FTC Wins Court OK for Registry

An appeals court Tuesday allowed the Federal Trade Commission to enforce the national “do-not-call” list until the court resolves whether the popular registry violates the free-speech rights of telemarketers.

The ruling by a three-judge panel of the U.S. 10th Circuit Court of Appeals in Denver revives a government crackdown on the $275-billion telemarketing industry.

About 51 million phone numbers have been placed on the registry since summer by people seeking to avoid sales pitches. Telemarketers who call numbers on the list face fines of up to $11,000.

But the registry’s future was cast in doubt late last month after two federal judges barred the FTC from enforcing it. First, a judge in Oklahoma held that the agency did not have the legal authority to enforce the list. That decision prompted both houses of Congress to pass legislation explicitly giving the FTC the power it lacked.

Less than an hour after the final vote, however, a judge in Denver ruled that the registry was unconstitutional because it violated the free-speech rights of telemarketers. The FTC appealed but did not begin enforcing the program last week as planned.

Although the constitutionality of the list remains to be decided, the appeals court said it believed that the FTC stood a good chance of winning its appeal and scheduled oral arguments in the case for Nov. 10.

“We conclude there is a substantial likelihood that the FTC will be able to show ... that the list directly advances the government’s substantial interest and is narrowly tailored,” the panel wrote.

“The Supreme Court has held that there is undoubtedly a substantial governmental interest in the prevention of abusive and coercive sales practices,” the judges added. “The prevention of intrusion upon privacy in the home is another ... substantial governmental interest.”

The Direct Marketing Assn. and the American Teleservices Assn. trade groups could not be reached late Tuesday after the court decision. But the DMA, apparently anticipating that some sort of registry would ultimately be upheld in court, had advised its 5,000 members not to call numbers on the list.

Sean Gallagher, an attorney who represents the American Teleservices Assn. and two telemarketing companies, said he was disappointed by the appeals court decision but refused to call it a defeat.

“This does not reverse the judge’s ruling that the law is unconstitutional,” he said.

Federal regulators praised the decision and said they would press ahead with enforcement of the registry, although it may take several days to get the list up and running again.

“This is an important victory for American consumers,” said FTC Chairman Timothy J. Muris. “We will now proceed to implement and enforce the Do-Not-Call Registry.”

A spokesman for the Federal Communications Commission said the agency today would probably start to share the names of several thousand people who requested to be added to the list after the FTC suspended the addition of new names.

The FCC, which shares enforcement of the list with the FTC, took primary responsibility for the registry after the initial court rulings. But its efforts were hamstrung because the FTC refused to turn over the database of numbers out of fear that doing so would violate the court’s orders.

“The ability to cooperate with the FTC will make our enforcement efforts more efficient and more effective,” FCC Chairman Michael K. Powell said.

Telemarketing groups initially sued the FTC in January, contending that the do-not-call list is discriminatory and infringes their 1st Amendment rights. They pointed out that politicians and nonprofit groups aren’t covered by the rules and remain free to solicit funds.

Many legal experts said the courts had traditionally endorsed granting fewer constitutional protections to so-called commercial speech than to other kinds of speech.

The appeals court cited that difference in Tuesday’s order and said the FTC’s do-not-call rules appeared broad enough not to favor certain types of commercial telemarketers over others. And it noted that people can request not to be called by charities on a case-by-case basis.

Associated Press was used in compiling this report.