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Hold that Call: FTC and the Do-Not-Call List

September 24, 2003 at 12:00 AM EST
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RAY SUAREZ: One week from today, a new law was scheduled to take effect stopping telemarketers from making unsolicited calls to nearly 50 million numbers. Most of those numbers came from a registry created by the Federal Trade commission. People signed up for the registry over the Web. But today, a federal court in Oklahoma blocked the plan. It said the FTC simply did not have the authority to create the list. For a closer look at the decision and what happens next, I’m joined by Lorraine Woellert, legal affairs correspondent for “Business Week.” Lorraine, as of this moment this system cannot take effect, right?

LORRAINE WOELLERT: As of now, that’s correct. There is some speculation that the FCC, another government agency, could move forward on the list but as of now everybody is working on the assumption that the law won’t go into effect. Congress is actually moving to give the FTC the authority it needs.

RAY SUAREZ: Now the Federal Trade Commission passed a rule, Congress passed a bill, the president signed it. How did it end up in a federal district court?

LORRAINE WOELLERT: Well, usually what happens is Congress passes a law and then the federal agency acts to implement the law. In this case, the FTC moved on its own without any authorization from congress. Timothy Muris the FTC chairman came in, he’s a big privacy guy. This was part of one of his big initiatives, do not call. He passed regulation and then he went to congress and said I need money to enforce this. Congress passed a bill saying here’s the money that you need to enforce it. And President Bush signed that bill. Congress never signed a bill saying… giving the FTC the power to pass this regulation. So the FTC moved… it was a little bit ahead of itself.

RAY SUAREZ: So the industry went to court on that basis, whether or not the federal trade commission was allowed in the first place.

LORRAINE WOELLERT: Correct. The procedural issue was one of the big reasons that the industry went to court but the industry also is arguing that there are constitutional questions here. There are two separate lawsuits. This one that we heard of yesterday and then the one… another one that we’re still waiting to hear on, but both cases are arguing that the FTC’s rule violates their First Amendment rights. That it carves out exceptions for certain people while blocking calls from others.

RAY SUAREZ: So will we really have to hear what the Colorado court says before we really know what the fate of the do not call list is?

LORRAINE WOELLERT: Yes, I think that Congress will move to give the FTC the power that it needs to do this law that doesn’t mean that this is over. The telemarketers are pushing forward with their litigation. They vowed to take this all the way to the Supreme Court because it is a constitutional question. And this could take, you know, years before it’s really resolved.

RAY SUAREZ: Well, House Committee chairman and his ranking member, Congressman Tauzin and Dingell, appeared before reporters today and said this ruling will not stand. They will make sure that the 50 million people who don’t want to be called get what they want. I can see how they can do it with a bill. That answers today’s court case. But if it’s ruled unconstitutional, they can’t pass a bill, can they?

LORRAINE WOELLERT: They can pass a bill and then it can be ruled unconstitutional later; 50 million people signed up for this list. You know, there are 280 million people in this country. So that’s a huge blow to the industry. But it’s also… you’re talking 50 million voters, you know, 50 million households times how many people live there. Congress can’t lose on this even if they’re in the end trumped by the Supreme Court. They’ve got to move forward. It’s a political no-brainer for them. They’ll do what they can. If the court overrules them in the end, well, they still did the right thing for the voters.

RAY SUAREZ: Has the industry put forward a plan that is an alternative to this do not call list that would be managed by a federal agency?

LORRAINE WOELLERT: The industry will tell you that they don’t want any legislation at all. They are trying to meet this week or next with Tauzin and Dingell, but they will tell you privately that nothing will satisfy them. Any kind of legislation that blocks legitimate marketers from making legitimate sales calls is just unacceptable.

RAY SUAREZ: Now, even when October came, if there hadn’t been this ruling, that didn’t mean that all calls to people on that do not call list were going to stop, did it?

LORRAINE WOELLERT: No. In fact, this is something that… I think that this bill or this rule was a little bit hyped by the government. Everybody thought that your phone was going to stop ringing October 1. But in fact any company that you do business with had permission to call you. Any company that you conducted a financial transaction with would have the right to call you. Political campaigns, pollsters, market researchers, those phone calls you get saying you’ve won a weekend at our resort, please call us, those calls would still come.

RAY SUAREZ: And charities.

LORRAINE WOELLERT: And charities, right.

RAY SUAREZ: So right now, we’re sort of in a wait-and-see mode, waiting for Congress to act and waiting for this other court case?

LORRAINE WOELLERT: Correct. Congress has vowed to put language in legislation that is pending now so that we can try and get the list moving by October 1. But between now and October 1 we could see yet another ruling from a different judge blocking the list yet again. So, yes, we’re in limbo for at least a week.

RAY SUAREZ: This argument over whether the FCC, the Federal Communications Commission or the Federal Trade Commission should be doing this. This is pretty arcane if you’re just a person sitting at home and doesn’t want the phone to ring anymore. Is there a lot at stake? Is there much difference between having these two agencies do it?

LORRAINE WOELLERT: There is because the FCC, the Federal Communications Commission which oversees telephone companies and certain financial companies, they have the authority to do this. They’ve had that authority since the early 1990s. Back then, they took a look at the do not call registry and they said, you know, we don’t think that will work so we’re not going to do it. The FTC, Federal Trade Commission, which is sort of like our Consumer Protection Agency, came in under the new chairman, Timothy Muris and said, “we want to do this. We may not have the authority to do it, but we’re going to go ahead anyway.” So as a practical matter, yes, it does make a big difference because one agency has the right to do it and the other one doesn’t.

RAY SUAREZ: They’re paying for the program by charging the telemarketers themselves for a list to find out who not to call.

LORRAINE WOELLERT: Yes. If I’m a telemarketer it costs me about over $7,000 a quarter to buy this list. I have to scrub my list every quarter so I’m required to buy it four times a year. And that money goes to the FTC for enforcement. So even if at this late date the FCC were to decide it was going to move in and enforce it this, it wouldn’t have the money. The FTC holds the purse strings.

RAY SUAREZ: Lorraine Woellert, thanks a lot for joining us.

LORRAINE WOELLERT: Thank you.