FCC Proposes Changes to Telemarketing Rules

Article by Michelle W. Cohen and Kathrine L. Calderazzi

In 1992, the Federal Communications Commission ("FCC" or "Commission") adopted rules implementing the Telephone Consumer Protection Act of 1991 ("TCPA"). These rules restricted unsolicited advertising via telephone and facsimile. However, in light of advances in telemarketing technologies and increasing concerns over consumer privacy, the FCC recently launched a new proceeding aimed at revising its rules to better carry out the goal of the TCPA to balance individual privacy rights with commercial freedom of speech and trade.

Following is a summary of the comments solicited by the FCC in its Notice of Proposed Rulemaking ("NPRM") released on September 18, 2002. Comments are due on November 22, 2002 and reply comments are due on December 9, 2002.

Summary

The NPRM asks whether the FCC’s existing rules should be refined, or new rules adopted, to account for technological advances and changing marketing practices. Accordingly, the NPRM requests comment on the following issues:

Company-specific do-not-call lists

Presently, telemarketers are required to place a consumer on a do-not-call list if the consumer requests not to receive further solicitations. Such lists are company-specific and, as a result, consumers must repeat their request not to be called on a case-by-case basis as calls are received.

• Have such lists been effective in preventing unwanted calls?
• Is it too burdensome on consumers to request placement on such lists on a case-by-case basis as calls are received?
• How can the interests of consumers who wish to continue to receive such calls be balanced with the interests of those who object to such calls?
• Predictive dialers result in frequent hang-ups, which prevents consumers from requesting placement on a do-not-call list. What legitimate business or commercial speech interest is promoted by these calls?
• Should the FCC maintain a company-specific do-not-call requirement if the FTC adopts a national do-not-call database?
• If the rule is retained, should any changes be made (e.g., must make toll free number or web site available for people to register for the do-not-call list; provide documentation of request; time frame for processing such requests)?
• How effective is DMA’s Telephone Preference Service?
• Should the rules be modified to minimize unnecessary burdens on telemarketers?
• What is the effect on the "established business relationship" exemption if a national do-not-call database is established?

Network Technologies

The NPRM asks whether network technologies have been developed that allow consumers to avoid receiving unwanted telemarketing calls. The FCC previously rejected arguments that use of network technology would allow consumers to avoid unwanted calls.

• If such technologies have been developed, how should this influence the Commission’s analysis of revising its company-specific do-not-call rules or possibly adopting a national do-not call list?
• Should the FCC consider any additional "caller ID" requirements for telemarketers (e.g., requirement to transmit name and telephone number; prohibit blocking or altering transmission of such information)?

Autodialers

An "automatic telephone dialing system" is defined as equipment which has the capacity to store or produce telephone numbers to be called using a random or sequential number generator and to dial such numbers.

• Should the definition of "automatic telephone dialing system" be revised to identify new technologies?
• Did Congress intend for the definition to encompass any equipment that can dial numbers automatically (either by producing numbers at random or by generating them from an existing database)?

Identification Requirements

FCC rules require telemarketers to provide the name of the individual caller, the name of the person or entity on whose behalf the call is being made, and a telephone number or address at which the person or entity may be contacted.

• Should the rules be clarified to state expressly that identification requirements apply to all artificial and prerecorded voice messages and to all live solicitation calls?
• How should the identification requirements apply to calls made with predictive dialers and other circumstances where telemarketing calls are abandoned? Do such abandoned calls violate the rules because they do not provide consumers with required identifying information regarding the telemarketer?

Artificial or Prerecorded Voice Messages

It is prohibited to call a residence using an artificial or prerecorded voice to deliver a message without the prior express consent of the called party, unless the call is for emergency purposes or is specifically exempted.

• Are unsolicited calls made with artificial or prerecorded messages permitted if they offer free goods or services or contain "information only" about products, and do not immediately solicit a purchase?
• Should calls made jointly by nonprofit and for-profit organizations fall within the exemption for calls by tax-exempt nonprofit organizations (e.g., where the nonprofit organization calls consumers to sell another company’s product and receives a portion of the proceeds in return)?
• Should the Commission revisit its previous conclusion that there is an "established business relationship" exemption from the restrictions on artificial or prerecorded message calls to residences? Should there be any time limitation to such relationships?
• Should a company be required to abide by a do-not-call request if the customer continues to do business with that company?

Time of Day Restrictions

Should the Commission alter its current prohibition on unsolicited sales calls before 8:00 am and after 9:00 pm local time at the called party’s location?

Unsolicited Facsimile Advertisements

The TCPA prohibits the transmission of unsolicited advertisements by telephone facsimile machines and requires those sending messages via telephone facsimile machines to identify themselves to message recipients. The FCC is seeking comment on the continued effectiveness of TCPA regulations and on any developing technologies, such as computerized fax servers, that might warrant revising the unsolicited fax rules. An unsolicited advertisement is defined in FCC rules as "any material advertising the commercial availability or quality of any property, good, or services which is transmitted to any person without that person’s prior express invitation or permission."

• Prior Express Invitation or Permission
: The FCC is seeking comment on the need to clarify what constitutes "prior express invitation or permission" for purposes of sending an unsolicited fax. The FCC is considering the circumstances in which facsimile numbers are distributed or published by individuals and businesses.
In particular, the FCC is exploring the issue of membership in a trade association or similar group – i.e., should the publication of one’s fax number in an organization’s directory constitute an invitation or permission to receive an unsolicited fax?

• Established Business Relationship
: The FCC asks whether, in practice, this exemption has served to protect ongoing business relationships and whether it has had any adverse impact on consumer privacy. Regarding the established business relationship exemption, the FCC also is seeking comment on:
- whether the FCC should amend its rules to expressly provide for the exemption;
- the need to clarify the scope of the exemption – e.g., should a company that has an established relationship with a customer for one type of product or service also be allowed to send unsolicited faxes about a different service or product; and
- whether it is necessary for the FCC to adopt rules to protect consumers in circumstances where consumers seek to stop faxes to their fax numbers from businesses with which they have established business relationships.

• Fax Broadcasters
: The FCC is considering whether it should specifically address in its rules the activities of "fax broadcasters" who transmit other entities’ advertisements to a large number of telephone fax numbers for a fee. The FCC previously ruled that "in the absence of a ‘high degree of involvement or actual notice of an illegal use and failure to take steps to prevent such transmissions,’" common carriers and fax broadcasters are not liable for the transmission of a prohibited fax advertisement.
- The FCC has noted that some fax broadcasters maintain lists of telephone facsimile numbers that they use to direct their clients’ advertisements, which may subject such fax broadcasters to enforcement action.
- The FCC has asked whether it should address specifically in its rules the activities of fax broad casters. Specifically,
A. should the FCC amend its rules to state explicitly that certain fax broadcasting practices expose the fax broadcaster to liability under the TCPA and the FCC’s rules?
B. should the FCC specify by rule the particular activities that would demonstrate a fax broadcaster’s "high degree of involvement" in the unlawful activity of sending unsolicited advertisements to telephone facsimile machines?
C. have the FCC’s rules that require fax advertisements to identify the entity on whose behalf the messages are sent been effective in protecting consumers’ rights to enforce the TCPA?

Wireless Telephone Numbers

The TCPA and FCC rules prohibit telephone calls using an autodialer or a prerecorded voice message to any telephone number assigned to a paging service, cellular telephone service, or any service for which the called party is charged for the call, except in emergencies or with the prior express consent of the called party.

• The FCC seeks comment on the extent to which telemarketing to wireless consumers exists today, including whether consumers receive solicitations on their wireless phones, and the nature and frequency of these solicitations.
• The FCC asks whether telemarketers are including or targeting wireless phone numbers in their telemarketing calls.
• The FCC is broadly asking whether any revisions to the TCPA rules are necessary to address telemarketing to wireless telephone numbers. For instance, should wireless telephone numbers be considered "residential telephone numbers" for the purposes of the FCC’s rules governing telephone solicitations?
• The FCC is also seeking comment on the availability of any technological tools that would allow telemarketers to recognize numbers that have been ported from wireline to wireless phones or to recognize wireless numbers that have been assigned from a pool of numbers that formerly were all wireline.

Enforcement and State Preemption Issues

The FCC notes that it has continued to receive inquiries about a consumer’s right to file suit against a person or entity that has made one phone call in violation of the TCPA rules.

• The NPRM asks whether the FCC should clarify whether a consumer may file suit after receiving one phone call from a telemarketer who, for example, fails to properly identify himself or makes a call outside the time of day restrictions.
• The NPRM is also seeking comment on whether, and if so, to what degree, state requirements should be preempted.

National Do-Not-Call List

Although the TCPA expressly authorizes the FCC, if it chooses, to require a single national database of residential subscribers who object to receiving telephone solicitations, the FCC previously declined to adopt such a national do-not-call list. The NPRM asks whether the FCC should revisit that determination. Specifically, the FCC is looking at the interplay between this rulemaking proceeding and the FTC’s proposal to adopt a nationwide do-not-call list for those entities over which the FTC has jurisdiction. The NPRM seeks comment on the following issues:

• The potential costs of establishing and maintaining a national do-not-call database, the burdens on telemarketers of compliance with a national do-not-call database, and whether there should be any distinction on a national, regional, state, or local level or for small businesses.
• The constitutionality of a do-not-call database.
• Possible options for satisfying the TCPA’s statutory requirements for a do-not-call database, including whether the FCC could adopt rules requiring common carriers and others under the FCC’s jurisdiction to comply with a national do-not-call regime administered by the FTC.
• Whether the FCC should use its authority under the TCPA to extend any national do-not-call requirements adopted by the FTC to those entities that fall outside the FTC’s jurisdiction.
• How to resolve any inconsistencies that result from this rulemaking and the FTC’s do-not-call database rulemaking (e.g., TCPA’s exemption for non-profit calls versus FTC’s coverage of charitable solicitations by for-profit entities on behalf of nonprofit entities).

State Do-Not-Call Lists

The FCC seeks comment on how effective these state-administered do-not-call lists have been in curbing unwanted telephone solicitations and whether a national database would correct any of the shortcomings of the state lists.

• In addition, the FCC asks whether the state lists should be limited to intrastate telemarketing calls, while the federal law would govern interstate telemarketing. The FCC is also seeking comment on whether states are authorized to regulate telemarketing originating outside of the state.
• The FCC further asks commenters to explore the issue of federal preemption of state do-not-call lists.

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