News > Technology
'Do not call' list unplugged
Court rules FTC overstepped its authority when it set up the list; FTC to appeal the decision.
September 24, 2003: 8:22 PM EDT

NEW YORK (CNN/Money) - A federal court has blocked the national "do not call" list -- meant to allow consumers to stop unwanted telephone sales calls -- just days before it was scheduled to take effect.

Workers at a telemarketing firm place calls to consumers.

The ruling Tuesday by the U.S. District Court in Oklahoma was a victory for the Direct Marketing Association and telemarketers who said the registry violated their rights under the First and Fifth Amendments to the Constitution.

Judge Lee West ruled that the Federal Trade Commission cannot enforce the do-not-call registry. The FTC has signed up some 50 million phone numbers for the list, which was due to become effective Oct. 1.

In response to the ruling, the FTC said it had asked a court to stay the decision blocking its popular "do not call" anti-telemarketing list while it appeals the case.

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In a statement Wednesday, the DMA acknowledged that millions of American do not want to receive telephone marketing calls. The group said it supports the idea of a list for consumers to express their preference not to be solicited by telephone, and pointed out that for years it has offered its own no-call system for consumers.

The DMA is a trade group representing about 5,000 U.S. companies. Other plaintiffs, all telemarketers, were U.S. Security, Chartered Benefit Services Inc., Global Contact Services Inc. and InfoCision Management Corp.

FTC Chairman Timothy Muris called the decision "clearly incorrect," and vowed the agency will "seek every recourse to give American consumers a choice to stop unwanted telemarketing calls."

'This will get cured'

House Energy and Commerce Committee Chairman Billy Tauzin, R-La., and the committee's ranking member, John Dingell, D-Mich., said they were disappointed by the ruling but are confident it will be overturned.

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Billy Tauzin, the chairman for the House committee on energy and commerce, pledges to revive the national Do-not-call list.

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Tauzin promised "this will get cured tomorrow," saying that he was introducing a bill that would allow the do-not-call list to be implemented on Oct. 1. The Senate separately will introduce legislation to authorize the list, Tauzin said on CNN's Lou Dobbs Tonight.

"To those who said this is a free speech issue, this is not about speech. This is about your right not to hear, not to listen," Tauzin told Dobbs. "If you don't want to listen, you ought to get on this list. This court in Oklahoma is not going to stop us," he added.

The FTC's do-not-call list was created in early 2002 and implemented this year after Congress ordered the agency to make rules preventing abusive and deceptive telemarketing practices.

Plaintiffs challenged the creation of the list and its prohibition of "abandoned calls," defined as one in which the telemarketer does not get on the line within two seconds of calling a consumer. They wanted the court to prohibit the FTC from enforcing the registry and rules against abandoned calls.

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West agreed regarding the registry, but disagreed regarding abandoned calls.

The judge held that it was "inappropriate" for Congress to have allowed the FTC to interpret the congressional orders on its own, saying it "raises serious constitutional questions."

West agreed with the plaintiffs' argument that Congress should have given an "unambiguous grant of authority" for the FTC to create the registry and other rules.

"Admittedly, the elimination of telemarketing fraud and the prohibition against deceptive and abusive telemarketing acts or practices are significant public concerns," the court wrote in its order. "However, an administrative agency's power to regulate in the public interest must always be grounded in a valid grant of authority from Congress."

Muris disputed that, and said the FTC was given "clear legislative direction" in creating the do-not-call registry.

"On Feb. 13, 2003, the Congress passed the Do Not Call Implementation Act, which authorized the FTC to collect fees from sellers and telemarketers to implement and enforce the provisions relating to the do-not-call registry," Muris said.

'Do not call'
Regulatory Policy and Organizations
Federal Trade Commission (FTC)

"The president signed this bill on March 11, 2003. Moreover, on Feb. 20, 2003, the president signed the Omnibus Appropriations Act, which authorizes the FTC to implement and enforce the do-not-call provisions of the Telemarketing Sales Rule," he added.

Kevin Grady, an antitrust attorney in Atlanta, said he believes the judge's ruling was a "mere roadblock" in the effort to shield consumers from telemarketing calls.

"To the extent that the decision focused on whether or not the FTC had congressional authority to do what they did, I think you'll see a move in Congress to make sure that it's very clear that they do have the authority," Grady told CNN.

"Whether it goes through on October first or not," Grady said, "as long as you and I are still breathing, this ultimately will go into effect. It's too popular not to."

Telemarketing cure killed? Not really.

The DMA and other plaintiffs argued the do-not-call registry violated their rights under the First Amendment, allowing freedom of speech, and the Fifth Amendment, which grants due process of law. They said the FTC's rules "discriminate against speech based upon content and identity of speakers and ... suppresses far more speech than necessary."

The FTC argued that the creation of the registry is a correct interpretation of Congress's orders to prevent abusive telephone marketing practices, because the FTC considers calls to a number on the registry abusive.

West agreed with the plaintiffs only on their complaint about the do-not-call registry. He upheld rules against abandoned calls and unauthorized charges on a customer's account, agreeing with the FTC that they are unfair practices.  Top of page

-- Reuters contributed to this story.

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