or she agrees to be contacted and gives the number he or she agrees to be contacted at, that specific company is exempt from the new telemarketing rules. It is important to note the agreement must be signed either by hand or e-signature.

Tax-Exempt Nonprofit Organizations. The new telemarketing rules are not extended to tax-exempt nonprofit organizations or calls by independent telemarketers made on their behalf as these calls are specifically excluded from the TCPAs definition of telephone solicitation. These organizations also are exempt from company-specific do-notcall rules.

Calls to Personal Relationships. Calls made to persons with whom the telemarketer has a personal relationship (i.e., friends, family, acquaintances) also are exempt because the FCC considers such calls to be expected and limited in number.

COMPANY-SPECIFIC RULES

In its order, the FCC concludes the retention of the company-specific rules (adopted in the 1992 TCPA order) will complement the national do-not-call registry by providing consumers with an additional option for managing telemarketing calls. Thus, telemarketers are responsible for adhering to the existing company-specific rules. Several modifications to these companyspecific rules were adopted in the FCCs order, however, and are described below.

• The FCC has reduced the required time to retain names of parties who have requested not to be called in a companys database from 10 years to five years.
• Despite industry comments requesting an extension of the time limit by which to honor do-not-call requests, the FCC has concluded that requests must be honored when made; the subscribers telephone number must be placed on the do-not-call list at the time the request is made. Processing time to complete the request must not exceed 30 days of the date the request was made.
• The FCCs order also adopts a provision stating that a consumers do-not-call request terminates the established business relationship for purposes of telemarketing calls even if the consumer continues to do business with the seller.
• The FCCs company specific do-not-call rules require any person or entity making telephone solicitations to have procedures to maintain a list of persons requesting not to receive telemarketing calls. The procedures must meet the following minimum requirements:
• Have a written policy, available upon demand, for maintaining a do-not-call list.
• Personnel involved in any aspect of telemarketing must be trained on the existence and use of the do-not-call list.
• Requests by called parties not to be called must be recorded at the time of the request and available upon demand for disclosure. Requests must be honored for five years from the time the request is made.
• Anyone making a call for telemarketing purposes must identify the name of the caller, the name of the person/entity on whose behalf the call is being made and the telephone number (not a 900 number or any other number for which charges exceed local or long distance transmission charges) or address at which the person/entity may be contacted.

ADDITIONAL TELEMARKETING RULES

Automated Telephone Dialing Equipment. Automated telephone dialing equipment is prohibited from dialing emergency numbers, health care facilities, telephone numbers assigned to wireless services, and any other numbers for which the consumer is charged for the call. The FCC also prohibits the use of any technology to dial any telephone number for the purpose of determining whether the line is a fax or voice line. The FCC has concluded predictive dialers (which differ from normal autodialers because they use predictive dialing software and a database of numbers) should be classified as automated telephone dialing equipment and, thus, are subject to the same rules.

Artificial/Prerecorded Voice Messages. Prerecorded messages that constitute telephone solicitations as well as unsolicited advertisements are banned, including dual purpose calls to current customers (i.e., calls from phone companies to customers regarding new calling plans) as they would, in most cases, constitute unsolicited advertisements. However, if the company does have an established business relationship, it would be permitted under the FCCs rules. Absent an established business relationship, the telemarketer first must obtain the prior express consent of the called party to lawfully initiate the call. Additionally, all prerecorded messages, whether delivered by automated dialing equipment or not, must identify the name of the business, individual or entity responsible for initiating the call, along with the telephone number of such business, individual or entity. If a called party calls the number and requests to be put on a do-notcall list, that request must be recorded and the company must honor that request.

Abandoned Calls. Under the new rules, telemarketers must ensure predictive dialers abandon no more than 3 percent of placed and answered calls measured over a 30-day period. The call will be considered abandoned if it is not transferred to a live sales agent within two seconds of the recipients completed greeting. When a call is abandoned, a prerecorded identification message must be delivered containing the telemarketers name, telephone number, and notification that the call is for telemarketing purposes. Additionally, telemarketers must allow the phone to ring for 15 seconds or four rings before disconnecting an unanswered call. Finally, telemarketers must keep clear records with convincing evidence that the dialers used comply with these standards.

Wireless Telephone Numbers. All live telephone solicitations to wireless numbers are not prohibited by the FCCs rules adopted in this order. On the other hand, wireless customers will have the same option of registering their numbers on the federal do-not-call list if they do not wish to receive telemarketing calls. The FCC has affirmed, however, that companies using prerecorded messages are banned from calling wireless telephone numbers.

Caller Identification. The FCCs telemarketing rules prohibit telemarketers from blocking caller ID information and must transmit caller ID information. Caller ID information must include either ANI or CPN and, when available by the telemarketers carrier, the name of the telemarketer. The telemarketer in the case must supply convincing evidence when its carrier cannot transmit the name of the telemarketer. The caller ID telephone number provided must permit any individual to make a do-not-call request during regular business hours.

Time of Day Restrictions. The FCC has decided not to adjust the restrictions for telemarketers on time of day calling. The FCCs rules say telemarketers must not call between the hours of 9 p.m. and 8 a.m. local time at the called partys location.

Gregory E. Kunkle, Esq., and Thomas K. Crowe, Esq., are Washington, D.C.-based attorneys specializing in communications matters. They can be reached at +1 202 263 3640, via email at firm@tkcrowe.com.