Federal Court Strikes Down Do-Not-Call Registry

By Christine Hall | July 7, 2008 | 8:21 PM EDT

(CNSNews.com) - A federal judge in Oklahoma Tuesday struck down a Federal Trade Commission rule establishing a national do-not-call registry for consumers who don't want to receive telemarketing calls. Congressional leaders on the issue immediately promised to work to undo the court decision.

U.S. District Judge Lee R. West's verdict pertained to a telemarketer lawsuit challenging the Federal Trade Commission (FTC) rule. The telemarketing industry claims it stands to lose some $50 billion in annual sales if consumers "opt out" of receiving marketing calls. And, according to the FTC rule, a company violating the do-not-call list could be fined up to $11,000 per violation.

In his ruling, West said Congress granted the Federal Communications Commission (FCC) authority to set up a national do-not-call registry but not the FTC.

Chris Hoofnagle of the Electronic Privacy Information Center predicted Congress or an appeals court would now wade into the controversy.

"I think this decision can be seen as a technical win that may result in the delay of the implementation of the list," said Hoofnagle.

Hoofnagle expressed satisfaction that the district court did not side with marketers on two other matters in the lawsuit - the prohibition of so-called abandoned calls (automatic dialing software that disconnects a consumer if a telemarketer is too busy to take the call) and restrictions on the use of pre-acquired account information.

Reps. Billy Tauzin (R-La.) and John Dingell (D-Mich.), chairman and ranking member, respectively, of the House Energy and Commerce Committee, held a Capitol Hill press conference following news of West's ruling, vowing to find a way to undo the decision.

FTC Chairman Timothy Muris on Wednesday called the ruling "clearly incorrect" and said the agency would "seek every recourse to give American consumers a choice to stop unwanted telemarketing calls."

The FTC rule was scheduled to go into effect in October and followed passage of the Do-Not-Call Implementation Act (HR 395).The Direct Marketing Association (DMA), in its own statement, declared it was "grateful" that the federal court "understood and upheld [the] industry's" position.

In challenging the FTC rule, the DMA, U.S. Security, Chartered Benefit Services, Inc., Global Contact Services, Inc., and InfoCision Management Corp. had argued that the FTC rule violated their First and Fifth Amendment rights under the U.S. Constitution by discriminating against and suppressing their free speech.

The DMA stated that it "acknowledges the wishes of millions of U.S. consumers who have expressed their preferences not to receive telephone-marketing solicitations - as evidenced by the millions of phone numbers registered on the FTC list."

However, the DMA stated the best solution is the Telephone Preference Service (TPS), the national no-call system it established in 1985.

According to Hoofnagle, three separate authorities regulate telemarketing - state attorneys general, the FCC (through the 1991 Telephone Consumer Protection Act) and the FTC.

The impact on state laws from the federal district court decision may vary.

Illinois Attorney General Lisa Madigan said her state's do-not-call list is "now in limbo" because the state law is "tied directly to the federal list."

But Bruce Gordon, spokesman for the Minnesota Department of Commerce, told news sources that his own state's no-call list remained in effect regardless of the ruling.

"We think the Minnesota do-not-call list will not be affected by this federal ruling and will remain in place," Gordon told the Minneapolis/St. Paul Business Journal.

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