FCC Clarifies “Do Not Call” Rules On Reconsideration
SOURCE: BloostonLaw Telecom Update, Vol. 8, No. 8, February 23, 2005

The FCC has released the text of its Second Order on Reconsideration clarifying various issues with respect to the “Do Not Call” rules associated with the Telephone Consumer Protection Act (TCPA). Adopted at its February 10 open meeting, the Recon Order generally clarifies that (1) calls made for the purpose of debt collection are not required to identify the caller’s state-registered name in prerecorded messages if doing so would conflict with federal or state laws; and (2) bill messages satisfy the requirement for common carriers to provide an annual notice to subscribers of the opportunity to register with the national Do Not Call list (see below). Further, the Commission clarified application of the “established business relationship” exemption as well as the rules on maintaining company-specific Do Not Call lists.

More specifically, however, the Recon Order addresses a number of petitions for reconsideration and/or clarification of the Do Not Call rules. Without enumerating the arguments in each petition, the Commission came to the following conclusions:

1. Constitutional Issue: In February 2004, the 10 th U.S. Circuit Court of Appeals in Denver held that the Commission’s “opt-in telemarketing regulation[s] that provide a mechanism for consumers to restrict commercial sales calls but do not provide a similar mechanism to limit charitable or political calls” are “consistent with First Amendment requirements.” Thus, the FCC said its Do Not Call rules are constitutional.

2. Business Numbers: The FCC declined to apply the Do Not Call restriction to business numbers. It said the 2003 TCPA Order provided that the national Do Not Call registry applies to calls to “residential subscribers” and does not preclude calls to businesses. To the extent that some business numbers have been inadvertently registered on the national registry, calls made to such numbers will not be considered violations of FCC rules. The FCC also declined to exempt those calls made to “home-based businesses”; rather, it will review such calls on a case-by-case basis to determine whether the call was made to a residential subscriber.

3.Real Estate Agents: The FCC affirmed that a real estate agent, insurance agent, or newspaper is precluded from calling consumers registered on the national Do Not Call list, unless the calls would fall within one of the specific exemptions provided in the statute and rules. Therefore, the FCC clarified that a telephone solicitation would include calls by real estate agents to property owners for the purpose of offering their services to the owner, whether the property listing has lapsed or not. The FCC found, however, that calls by real estate agents who represent only the potential buyer to someone who has advertised their property for sale, do not constitute telephone solicitations, so long as the purpose of the call is to discuss a potential sale of the property to the represented buyer. The callers, in such circumstances, are not encouraging the called party to purchase, rent or invest in property, as contemplated by the definition of “telephone solicitation.” They are instead calling in response to an offer to purchase something from the called party. In addition, as explained in the 2003 TCPA Order, calls constituting telephone solicitations to persons based on referrals are nevertheless subject to the Do Not Call rules, if not otherwise exempted.

4. Safe Harbor Provisions: The FCC declined to amend its safe harbor provision to account for “good faith calls” that violate the rules and to accommodate call back technologies that have the potential to run afoul of the rules. The FCC said it believes the existing safe harbor provision sufficiently addresses calls made in error by telemarketers that have made a good faith effort to comply with the rules. Consistent with the Federal Trade Commission (FTC), the FCC said, it concludes that a seller or telemarketer will not be liable for violating the national Do Not Call rules if it can demonstrate that it has met certain standards, including using a process to prevent telemarketing to any telephone number on the national Do Not Call registry using a version of the registry obtained from the registry administrator no more than 31 days prior to the date any call is made.

5. Common Carrier Notices: The FCC will allow common carriers to provide the notice required through either a bill insert or a separate message on the bill itself. Such notice may also appear on an Internet bill that the subscriber has opted to receive. The FCC believes that bill messages may be a less expensive and an efficient alternative to a separate page in the bill for some carriers, and will nevertheless comply with the TCPA. The FCC emphasizes, however, that the notice, whether appearing on the actual bill or on a separate page in the bill, must be clear and conspicuous and include, at a minimum, the Internet address and toll-free number that residential telephone subscribers may use to register on or remove their numbers from the national database. Carriers must notify their customers of the Do Not Call options beginning January 1, 2004, and annually thereafter. BloostonLaw has developed appropriate language and can provide this wording upon request.

6.Company-Specific Lists: The FCC concludes that any Do Not Call request made of a particular company must be honored for a period of five years from the date the request is made, whether the request was made prior to the effective date of the amended rule or after the rule went into effect. Telemarketers may remove those numbers from their company-specific do-not-call lists that have been on their lists for a period of five years or longer. As explained in the 2003 TCPA Order, the FCC believes a five-year retention period reasonably balances any administrative burden on consumers in requesting not to be called with the interests of telemarketers in contacting consumers. The shorter retention period increases the accuracy of companies’ Do Not Call databases while the national Do Not Call registry option mitigates the burden on those consumers who may find company-specific Do Not Call requests overly burdensome. The FCC also believe that having two different retention periods—one for requests made prior to the effective date of the amended rule and one for requests made after—will lead to confusion among consumers and increase administrative burdens on telemarketers.

In addition, The FCC declined to amend the timeframe by which telemarketers must honor Do Not Call requests. In concluding that telemarketers must honor such requests within 30 days, the FCC said it considered both the large databases of such requests maintained by some entities and the limitations on certain small businesses. The FCC also determined that telemarketers with the capability to honor company-specific Do Not Call requests in less than 30 days must do so. The FCC continues to believe that this requirement adequately balances the privacy interests of those consumers that have requested not to be called with the interests of the telemarketing industry. The FCC also declined to amend its determination regarding the hours a telemarketer must be available to record Do Not Call requests from consumers making inbound calls to that telemarketer. In the 2003 TCPA Order, the FCC concluded that the number supplied by the telemarketer must permit an individual to make a Do Not Call request during the hours of 9:00 a.m. and 5:00 p.m. Monday through Friday. Telemarketers are already required to record Do Not Call requests at the time the request is made, such as during a live solicitation call. Thus, the FCC believes that in those instances where the consumer must instead contact the telemarketer at the telemarketer’s number, it is reasonable to do so during “normal” business hours when most consumers are likely to call.

7. Non-Profit Tax Exemption: The FCC reaffirmed its determination regarding for-profit companies that call to encourage the purchase of goods or services, yet donate some of the proceeds to a nonprofit organization. In circumstances where telephone calls are initiated by a for-profit entity to offer its own, or another for-profit entity’s products for sale—even if a tax-exempt nonprofit will receive a portion of the sale’s proceeds—such calls are telephone solicitations as defined by the TCPA. The FCC distinguishes these types of calls from those initiated, directed, and controlled by a tax-exempt nonprofit for its own fundraising purposes. The Commission believes that to exempt for-profit organizations merely because a tax-exempt nonprofit organization is involved in the telemarketing program would undermine the purpose of the Do Not Call registry.

8.Prerecorded Messages: The FCC declined to exempt prerecorded messages that purport to deliver “information only”—e.g., messages such as timeshare solicitations that the Commission said are clearly part of a marketing campaign to encourage consumers to invest in a commercial product. As the FCC stated in the 2003 TCPA Order, the fact that a sale is not completed during the call or message does not mean the message does not constitute a telephone solicitation or unsolicited advertisement. Messages that describe a new product, a vacation destination, or a company that will be in “your area” to perform home repairs nevertheless are part of an effort to sell goods and services, even if a sale is not made during the call. In addition, messages that promote goods or services at no cost are nevertheless unsolicited advertisements because they describe the “quality of any property, goods or services.” According to the Commission, the petitioner points out that consumers who receive prerecorded messages must return the calls if they wish to learn more, to complete the sale, or simply to ask to be placed on a Do Not Call list. As noted in the 2003 TCPA Order, the Commission said, such messages were determined by Congress to be more intrusive to consumer privacy than live solicitation calls. Thus, the FCC reiterated that prerecorded messages that contain either a telephone solicitation or introduce an unsolicited advertisement are prohibited without the prior express consent of the called party.

9. Financial Contracts: The FCC noted that financial “contracts” often remain in force even if the consumer is not required to make regular payments or transactions. In passing the recent Fair and Accurate Credit Transactions Act of 2003 (FACT Act), Congress provided that a “pre-existing business relationship” includes a “financial contract between a person and a consumer which is in force” or a “financial transaction (including holding an active account or a policy in force or having another continuing relationship).” The FCC similarly clarifies that the existence of financial agreements, including bank accounts, credit cards, loans, insurance policies and mortgages, constitute ongoing relationships that should permit a company to contact the consumer to, for example, notify them of changes in terms of a contract or offer new products and services that may benefit them. Consumers should not be surprised to receive a call from a bank at which they have an account, even if they have not transacted any business on that account for over 18 months. They also are likely to expect to receive calls from insurance companies with whom they hold an insurance policy or from lenders with whom they secured a mortgage.

Similarly, a publication that a consumer agrees to subscribe to for a specified period of time, has an established business relationship (EBR) with the consumer for the duration of the subscription. Thus, during the time a financial contract remains in force between a company and a consumer, there exists an established business relationship, which will permit that company to call the consumer during the period of the “contract.” Once any account is closed or any “contract” has terminated, the bank, lender, or other entity will have an additional 18 months from the last transaction to contact the consumer before the EBR is terminated for purposes of telemarketing calls. However, the FCC emphasizes that a consumer may terminate the EBR for purposes of telemarketing calls at any time by making a Do Not Call request. Once the consumer makes a company-specific Do Not Call request, the company may not call the consumer again to make a telephone solicitation regardless of whether the consumer continues to do business with the company.

In addition, the FCC clarified that intermediaries, such as insurance agents and mortgage brokers, may call those consumers with whom they have arranged an insurance policy or mortgage for a period of 18 months from the time the transaction is completed, i.e., the broker/agent arranged the mortgage or insurance deal. The FCC agreed that brokers and agents often play an important role in these types of financial transactions and that, in many circumstances, the consumer would expect to receive a call from them within a reasonable period of time of the transaction. However, the Commission believes that to allow a broker to make a telephone solicitation to a consumer for the duration of the loan or term of the policy would conflict with the Do Not Call rules’ purpose in protecting consumer privacy rights. In addition, a broker or agent may obtain the consumer’s express written permission to call beyond the 18-month period at the time of the transaction.

10. Dead Air Calls: The FCC noted that the record revealed that consumers often face “dead air” calls and repeated hang-ups resulting from the use of predictive dialers. In addition to requiring that telemarketers limit the number of such abandoned calls to 3% of calls answered by a person, the Commission required that telemarketers deliver a prerecorded message when abandoning a call so that consumers will know who is calling them. The Commission emphasized that the message must be limited to name and telephone number, along with a notice that the call is for “telemarketing purposes.” The FCC cautioned that the message may not be used to deliver an unsolicited advertisement, and that additional information in the prerecorded message constituting an unsolicited advertisement would be a violation of the rules.

The FCC said that words other than “telemarketing purposes” may convey the purpose of the call. However, it noted that language such as “Hi, this is Company A, calling today to sell you our services” does not constitute an unsolicited advertisement and concluded that such statement would run afoul of the rules. Therefore, the FCC strongly encouraged telemarketers to use the words “telemarketing purposes” when delivering a prerecorded identification message for an abandoned call in order to avoid delivering an unsolicited advertisement in the message.

BloostonLaw contacts: Ben Dickens, Gerry Duffy, and Mary Sisak.

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