Appendix — Mainstream Marketing Services, Inc. v. Federal Trade Commission

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INTHE Q341552MAY 14 2004

Supreme Court of the United States |

AMERICAN TELESERVICES ASSOCIATION, MAINSTREAM

MARKETING SERVICES, INC., AND TMG MARKETING, INC.,

Petitioners,

FEDERAL TRADE COMMISSION, FEDERAL COMMUNICATIONS

COMMISSION, AND UNITED STATES,

Respondents.

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Tenth Circuit

APPENDIX TO PETITION FORA

WRIT OF CERTIORARI (Continued)

VOLUME III

ROBERT CORN-REVERE *

RONALD G. LONDON

JEFFREY L. FISHER

KAVITA AMAR

SONJA WEST

DAVIS WRIGHT TREMAINE LLP

1500 K Street, N.W., Suite 450

Washington, D.C. 20005

(202) 508-6600

SEAN R. GALLAGHER

HOGAN & HARTSON LLP

1200 17th Street, Suite 1500

Denver, Colorado 80202

(303) 899-7300

* Counsel of Record Counsel for Petitioners

WILSON-EPES PRINTING CO., INC. — (202) 789-0096 -— WASHINGTON, D.C. 20001

TABLE OF CONTENTS

Mainstream Mktg. Servs., Inc. v. FTC, 358 F.3d 1228

CONSE UID i eisecsnercsissnisiseedinassecptitiescoctsacecéiccz.:

FTC v. Mainstream Mktg. Servs., Inc., 345 F 2d 850

Ge EE sbi oo Nn

Mainstream Mktg. Servs., Inc. v. FCC, No. 03-9571,

Order Denying Stay (10th Cir. Sept. 26, ri)

Mainstream Mktg. Servs., Inc. v. FCC, 284 F.Supp.2d

FM RP MAE TINY iicrnseesnssienceintbinncdiasnsarsiesisealc

Mainstream Mktg. Servs., Inc. v. FCC, 283 F.Supp.2d

BEE GD CID, DOI) isn scsecnscssincesdsncnesiioesnisesseieees oc.

Telemarketing Sales Rule Fees; Final Rule, 68 Fed.

WON SETI IID ses issosscsesesessochastecasenssssesssisacncce..

Telemarketing Sales Rule; Final Rule, 68 Fed. Reg.

IP cc ees hah sada

Rules and Regulations Implementing the Telephone

Consumer Protection Act of 1991, 18 FCC Red

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Rules and Regulaticns Implementing the Telephone

Consumer Protection Act of 1991, 18 FCC Red

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Rules and Regulations Implementing the Telephone

Consumer Protection Act of 1991, 17 FCC Red

NI sido acai crac et Nl a ar at

Telemarketing and Consumer Fraud and Abuse

Prevention Act, 15 U.S.C. §§ 6101-6108 ooo...

Do-Not-Call Implementation Act, Pub. L. 108-10, 117

Stat. 557 (2003), codified as Notes to 15 U.S.C.

PY seit

Page

576a

585a

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948a

TABLE OF CONTENTS—Continued

Page

Telephone Consumer Protection Act, 47 U.S.C.

§ 227

SF CFA Sse cicticacaciaeaaaiaaciainns 983a

SOE B. PE FO vicainiccniccivscnscadntntinnianahiaiacnns 993a

576a

APPENDIX H

Before the

Federal Communications Commission

Washington, D.C. 20554

CG Docket No. 02-278

In the Matter of

Rules and Regulations Implementing the

Telephone Consumer Protection Act of 1991

Adopted: August 18, 2003

Released: August 18, 2003

ORDER ON RECONSIDERATION

By the Commission:

1. On July 3, 2003, the Federal Communications Commis-

sion (Commission) released a Report and Order revising

many of its telemarketing and facsimile advertising rules

pursuant to the Telephone Consumer Protection Act of 1991

(TCPA).' Pursuant to Section 1.108 of-the Commission’s

rules,” on our Own motion, we issue this limited reconsid-

eration of the Report and Order and extend, until January 1,

2905, the effective date of our determination that an

' See Rules and Regulations Implementing the Telephone Consumer

Protection Act of 1991, CG Docket No. 02-278, FCC 03-153, Report and

Order (rel. July 3, 2003) (Report and Order). A summary of this Report

and Order was published in the Federal Register on July 25, 2003 (68 Fed.

Reg. 44144).

747 C.F.R. § 1.108.

577a

established business relationship will no longer be sufficient

to show that an individual or business has given express

permission to receive unsolicited facsimile advertisements.

We also extend, until January 1, 2005, the effective date of

amended rule 47 C.F.R. § 64.1200(a)(3)(i).?

2. In the Report and Order, the Commission reversed its

prior conclusion that an established business relationship

provides companies with the necessary express permission to

send faxes to their customers.’ The Commission determined

that the established business relationship would no longer be

sufficient to show that an individual or business has given

express permission to receive unsolicited facsimile

advertisements.’ Instead, the Commission concluded that the

recipient’s express invitation or permission must be in writing

and include the recipient’s signature.° The recipient must

clearly indicate that he or she consents to receiving such

faxed advertisements from the company to which permission

is given, and must provide the individual’ S or business: s fax

number to which faxes may be sent.’

3. The American Society of Association Executives

(ASAE) filed a petition for emergency clarification of the

rules governing unsolicited facsimile advertisements as they

> Amended rule 47 C.F.R. § 64.1200(a)(3)(i) provides that ‘ta facsimile

advertisement is not ‘unsolicited’ if the recipient has granted the sender

prior express invitation or permission to deliver the advertisement, as

evidenced by a signed, written statement that includes the facsimile

number to which any advertisements may be sent and clearly indicates the

recipient’s consent to receive such facsimile advertisements from the

sender.”

* Report and Order at para. 189.

° Id.

° Report and Order at para. 191.

"Id

578a

apply to tax-exempt nonprofit organizations.® In addition,

ASAE filed a petition for stay of the unsolicited facsimile

rules as they apply to tax-exempt nonprofits in the event the

Commission is unable to clarify the rules prior to their

effective date.? Many of ASAE’s members and other organi-

zations have filed comments in support of ASAE’s

petitions.'” The National Association of Realtors also filed a

Request for Emergency Stay of all of the facsimile advertise-

ment rules, asking the Commission to grant a one-year stay of

the recently adopted rules.'' A Request for Stay of the

amended rules concerning unsolicited facsimile advertising as

they apply to the publishers of Requester Publications, along

with a Request for Expedited Clarification of the unsolicited

facsimile rules, were filed by Proximity Marketing.'? In

addition, a Request for Stay of the amended rules concerning

unsolicited facsimile advertising as they apply to political

action committees was filed by the National Association of

* ASAE Petition for Emergency Clarification, filed July 25, 2003

(asking the Commission to issue, on an emergency basis, a clarification

that unsolicited facsimile communications are not prohibited when issued

by tax-exempt nonprofit purposes).

* ASAE Petition for Stay, filed July 25, 2003.

'° See, e.g., Maryland Society of Association Executives Comments;

Construction Management Association of America Comments; Pittsburgh

Pediatric Society Comments; Albany County Convention and Visitors’

Bureau Comments; American Correctional Association Comments.

''The National Association of Realtors (NAR) requests that the

Commission stay the effective date of the Commission’s rules at

64.1200(a)(3), 68.318 and other applicable rules “to permit NAR and its

members sufficient time to review and comply with the Commission’s

new, unanticipated, and unprecedented, unsolicited fax rules.” See NAR

Request for Emergency Stay of Facsimile Advertisement Rules, filed

August 1, 2003, p. 1.

'? Proximity Marketing Request for Stay and Proximity Marketing

Request for Expedited Clarification, filed August 6, 2003.

I eS ee

579a

Business Political Action Committees (NABPAC).'? The

Chamber of Commerce of the United States et al. filed a

Request for Stay of the amended rules that apply to

unsolicited commercial faxes.'* The “Business Users Coali-

tion” submitted a Petition for Emergency Stay of at least six -

months of the amended rules regarding unsolicited facsimile

advertisements.'> A Petition for Stay of the rules governing

the nature of “express permission” required to send advertise-

ments by fax was filed by American Business Media.'® A

Petition for Emergency Stay & Clarification of the amended

rules governing unsolicited facsimile advertisements as they

apply to tax-exempt nonprofit organizations was submitted by

the Air Conditioning Contractors of America (ACCA).'’? A

Request for Stay of those rules governing unsolicited fax

advertising was filed by the American Dietetic Association

'’ NABPAC Request for Stay of Facsimile Advertisement Rules, filed

August 8, 2003.

'* The Chamber of Commerce of the United States, the Community

Association Institute, the National Association of Manufacturers, the

National Association of Wholesaler-Distributors, the National Restaurant

Association, and the National Federation cf Independent Business

Request for Stay of Facsimile Advertisement Rules, filed August 8, 2003.

The American Society of Travel Agents, Mortgage Bankers

Association of America, National Association of Mortgage Brokers,

Consumer Mortgage Coalition, and the Midwest Circulation Association

(collectively “Business Users Coalition”) Petition for Emergency Stay,

filed August 7, 2003.

'© American Business Media seeks “a stay pending reconsideration of

[the requirement for written and signed permission], a Stay pending

clarification that notifications to subscribers of subscription expiration and

insertion orders to advertisers are not advertisements, a stay for one year

in the event that the Commission retains the signature rule and a stay

pending judicial review.” American Business Media Petition for Stay,

filed August 6, 2003.

'” Air Conditioning Contractors of America (ACCA) Petition for

Emergency Stay & Clarification, filed August 12, 2003.

580a

(ADA).'* Reed Elsevier Inc. submitted a Motion for Stay of

the effective date of the amended fax consent rule at

64.1200(a)(3)(i).'? The Newspaper Association of America

(NAA) and the National Newspaper Association (NNA) filed

a Petition for Stay of the Commission’s amended rules on

" unsolicited facsimile advertisements.”°

4. The American Teleservices Association (ATA) has also

submitted a Request for Expedited Stay of the Commission’s

revisions to the rules implementing the TCPA.”' The ATA

requests that the Commission stay the revisions to the rules

implementing the TCPA, pending a final decision on judicial

review of the new rules. ATA’s petition relates primarily to

the new telephone solicitation rules, including the national

do-not-call registry.

5. We now, on our own motion, issue this limited re-

consideration of the effective date of our determination that

an established business relationship will no longer be

sufficient to show that an individual or business has given

express permission to receive unsolicited facsimile adver-

tisements, as well as the amended unsolicited facsimile

provisions at 47 C.F.R. § 64.1200(a)(3)(i). Section 64.1200

(a)(3)(i), as amended, requires the sender of a facsimile

advertisement to first obtain from the recipient a signed,

written statement that includes the facsimile number to which

any advertisements may be sent and clearly indicates the

recipient’s consent to receive such facsimile advertisements

'* American Dietetic Association Request for Clarification or, in

the Alternative, A Stay of the Implementation of Regulations, filed

! August 6, 2003.

” Reed Elsevier Inc. Motion for Stay, filed August 12, 2003.

?? NAA and NNA Petition for Stay, filed August 8, 2003.

*! See ATA Request for Expedited Stay, filed July 25, 2003.

aii

aaa ia al

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from the sender.” The comments filed after the release of the

Report and Order indicate that riany organizations may need

additional time to secure this written permission from

individuals and businesses to whom they fax advertisements.

We believe that, in light of this new information, the public

interest would best be served by allowing senders of such

advertisements additional time to obtain such express permis-

sion before the new rules become effective. In addition, this

extension will allow the Commission the opportunity to

consider any petitions for reconsideration and other filings

that may be made on this issue.”’ We retain the discretion to

extend the effective date further should circumstances

warrant such an action.”

6. We emphasize that the only effective dates of the

Commission’s Report and Order extended by this Order

are: 1) the determination that an established business

relationship will no longer be sufficient to show that an

individual or business has given express permission to receive

unsolicited facsimile advertisements; and 2) the requirement

that the sender of a facsimile advertisement first obtain the

recipient’s express permission in writing. Therefore, until the

amended rule at 47 C.F.R. § 64.1200(a)(3)(i) becomes effec-

*” See 47 U.S.C. § 227(a)(4) for the definition of “unsolicited

advertisement.”

3 Petitions for reconsideration are due on August 25, 2003.

**We emphasize that our existing TCPA rules prohibiting the

transmission of unsolicited advertisements to a telephone facsimile

machine will remain in effect during the pendency of this extension.

Under these rules, those transmitting facsimile advertisements must have

an established business relationship or prior express permission from the

facsimile recipient to comply with our rules. In addition, the effective

date of the other amended facsimile rules remains unchanged by this

Order. See, e.g., 47 C.F.R. § 68.318(d) (amending the rules to require any

fax broadcaster that demonstrates a high degree of involvement in the

transmission of messages to be identified on the facsimile, along with the

identification of the sender).

582a

tive on January |, 2005, an established business relationship

will continue to be sufficient to show that an individual or

business has given express permission to receive facsimile

advertisements. The effective date of our amended definition

of an “established business relationship” is not affected by

our determination here.”°

7. We have considered and rejected ATA’s request to stay

the revisions to the rules implementing the TCPA to the

extent that such request extends beyond the fax rules

discussed above. Although the Commission has declined to

adopt a single standard for requests for injunctive relief, we

generally consider four criteria: (1) the likelihood of success

on the merits, (2) the threat of irreparable harm absent grant

of preliminary relief, (3) the degree of injury to other parties

if relief is granted, and (4) that a stay will be in the public

interest."° We conclude that ATA’s request does not satisfy

the factors governing the issuance of a stay.

8. The actions contained herein have not changed our

Final Regulatory Flexibility Analysis (FRFA), which is set

forth in the Report and Order. Thus, no supplemental FRFA

is necessary. In addition, the action contained herein imposes

no new or modified reporting and/or recordkeeping

requirements or burdens on the public.

9. Accordingly, IT IS ORDERED that, pursuant to

Sections 1-4, 222, 227, and 303(r) of the Communications

Act of 1934, as amended, 47 U.S.C. §§ 151-154, 222 and

227: and Section 1.108 of the Commission’s Rules, 47 C.F.R.

§§ 1.108, this Order on Reconsideration in CG Docket No.

°° Report and Order at para 113.

sion, 259 F.2d 921 (D.C. Cir. 1958). See also Replacement of Part 90 by

Part 88 to Revise the Private Land Mobile Radio Services and Modify the

Policies Governing Them, PR Docket No. 92-235, 15 FCC Red 7051,

7054 at para. 7 (1999).

=_— Ss.

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583a

02-278 IS ADOPTED and that the Report and Order, FCC

03-153, IS MODIFIED as set forth herein.

10. IT IS FURTHER ORDERED, subject to the extended

effective dates set forth above, that the National Association

of Realtors’ Request for Emergency Stay IS DISMISSED

without prejudice.

11. If IS FURTHER ORDERED, subject to the extended

effective dates set forth above, that the American Society of

Association Executives’ Petition for Stay IS DISMISSED

without prejudice.

12. IT IS FURTHER ORDERED, subject to the extended

effective dates set forth above, that Proximity Marketing’s

Request for Stay IS DISMISSED without prejudice.

13. IT IS FURTHER ORDERED, subject to the extended

effective dates set forth above, that the National Association

of Business Political Action Committees’ Request for Stay IS

DISMISSED without prejudice.

14. IT IS FURTHER ORDERED, subject to the extended

effective dates set forth above, that the Chamber of Com-

merce of the United States et al. Request for Stay IS

DISMISSED without prejudice.

15. IT IS FURTHER ORDERED, subject to the extended

effective dates set forth above, that the Business Users Coali-

tion’s Petition for Emergency Stay IS DISMISSED without

prejudice.

16. IT IS FURTHER ORDERED, subject to the extended

effective dates set forth above, that the American Business

Media’s Petition for Stay IS DISMISSED without prejudice.

17. IT IS FURTHER ORDERED, subject to the extended

effective dates set forth above, that the Air Conditioning

Contractors of America’s Petition for Emergency Stay IS

DISMISSED without prejudice.

584a

18. IT IS FURTHER ORDERED, subject to the extended

effective dates set forth above, that the American Dietetic

Association’s Request for Stay of the Implementation of

Regulations IS DISMISSED without prejudice.

19. IT IS FURTHER ORDERED, subject to the extended

effective dates set forth above, that Reed Elsevier Inc.’s

Motion for Stay IS DISMISSED without prejudice.

20. IT IS FURTHER ORDERED, subject to the extended

effective dates set forth above, that the Newspaper Associa-

tion of America and the National Newspaper Association’s

Petition for Stay IS DISMISSED without prejudice. _

21. IT IS FURTHER ORDERED, that the American

Teleservices Association Request for Expedited Stay IS

DISMISSED without prejudice to the extent it seeks a stay of

the rules affected by the extended effective dates set forth

above, but is OTHERWISE DENIED.

22. IT IS FURTHER ORDERED, that the effective date

for the Commission’s determination that an established

business relationship will no longer be sufficient to show that

an individual or business has given express permission to

receive unsolicited facsimile advertisements and the require-

ment that the sender of a facsimile advertisement first obtain

the recipient’s express permission in writing, as codified at 47

C.F.R. § 64.1200(a)(3)(i), IS January 1, 2005, and that this

Order on Reconsideration is effective upon publication in the

Federal Register.”’

FEDERAL COMMUNICATIONS COMMISSION

Marlene H. Dortch

Secretary

*” In light of the need to allow affected entities time to comply with the

new faxing rules, we find good cause, pursuant to 5 U.S.C. § 553(d), to

make this effective on less than thirty days’ notice.

585a

APPENDIX I

Before the

Federal Communications Commission

Washington, D.C. 20554

CG Docket No. 02-278

In the Matter of

Rules and Regulations Implementing the

Telephone Consumer Protection Act of 1991

REPORT AND ORDER

- Adopted: June 26, 2003

Released: July 3, 2003

By the Commission: Chairman Powell, Commissioners

Abernathy, Copps and Adelstein issuing separate statements.

586a

TABLE OF CONTENTS

Paragraph Number

a iinicsstysssssecssexvonsessesssevosescreceseees l

ce clicsissrnnancsnatesvcevnssenscosossecssees 4

A. Telephone Consumer Protection Act of 1991 ... 4

Neen tesa riilendeiaincseseacevecsssesesevess 6

C. Marketplace Changes Since 1992............:seee 8

D. FTC National Do-Not-Call Registry and

I I isascssscsasscncscsossseresesercesseoeees 9

Be Be Bee CBINS oo... cencsccceccesesssororeeee 12

F. Notice of Proposed Rulemaking...............:0:0+ 14

G. Do-Not-Call Implementation Act..............006 15

Ill. NATIONAL DO-NOT-CALL LIST................ 16

sth a tsncnesinsccssannevesocrocescecssnsesevesees 16

Nee ielnckapisanesscneccsesecocessssesees 25

1. National Do-Not-Call Registry..............::000 28

i iciisinisanrsessusctesovssconersssceseosees 42

3. Section 227(c)(3) Requirements................0++ 55

ea cciciascssisssscscosercsovcescooss 63

5. Consistency with State and FTC Do-Not-

Neen ae sctstaherensseessccsssenessesses 74

IV. COMPANY SPECIFIC DO-NOT-CALL LISTS... 86

A. Background............0+ a 86

ea niciecinssnscsesnicsrestasrosenseesses 90

1. Efficacy of the Company-Specific Rules ...... 90

587a

2.Amendments to the Company-Specific

in TI ceaccnniara erent uaubenaenecuemeeataa

Fe iSirditinebten iain

VI. ESTABLISHED BUSINESS RELATION-SHIP ..

Fe iisinktteiceiniecivsalcentamaict eae

BN aeeseciearesaeccseldctbenielanabatbon nt

1. Definition of Established Business

cc, OR EERSTE T ASAT IIe

2. Telecommunications Common Carriers......

3. Interplay Between Established Business

Relationship and Do-Not-Call Request.........

VII. TAX-EXEMPT NONPROFIT ORGANIZA-

Se TT icici siebeitii ania rasan dea ae

hi. Fe ecacisnicmiicces ee

ai rs NE eer

VII. AUTOMATED TELEPHONE _ DIALING

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i IIR secre nC ee

B, PWURCEIWG TPURIOES a oscicscsccssesscecsecensesesnazeonss

pa, aOR ICME oe mE MORON er CO

IX. ARTIFICIAL OR PRERECORDED VOICE

FURR NIIEN bins Sataseise cc traseniieenaeienorea tenia eens a

Fes IIT ics Scxcsiasidassacctseeecnteadatmaenscneaes

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100

109

112

113

119

124

125

128

129

131

135

136

139

588a

1. Offers for Free Goods or Services;

Information-Only Messages ..............:ssseeeeee

2. Identification Requirements ................00008

3. Radio Station and Television Broadcaster

Pe. TI ii cccncersiccssessssecenvnserescoentcnariccrsnexensenne

De - aisiistneeceacciocmtnneionintine

1. Maximum Rate on Abandoned Calls...........

2. Two-Second-Transfer Rule .........sssssssseeeeee

3. Prerecorded Message for Identification.......

4. Established Business Relationship ..............

DF I ei essiiheeirsiecicnenenccanisivnions

XI. WIRELESS TELEPHONE NUMBERG .............

Ph - FE a icitactsiimciensiarsiiiimiennvasi

Te. i thiinntieciedarccscncccmmiaeces

1. Telemarketing Calls to Wireless Numbers..

2. Wireless Number Portability and Pooling...

NEE, CALLER Te Ae cncissvisssscccessoensevesens

A, FE avi iivvcsscciesnssesenicsenensemntinen

Be 7 FN ccccansinstmncaccwvejetodenronssteomeiniaenate

XIII. UNSOLICITED FACSIMILE ADVERTISE-

Fe, Tain esses ccenisscasissinenivsccieemscerninsss

' ee ERO LO LONE TOP NCR SOE DE

1. Prior Express Invitation or Permission........

589a

2. Fu Fed eens 194

3. Pek DONE, ouienonneetin eee 198

4. Identification Requirements ...............0000... 203

XIV. PRIVATE RIGHT OF ACTION.............ccccceceees 204

A. BOGRQPOUl,..nciucsmaumde mie ree

SS. DROWNING. cccisicenementmn een 206

XV. INFORMAL COMPLAINT RULEG...............00+. 20°

XVI. TIME OF DAY RESTRICTIONS ............0..c00000 208

XVII. ENFORCEMENT PRIORITIES.................000000 211

AVI. OTHER Tee ans aan 215

A. Access to TCPA Inquiries and Complaints aces 215

B. Reports 10 Comptes. ccissicrcecessssereresssosaverceees bias 217

AIX. PROCEDURAL, Fee rvcssinccscsccscesvecssorsnvenssees 218

A. Regulatory Flexibility Act Analysis.................. 218

B. Paperwork Reduction Act Analysis...............0... 219

C. Late-Filed Comments ..siccccccccessnscesscsesesesneovorsses 220

D. Materials in Accessible Formats............cc0c0000. 221

AX. ORDERING CL AGI wivesscccctsctcccssccesectovesespie 222

Appendix A: Final Rules

Appendix B: Final Regulatory Flexibility Act Analysis

Appendix C: Comments Filed

Se a PRB LE EE til Rt a Ea -

590a

I. INTRODUCTION

1. In this Order, we revise the current Telephone Consumer

Protection Act (TCPA)' rules and adopt new rules to provide

consumers with several options for avoiding unwanted tele-

phone solicitations. Specifically, we establish with the

Federal Trade Commission (FTC) a national do-not-call reg-

istry for consumers who wish to avoid unwanted tele-

marketing calls. The national do-not-call registry will supple-

ment the current company-specific do-not-call rules for those

consumers who wish to continue requesting that particular

companies not call them. To address the more prevalent use

of predictive dialers, we have determined that a telemarketer

may abandon no more than three percent of calls answered by

a person and must deliver a prerecorded identification

message when abandoning a call. The new rules will also

require all companies conducting telemarketing to transmit

caller identification (caller ID) information, when available,

and prohibits them from blocking such information. The

Commission has revised its earlier determination that an

established business relationship constitutes express invita-

tion or permission to receive an unsolicited fax, and we have

clarified when fax broadcasters are liable for the transmission

of unlawful facsimile advertisements. We believe the rules

the Commission adopts here strike an appropriate balance

between maximizing consumer privacy protections and

avoiding imposing undue burdens on telemarketers.

2. It has now been over ten years since the Commission

adopted a broad set of rules that respond to Congress’s

directives in the TCPA. Over the last decade, the telemarket-

ing industry has undergone significant changes in the tech-

nologies and methods used to contact consumers. The

' Telephone Consumer Protection Act of 1991, Pub. L. No. 102-243,

105 Stat. 2394 (1991), codified at 47 U.S.C. § 227. The TCPA amended

Title II of the Communications Act of 1934, 47 U.S.C. § 201 et seq.

59la

Commission has carefully reviewed the record developed in

this rulemaking proceeding. The record confirms that these

marketplace changes warrant modifications to our existing

rules, and adoption of new rules if consumers are to continue

to receive the protections that Congress intended to provide

when it enacted the TCPA. The number of telemarketing calls

has risen steadily; the use of predictive dialers has

proliferated; and consumer frustration with unsolicited tele-

marketing calls continues despite the efforts of the states, the

Direct Marketing Association (DMA),’ and the company-

specific approach to the problem. Consumers often feel

frightened, threatened, and harassed by telemarketing calls.

They are angered by hang-ups and “dead air” calls, by do-

not-call requests that are not honored, and by unsolicited fax

advertisements. Many consumers who commented in this

proceeding “want something done” about unwanted solicita-

tion calls, and the vast majority of them support the

establishment of a national do-not-call registry. Congress,

too, has responded by enacting the Do-Not-Call Implementa-

tion Act (Do-Not-Call Act),’ authorizing the establishment of

a national do-not-call registry, and directing this Commission

to issue final rules in its second major TCPA proceeding that

maximize consistency with those of the FTC.

3. The Commission recognizes that telemarketing is a

legitimate method of selling goods and services, and that

many consumers value the savings and convenience it

provides. Thus, the national do-not-call registry that we adopt

here will only apply to outbound telemarketing calls and will

only include the telephone numbers of consumers who

* The Direct Marketing Association (DMA) is a trade association of

businesses that advertise their products and services directly to consumers

by mail, telephone, magazine, internet, radio or television. See also infra,

note 47.

* Do-Not-Call Implementation Act, Pub. L. No. 108-10, 117 Stat. 557

(2003), to be codified at 15 U.S.C. § 6101 (Do-Not-Call Act).

592a

indicate that they wish to avoid such calls. Consumers who

want to receive such calls may instead continue to rely on the

company-specific do-not-call lists to manage telemarketing

calls into their homes. Based on Congress’s directives in the

TCPA and the Do-Not-Call Act, the substantial record

developed in this proceeding, and on the Commission’s own

enforcement experience, we adopt these amended rules, as

described in detail below.

Il. BACKGROUND

A. Telephone Consumer Protection Act of 1991

4. On December 20, 1991, Congress enacted tne TCPA in

an effort to address a growing number of telephone marketing

calls and certain telemarketing practices thought to be an

invasion of consumer privacy and even a risk to public

safety.’ The statute restricts the use of automatic telephone

dialing systems, artificial and prerecorded messages, and

telephone facsimile machines to send unsolicited advertise-

ments. Specifically, the TCPA provides that:

It shall be unlawful for any person within the United

States—

(A) to make any call (other than a call made for emer-

gency purposes or made with the prior express consent

of the called party) using any automatic telephone

dialing system or an artificial or prerecorded voice—

(i) to any emergency telephone line (including any

“911” line and any emergency line of a hospital,

medical physician or service office, health care

facility, poison control center, or fire protection or law

enforcement agency);

(ii) to the telephone line of any guest room or patient

room of a hospital, health care facility, elderly home,

or similar establishment; or

* See TCPA, Section 2(5), reprinted in 7 FCC Red 2736 at 2744.

593a

(ili) to any telephone number assigned to a paging

service, cellular telephone service, specialized mobile

radio service, or other radio common carrier service,

or any service for which the called party is charged for

the call;

(B) to initiate any telephone call to any residential

telephone line using an artificial or prerecorded voice to

deliver a message without the prior express consent of

the called party, unless the call is initiated for emergency

purposes or is exempted by rule or order by the

Commission under paragraph (2)(B);

or other device to send an unsolicited advertisement to a

telephone facsimile machine; or

(D) to use an automatic telephone dialing system in such

a way that two or more telephone lines of a multi-line

business are engaged simultaneously.°

Under the TCPA, those sending fax messages or transmitting

artificial or prerecorded voice messages are subject to certain

identification requirements.° The statute also provides

consumers with several options to enforce the restrictions on

unsolicited telemarketing, including a private right of action.’

* 47 U.S.C. § 227(b)(1).

°47 U.S.C. §§ 227(d)(1)(B) and (d)(3)(A). See also Rules and

Regulations Implementing the Telephone Consumer Protection Act of

1991, CC Docket No. 92-90, Order on Further Reconsideration, 12 FCC

Red 4609, 4613, para. 6 (1997) (1/997 TCPA Reconsideration Order), in

which the Commission found that “[s]ection 227(d)(1) of the statute

mandates that a facsimile include the identification of the business, other

entity, or individual creating or originating a facsimile message and not

the entity that transmits the message.” (footnotes emitted).

"The TCPA permits consumers to file suit in state court if an entity

violates the TCPA prohibitions on the use of facsimile machines,

automatic telephone dialing systems, and artificial or prerecorded voice

messages and telephone solicitation. 47 U.S.C. §§ 227(b)(3) and (c)(5).

he es ee

594a

5. The TCPA requires the Commission to prescribe regula-

tions to implement the statute’s restrictions on the use of

autodialers, artificial or prerecorded messages and unsolicited

facsimile advertisements.* The TCPA also requires the Com-

mission to “initiate a rulemaking proceeding concerning the

need to protect residential telephone subscribers’ privacy

rights” and to consider several methods to accommodate

telephone subscribers who do not wish to receive unsolicited

advertisements, including live voice solicitations.’ Specifi-

cally, section 227(c)(1) requires the Commission to “compare

and evaluate alternative methods and procedures (including

the use of electronic databases, telephone network technolo-

gies, special directory markings, industry-based or company-

specific ‘do not call’ systems, and any other alternatives,

individually or in combination) for their effectiveness in

protecting such privacy rights, and in terms of their cost and

other advantages and disadvantages.”'° The TCPA specifi-

cally authorizes the Commission to “require the establishment

and operation of a single national database to compile a list of

Consumers may recover actual damages or receive up to $500 in damages

for each violation, whichever is greater. If the court finds that the entity

willfully or knowingly violated the TCPA, consumers may recover an

amount equal to not more than three times this amount. 47 U.S.C.

§ 227(b)(3). Consumers may also bring their complaints regarding TCPA

violations to the attention of the state attorney general or an official

designated by the state. This state entity may bring a civil action on

behalf of its residents to enjoin a person or entity engaged in a pattern of

telephone calls or other transmissions in violation of the TCPA. 47 U.S.C.

§ 227(f)(1). Additionally, a consumer may request that the Commission

take enforcement actions regarding violations of the TCPA and the

regulations adopted to enforce it. See 47 C.F.R. § 1.41 on informal

requests for Commission action and 47 C.F.R. § 1.716 on the Commis-

sion’s process for complaints filed against common carriers.

* 47 U.S.C. § 227(b)(2).

* 47 U.S.C. § 227(c)(1)-(4).

' 47 U.S.C. § 227(c)(1 (A).

595a

telephone numbers of residential subscribers who object to

receiving telephone solicitations.”''

B. TCPA Rules

6. In 1992, the Commission adopted rules implementing

the TCPA, including the requirement that entities making

telephone solicitations institute procedures for maintaining

do-not-call lists.’ Pursuant to the Commission’s rules, a

person or entity engaged in telemarketing is required to

maintain a record of a called party’s request not to receive

future solicitations for a period of ten years.'’ Telemarketers

must develop and maintain written policies for maintaining

their lists,'* and they are required to inform their employees

of the list’s existence and train them to use the list.'* Com-

mission rules prohibit telemarketers from calling residential

telephone subscribers before 8 a.m. or after 9 p.m.'° and

require telemarketers to identify themselves to called par-

ties.'’ As mandated by the TCPA, the Commission’s rules

also establish general prohibitions against autodialed calls

being made without prior express consent to certain locations,

"47 U.S.C. § 227(c)(3).

? See Rules and Regulations Implementing the Telephone Consumer

Protection Act of 1991, CC Docket No. 92-90, Report and Order, 7 FCC

Red 8752 (1992) (1992 TCPA Order); see also 47 C.F.R. § 64.1200.

” Initially telemarketers were required to honor a do-not-call request

indefinitely, The Commission later modified its rules to require that the

request be honored for a ten-year period. See Rules and Regulations

Implementing the Telephone Consumer Protection Act of 1991, CC

Docket No. 92-90, Memorandum Opinion and Order, 10 FCC Red 12391,

12397-98, para. 14 (1995) (/995 TCPA Reconsideration Order); 47

C.F.R. § 64.1200(e)(2)(vi).

"47 C.R.R. § 64.1200(e)(2)(i),

'S 47 C.F.R. § 64.1200(e)(2)(ii).

"” 47 C.F.R. § 64.1200(e)(2)(iv).

596a

including emergency lines or health care facilities,'* the use

of prerecorded or artificial voice message calls to

residences,"’ line seizure by prerecorded messages,” and the

transmission of unsolicited advertisements by facsimile ma-

chines.”' The TCPA rules provide that facsimile and prere-

corded voice transmissions, as well as telephone facsimile

machines, must meet specific identification requirements.”

7. In 1995 and 1997, the Commission released orders ad-

dressing petitions for reconsideration of the 1/992 TCPA

Order. In a Memorandum Opinion and Order released on

August 7, 1995, the Commission exempted from its TCPA

rules calls made on behalf of tax-exempt nonprofit organiza-

tions, clarified treatment of debt collection calls, and required

telemarketers to honor a do-not-call request for a period of

ten years.”> The Commission also extended its TCPA rules to

respond to technical advances in computer-based facsimile

modems that enable solicitors to become “fax broadcasters.”

On April 10, 1997, the Commission issued an Order on

Further Reconsideration requiring that all facsimile transmis-

sions contain the identifying information of the business,

other entity, or individual creating or originating the facsimile

message, rather than the entity that transmits the message.”

"8 47 C.F.R. § 64.1200(a)(1)(i)-(iii).

'" 47 C.F.R. § 64.1200(a)(2).

2" 47 C.F.R. § 64.1200(a)(3).

2 47 C.F.R. §§ 64.1200(d)(1) and (2); 47 C.F.R. § 68.318(d).

23 1995 TCPA Reconsideration Order, 10 FCC Red at 12397-401,

paras, 12-19.

** 1995 TCPA Reconsideration Order, 10 FCC Red at 12404-06, paras.

27-31,

*S 1997 TCPA Reconsideration Order, \2 FCC Red at 4612-13, para. 6.

The Commission also “{did] not find anything in the TCPA that would

prohibit a facsimile broadcast provider from supplying identification of

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C. Marketplace Changes Since 1992

8. The marketplace for telemarketing has changed signify-

cantly in the last decade. When the TCPA was enacted in

1991, Congress determined that 300,000 solicitors were used

to telemarket goods and services to more than 18 million

Americans every day. Congress also found that in 1990

sales generated through telemarketing amounted to $435

billion dollars.*’” Some estimate that today telemarketers may

attempt as many as 104 million calls to consumers and

businesses every day,” and that telemarketing calls generate

itself and the entity originating a message if it arranges with the message

sender to do so.” /d. at 4613, para. 6.

*” See TCPA, Section 2(4), reprinted in 7 FCC Red 2736 at 2744.

8 In attempting to estimate the number of outbound marketing calls

made each day in the United States, representatives of the Direct

Marketing Association (DMA) have stated that, with as many as | million

telemarketing representatives making 13 calls an hour, working 8 hours a

day, it is possible that 104 million outbound calls are made to businesses

and consumers every day. They noted that, of these calls, as many as 41%

of them may be abandoned (because they get busy signals, no answer,

hang-ups, or answering machines). See transcript from FTC Do-Not-Call

Forum, Testimony of Jerry Cerasale, DMA, June 6, 2002 at 68. Another

Study presented to the FTC during its proceeding, estimates that the

annual number of outbound calls that are answered by a consumer is

16,129,411,765 (i.e., 16 billion calls). This figure does not include those

calls that are abandoned. James C. Miller, III, Jonathan S. Bowater,

Richard S. Higgins, and Robert Budd, “An Economic Assessment of

Proposed Amendments to the Telemarketing Sales Rule,” June 5, 2002 at

28, Att. | (prepared for the Consumer Choice Coalition and its members,

ACI Telecentrics Coverdell & Company, Discount Development

Services, HSN LP a/b/a HSN and Home Shopping Network, Household

Credit Services) MBNA America Bank, MemberWorks Incorporated,

Mortgage Investors Corporation, Optima Direct, TCIM Inc., Trilegiant

Corporation and West Corporation). See Telemarketing Sales Rule, Final

Rule, Federal Trade Commission, 68 Fed. Reg. 4580 at 4629-30, n.591

(Jan. 29, 2003) (FTC Order).

;

”

;

598a

over $600 billion in sales each year.” The telemarketing

industry is considered the single largest direct marketing

system in the country, representing 34.6% of the total U.S.

sales attributed to direct marketing. The number of

telemarketing calls, along with the increased use of various

technologies to contact consumers, has heightened public

concern about unwanted telemarketing calls and control over

the telephone network. Autodialers can deliver prerecorded

messages to thousands of potential customers every day.

Predictive dialers,’’ which initiate phene calls while tele-

marketers are talking to other consumers, frequently abandon

calls before a telemarketer is free to take the next call.** Using

” This figure represents telemarketing sales to consumers and

businesses. See Seth Stern, “Will feds tackle telemarketers?” (April 15,

2002) <http://www.csmonitor.com/2002/0415/p16s01l-wmcn.html> (cit-

ing Direct Marketing Association statistics).

study presented by Direct Marketing Association Telephone Mar-

keting Council, <http://www.third-wave.net/economics.htm> (visited

July 3, 2002).

" * predictive dialer is an automated dialing system that uses a

complex set of algorithms to automatically dial consumers’ telephone

numbers in a manner that “predicts” the timie when a consumer will

answer the phone and a telemarketer will be available to take the call.

Such software programs are set up in order to minimize the amount of

downtime for a telemarketer. In some instances, a consumer answers the

phone only to hear “dead ai:” because no telemarketer is free to take the

call. See Telemarketing Sales Rule, Notice of Proposed Rulemaking,

Federal Trade Commission, 67 Fed. Reg. 4492 at 4522 (January 30, 2002)

(FTC Notice).

*? Bach telemarketing company can set its predictive dialer software

for a predetermined abandonment rate (i.e., the percentage of hang-up

calls the system will allow). The higher the abandonment rate, the higher

the number of hang-up calls. High abandonment rates increase the

probability that a customer will be on the line when the telemarketer

finishes each call. It also, however, increases the likelihood that the

telemarketer will still be on a previously placed call and not be available

599a

predictive dialers allows telemarketers to devote more time to

selling products and services rather than dialing phone

numbers, but the practice inconveniences and aggravates

consumers who are hung up on. Despite a general ban on

faxing unsolicited advertisements,” and aggressive enforce-

ment by the Commission,” faxed advertisements also have

proliferated, as facsimile service providers (or “fax broad-

casters”) enable sellers to send advertisements to multiple

destinations at relatively little cost. These unsolicited faxes

impose costs on consumers, result in substantial inconven-

ience and disruption, and also may have serious implications

for public safety.*°

when the consumer answers the phone, resulting in “dead air” or a hang-

up. See FTC Notice, 67 Fed. Reg. at 4523.

* 47 U.S.C. § 227(b)(1)(C) and 47 C.F.R. § 64.1200a)(3).

The Commission or the Commission’s Enforcement Bureau have

issued forfeiture orders totaling $1.56 million for violations of the

TCPA’s prohibition on unsolicited fax advertisements. The Commission

has also proposed a $5,379,000 forfeiture against a fax broadcaster. See

Fax.com, Inc. Apparent Liability for Forfeiture, Notice of Apparent

Liability for Forfeiture, 17 FCC Red 15927 (2002) (Fax.com NAL), stayed

Missouri v. American Blast Fax, No. 4:00CV933SNL (E.D. Mo. Aug. 29,

2002). The Enforcement Bureau has also issued 189 citations for such

prohibited faxes. For a description of the Commission’s enforcements

actions involving the TCPA, see <http://www.fcc.gov/eb/tcd/working.

html>. Under section 503 of the Act, the Commission is required in an

enforcement action to issue a warning citation to any violator that does

not hold a Commission authorization. Only if the non-licensee violator

subsequently engages in conduct described in the citation may the

Commission propose a forfeiture, and the forfeiture may only be issued as

to the subsequent violations. See 47 U.S.C. §§ 503(b)(5), (b)(2)(C).

* See, e.g., Fax.com NAL, 17 FCC Red at 15932-33, para. 9, which

describes a medical doctor’s complaint about unsolicited fax advertise-

ments he received on a line that is reserved for the receipt of patient

medical data.

‘e

}

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D. FTC National Do-Not-Call Registry and Telemarketing

Rules

9. In response to these changes in the marketplace, the FTC

recently amended its own rules to better proiect consumers

from deceptive and abusive telemarketing practices, including

those that may be abusive of consumers’ interest in protecting

their privacy. On December 18, 2002, the FTC released an

order adopting a national do-not-call registry to be maintained

by the federal government to help consumers avoid unwanted

telemarketing calls. In that order, the FTC also adopted other

changes to its Telemarketing Sales Rule (TSR), which are

based on its authority under the 1994 Telemarketing Con-

sumer Fraud and Abuse Prevention Act. The FTC’s

amended TSR supplements its current company-specific do-

not-call rules with a provision allowing consumers to stop

unwanted telemarketing calls by registering their telephone

numbers with a national do-not-call registry at no cost.

Telemarketers will be required to pay fees to access the

database and to “scrub” their calling lists of the telephone

numbers in the database.*’ The FTC's list will not cover those

entities over which it has no jurisdiction, including common

cartiers, banks, credit unions, savings and loans, companies

engaged in the business of insurance, and airlines.** It also

Telemarketing Sales Rule, 16 C.F.R. Part 310, on August 16, 1995,

pursuant to the Telemarketing Consumer Fraud and Abuse Prevention Act

(Telemarketing Act), 15 U.S.C. §§ 6101-6108. The Telemarketing Act,

which was signed into law on August 16, 1994, directed the FTC to issue

a rule prohibiting deceptive and abusive telemarketing acts or practices.

FTC Notice, 67 Fed. Reg. at 4492-93.

— “Scrubbing” refers to comparing a do-not-call list to a company’s

call list and eliminating from the call list the telephone numbers of

consumers who have registered a desire not to be called.

1 Despite these jurisdictional limitations, the FTC stated that it can

reach telemarketing activity conducted by non-exempt entities. Therefore,

it maintains that when an exempt financial institution, telephone company,

601a

will not apply to intrastate telemarketing calls. In addition,

the FTC concluded that- nonprofit organizations are not

subject to the national do-not-call list; however, they must,

when using for-profit telemarketers, comply with the com-

pany-specific do-not-call rules.*°

10. The FTC indicated in its order that it does not intend

the national do-not-call registry to preempt state do-not-call

laws. Instead, i* will allow all states, and the DMA if it so

desires, to download into the national registry the telephone

numbers of consumers on their lists. The FTC anticipates a

relatively short transition period leading to one harmonized

registry, and said that it will work with the states to coordi-

nate implementation, minimize duplication, and maximize

efficiency for consumers.*° The FTC has also announced that

online registration for the do-not-call registry v.ill be avail-

able nationwide on or around July 1, 2003. Telephone

registration will be open on the same date for consumers in

States west of the Mississippi River and open to the entire

insurance company, airline, or nonprofit entity conducts its telemarketing

campaign using a third-party telemarketer not exempt from the amended

TSR, then that campaign is subject to the provisions of the TSR. See FTC

Order, 68 Fed. Reg. 4589 at 4587.

°° The FTC’s national do-not-call registry and other amendments to the

TSR have been challenged on grounds that a national do-not-call registry

violates the First Amendment and that the FTC exceeded its statutory

authority under the Telemarketing Consumer Fraud and Abuse Prevention

Act. See Mains.ream Marketing Services, Inc. v. F TC, No. 03-N-0184

(D. Colo. filed Jan. 29, 2003). See also U.S. Security et al v. FTC, Civ.

No. 03-122-W (W.D. Okla. filed Jan. 29, 2003). On March 26, 2003, the

U.S. District Court for the Western District of Oklahoma denied

plaintiffs’ Motion for Preliminary Injunction of the FTC’s abandoned call

rules, stating that plaintiffs “have failed to show a substantial likelihood

that they will prevail on the merits of their challenges to the Final Rule.”

See U.S. Security et al. vs. FTC, No. Case CIV-03-122-W (W.D. Okla.

March 26, 2003).

*° See FTC Order, 68 Fed. Reg. 4580 at 4641.

POs AAR TAA AY, 1 BARAT Std oe BB A Pian | AY oe

602a

country on July 8, 2003. On October 1, 2003, the FTC and

the States will begin enforcing the national do-not-call

provisions of the amended TSR.”

!! The FTC also adopted new rules on the use of predict-

ti tialers and the transmission of caller ID information. The

um ued TSR prohibits telemarketers from abandoning any

pro ion, that to avoid liability, a telemarketer must, among

sc’ +’ other requirements, abandon no more than three

perceni ot uii calls answered by a person.” Telemarketers will

also be required to transmit the telephone number, and, when

made available by the telemarketer’s carrier, the name of the

telemarketer, to any caller identification service.”

E. State Do-Not-Call Lists

12. A growing number of states have also adopted or are

considering legislation to establish statewide do-not-call lists.

To date, 36 states have passed “do-not-call” statutes, “* and

*' See FTC press materials at <http://www.ftc.gov/opa/2003/06/

dncaccelerated.htm> (accessed June 3, 2003).

*2 See FTC Order, 68 Fed. Reg. 4580 at 4641-45; 16 C.F.R. §§ 310.4

(b)(1)(iv) and 310.4(b)(4).

3 See FTC Order, 68 Fed. Reg. 4580 at 4623-28; 16 C.F.R. § 310.4

(a)(7).

6 Alabama, Alaska, Arizona, Arkansas, California, Colorado,

Connecticut, Florida, Georgia, Idaho, Illinois, Indiana, Kansas, Kentucky,

Louisiana, Maine, Massachusetts, Michigan, Minnesota, Mississippi,

Missouri, Montana, New Jersey, New Mexico, New York, North Dakota,

Oklahoma, Oregon, Pennsylvania, South Dakota, Tennessee, Texas, Utah,

Vermont, Wisconsin and Wyoming have no-call laws. Of these states,

Connecticut, Maine, Michigan, Pennsylvania, Vermont, and Wyoming

require telemarketers to use the DMA’s Telephone Preference Service

(TPS) list. See infra note 47. Alaska’s statute requires telephone

companies to place a black dot in the telephone directory by the names of

consumers who do not wish to receive telemarketing calls.

603a

numerous others have considered similar bills.*” Consumers

remain enthusiastic about do-not-call lists, as they continue to

not-call lists vary in the methods used for collecting data, the

fees charged, and the types of entities required to con:ply

with their restrictions. Some state statutes provide for state-

managed do-not-call lists, while others require telemarkcic.’s

to use the Direct Marketing Association’s Telephone

Preference Service.*’ In some states, residents can register for

*> States that are considering laws to create state-run do-not-call lists

are Delaware, District of Columbia, Hawaii, lowa, Maryland, Michigan,

Nebraska, Nevada, North Carolina, Ohio, Rhode Island, South Carolina,

Washington, and West Virginia.

6 In Indiana, more than 1,000,000 residential telephone numbers have

been submitted to the State’s do-not-call list. In Missouri, more than

1,000,000 residential telephone numbers are now enrolled in the State’s

do-not-call database, placing approximately 40% of the State’s house-

holds on that State’s do-not-call list. In Tennessee, 762,000 telephone

numbers have been registered, representing an estimated 33% cof al!

households. In New York, the number of residential telephone numbers

enrolled on that State’s do-not-call list is nearly 2 million. Connecticut’s

do-not-call list contains nearly 400,000 telephone numbers, and Georgia’s

is nearing 360,000. Colorado has 977,000 registered phone numbers,

almost half of the number of residential phone lines in the state. Texas

has more than 782,000 registered phone lines. Kentucky has 740,000

registered phone lines, representing 46% of Kentucky residents. The

Kansas list contains more than 367,000 phone lines. Approximately

1,600,000 residents enrolled in Pennsylvania’s registry in less than six

weeks. See NAAG Comments at 6, n.5.

* See, e.g., Wyoming (Wyo. Stat. Ann. § 40-12-301) and Maine (Me.

Rev. Stat. Ann. tit. 32, § 14716 (2003). Established in 1985, the DMA’s

Telephone Preference Service (TPS) is a list of residential telephone

numbers for consumers who do not wish to receive telemarketing calls.

The DMA requires its members to adhere to the list. Telemarketers who

are not members of DMA are not required to use the list, but may

purchase the TPS for a fee. See <http://www.dmaconsumers.org/off

telephonelist.html> (accessed April 8, 2003).

itactinte Rae Cone:

SSA RIG le a Th

Pe OT ASP ee eee

604a

the do-not-call lists at no charge.” In others, telephone

subscribers must pay a fee. For example, Georgia requires its

residents to pay $5 to place their phone numbers on the do-

not-call list for a period of two years.” To register with the

Texas do-not-call list, residents must pay $2.25 for three

years.’ In most states, telemarketers must pay to access the

state do-not-call list if they wish to call residents in that state;

however, such access fees vary from state to state. In Oregon,

telemarketers must pay $120 per year to obtain the state do-

not-call list;°' in Missouri, the fee is $600 per year, although

telemarketers can pay less if they want only numbers from

certain area codes.” The state “do-not-cali” statutes provide

varying exceptions to their requirements.

13. As state legislatures continue to consider their own do-

not-call laws, others have, in anticipation of the national do-

not-call registry, begun the process of harmonizing their lists

with the national list. The Illinois legislature, for example,

passed a bill to reconcile differences between the state and

federal no-call laws. The measure would make the FTC’s

national no-call list the official state list for Illinois and would

direct the Illinois Commerce Commission to work with local

exchange providers on how to inform consumers about the

existence of the list.°’ California’s Attorney General’s office

8 See, e.g., Connecticut (Conn. Gen. Stat. Ann. § 42-288a); Indiana

(H.B. 1222, to be codified at Ind. Code Ann. § 24.4.7); Missouri (Mo.

Rev. Stat. § 407.1098); and Tennessee (Tenn. Code Ann. § 65-4-404

(2002)); see also rules at Tenn. Comp. R & Regs. Chap. 1220-4-11).

49 See Ga. Code Ann. § 46-5-27 (2002); see also rules at Ga. Comp. R

& Regs. R. 515-14-1.

§ 43.001.

*| See Or. Rev. Stat. § 646.574.

52 See Mo. Rev. Stat. § 407.1098.

3 See Illinois H.B. 3407.

60Sa

is allowing residents to pre-register for the national registry

on the internet, and says it will deliver the pre-registered

California telephone numbers to the FTC as soon as it is

ready to receive them.” The FTC indicated in its order that it

will take some time to harmonize the various state do-not-call

registries with the national registry.» While some states will

be able to transfer their state “do-not-call” registration infor-

mation by the time telemarketers first gain access to the

national registry, other states may need from 12 to 18 months

to achieve those results.

F. Notice of Proposed Rulemaking

14. On September 18, 2002, the Commission released a

Memorandum Opinion and Order and Notice of Proposed

Rulemaking seeking comment on whether the Commission’s

rules need to be revised in order to carry out more effectively

Congress’s directives in the TCPA.”’ Specifically, we sought

comment on whether to revise or clarify our rules governing

unwanted telephone solicitations’ and the use of automatic

telephone dialing systems,” prerecorded or artificial voice

messages,”’ and telephone facsimile machines.” We also

* See <http://nocall.doj.state.ca.us/> (accessed April 8, 2003).

*° See FTC Order, 68 Fed. Reg. 4580 at 4641.

7 Rules and Regulations Implementing the Telephone Consumer

Protection Act of 1991, Notice of Proposed Rulemaking (NPRM) and

Memorandum Opinion and Order (MO&O), 17 FCC Rcd 17459, CG

Docket No. 02-278 and CC Docket No. 92-90 (2002) (2002 Notice). In

the MO&O, the Commission closed and terminated CC Docket No. 92-90

and opened a new docket to address the issues raised in this proceeding.

*8 2002 Notice, 17 FCC Red at 17468-71, paras. 13-17.

*? 2002 Notice, 17 FCC Red at 17473-76, paras. 23-27.

®° 2002 Notice, 17 FCC Red at 17477-81, paras. 30-35.

°! 2002 Notice, 17 FCC Red at 17482-84, paras. 37-40.

OF eT te

606a

sought comment on the effectiveness of company-specific do-

not-call lists.” In addition, we sought comment on whether to

revisit the option of establishing a national do-not-call list™

and, if so, how such action might be taken in conjunction

with the FTC’s proposal to adopt a national do-not-call list

and with various state do-not-call lists.“ Lastly, we sought

comment on the effect propostu policies and rules would

have on small business entities, including inter alia those that

engage in telemarketing activities and those that rely on

telemarketing as a method to solicit new business.” Follow-

ing the FTC’s announcement that it had amended its TSR, the

Commission extended the reply comment period in this

proceeding to ensure that all interested parties had ample

opportunity to comment on possible Commission action in

light of the FTC’s new rules.”

G. Do-Not-Call Implementation Act

15. On March 11, 2003, the Do-Not-Call Act was signed into

law, authorizing the FTC to collect fees from telemarketers

for the implementation and enforcement of a do-not-call

registry. The Do-Not-Call Act also requires the FCC to issue

a final rule in its ongoing TCPA proceeding within 180 days

of enactment, and to consult and coordinate with the FTC to

“maximize consistency” with the rule promulgated by the

FTC. Congress recognized that because the FCC is bound by

62 9902 Notice, 17 FCC Red at 17468-71, paras. 13-17.

63 9002 Notice, 17 FCC Red at 17487-96, paras. 49-66.

64 coe FTC Notice, 67 Fed. Reg. 4492 and FTC Order, 68 Fed. Reg.

4580.

65 9902 Notice, 17 FCC Red at 17497-501, paras. 70-80.

® On December 20, 2002, the Commission extended its reply comment

period until January 31, 2003. See Consumer & Governmental Affairs

Bureau Announces An Extension of Time To File Reply Comments on the

Telephone Consumer Protection Act (TCPA) Rules, Public Notice, DA

02-3554 (rel. Dec. 20, 2002).

607a

the TCPA, it would not be possible for the FCC to adopt rules

that are idew*‘eal to those of the FTC in every instance.’ In

those inst...ces “here such inconsistencies exist, Congress

stated that either the FTC or FCC must address them admini-

stratively or Congress must address them legisla-tively.” The

FTC’s recent rule changes expand that agency’s regulation of

telemarketing activities and require coordination to ensure

consistent and non-redundant federal enforcement. The

FCC’s jurisdiction over telemarketing practices, how-ever, is

significantly broader than the FTC’s. The FCC staff intends

to negotiate a Memorandum of Understanding be-tween the

respective agencies to achieve an efficient and effective

enforcement strategy that will promote compliance with

federal regulations. The FCC is required to report to Congress

within 45 days after the issuance of final rules in this

proceeding, and annually thereafter.” The Commiss-

ion released a Further Notice of Proposed Rulemaking on

March 25, 2003, seeking comment on the Do-Not-Call Act’s

requirements.” By this Order, we are complying with

Congress’s directives to issue final rules in our TPCA

proceeding within 180 days of the Do-Not-Call Act’s

enactment. Furthermore, we have consulted and coordinated

®’ See H.R. REP. No. 108-8 at 4 (2003), reprinted in 2003

U.S.C.C.A.N, 688, 671.

The Do-Not-Call Act provides that the FTC and FCC shall each

transmit a report to Congress which shall include: “(1) an analysis of the

telemarketing rules promulgated by both the Federal Trade Commission

and the Federal Communications Commission; (2) any inconsistencies

between the rules promulgated by each such Commission and the effect of

any such inconsistencies on consumers, and persons paying for access to

the registry; and (3) proposals to remedy any such inconsistencies.” See

Do-Not-Call Act, Sec. 4(a).

” Rules and Regulations Implementing the Telephone Consumer Pro-

tection Act of 1991, CG Docket No. 02-278, Further Notice of Proposed

Rulemaking, FCC 03-62 (rel. March 25, 2003) (Further Notice).

SOK a

608a

with the FTC to adopt a national do-not-call list and other

telemarketing rules that maximize consistency with the FTC’s

amended Telemarketing Sales Rule.’’ Pursuant to the

requirements of the Do-Not-Call Act, the Commission will

note the remaining inconsistencies between the FCC and FTC

rules in the report to Congress. The Commission will also

continue to work, within the framework of the TCPA, to

maximize consistency with the FTC’s rules.

Ill. NATIONAL DO-NOT-CALL LIST

A. Background

16. Section 227. The TCPA requires the Commission to

protect residential telephone subscribers’ privacy rights to

avoid receiving telephone solicitations to which they object.”

In so doing, section 227(c)(1) directs the Commission to

“compare and evaluate alternative methods and procedures”

including the use of electronic databases and other alterna-

tives in protecting such privacy rights.”’ Pursuant to section

227(c)(3), the Commission “may require the establishment

and operation of a single national database to compile a list of

telephone numbers of residential subscribers who object to

receiving telephone solicitations, and to make that compiled

list and parts thereof available for purchase.””* If the Com-

mission determines that adoption of a national database is

warranted, section 227(c)(3) enumerates a number of specific

”! See Comments filed by the FTC in response to the Commission’s

Further Notice. See also NARUC Winter Committee Meetings, February

23-26, 2003, at which FCC and FTC staff discussed the national do-not-

call registry and ways to harmonize federal and state programs, Letter

from James Bradford Ramsay, NARUC General Counsel, to FCC filed

March 14, 2003 (NARUC ex parte).

” 47 U.S.C. § 227(c)(1).

47 U.S.C. § 227(c)(1A).

47 U.S.C. § 227(c)(3).

609a

statutory requirements that must be satisfied.” Additionally,

section 227(c)(4) requires the Commission to consider the

different needs of telemarketers operating on a local or

regionnal basis and small businesses.” In addition to our

general authority over interstate communications, section

2(b) of the Communications Act specifically provides the

Commission with the authority to apply section 227 to

intrastate communications.”

17. TCPA Order and 2002 Notice. The Commission

initially considered the possibility of adopting a national do-

not-call database in the 1992 TCPA Order. At that time, the

Commission declined to adopt a national do-not-call registry

citing concerns that such a database would be costly and

difficult to establish and maintain in a reasonably accurate

form.”* The Commission noted that frequent updates would

be required, regional telemarketers would be forced to pur-

chase a national database, costs might be passed on to con-

sumers, and the information compiled could present problems

in protecting consumer privacy. The Commission opted

instead to implement an alternative approach requiring com-

mercial telemarketers to maintain their own company-specific

lists of consumers who do not wish to be called.”

” See 47 U.S.C § 227(c)(3)(A)-(L).

” 47 U.S.C. § 152(b). See also Texas v. American Blast Fax, 121 F.

Supp. 2d 1085 at 1087-89 (W.D. Tex. 2000), Minnesota v. Sunbelt

Communications and Marketing, Civil No. 02-CV-770 (D. Minn. Sept. 4,

2002).

™ 1992 TCPA Order, 7 FCC Red at 8760, para. 14. At that time

commenters estimated the start-up and operational costs for a national

database in the first year could be as high as $80 million. /d. at 8758,

para. I 1.

” See infra paras. 86-96 for a discussion of the company-specific do-

not-call requirements.

610a

18. In the 2002 Notice, the Commission sought comment

on whether to revisit its 1992 determination not to adopt a

national do-not-call list." As evidenced by the persistent

consumer complaints regarding unwanted telephone solicita-

tions, the Commission concluded that the time was ripe to

revisit this issue as part of its overall review of the TCPA

rules.*' In so doing, the Commission noted that the increasing

number of telemarketing calls over the last decade, along with

the increased use of various technologies, such as predictive

dialers, to contact consumers, has heightened public concern

about unwanted telemarketing calls and control over the

telephone network.” The Commission also noted that tech-

nological innovations may make the creation and mainte-

nance of a national do-not-call database more viable than in

the past. Therefore, the Commission sought comment on

whether a national do-not-call list should be adopted and, if

so, how such a list could be implemented in the most efficient

and effective manner for consumers, businesses, and regula-

tors. The Commission noted that a national list would provide

consumers with a one-step method for preventing unwanted

telemarketing calls. This option could be less burdensome for

consumers than repeating requests on a case-by-case basis,

particularly in light of the number of entities that conduct

80 5902 Notice, 17 FCC Red at 17487-96, paras. 49-66. On December

20, 2002, the Commission extended its reply comment period to allow

parties an opportunity to comment on the FTC's order establishing a

national do-not-call database for those entities over which it has

jurisdiction. See Consumer & Governmental Affairs Bureau Announces

An Extension of Time To File Reply Comments on the Telephone

Consumer Protection Act (TCPA) Rules, Public Notice, DA 02-3554 (rel.

Dec. 20, 2002).

5! 5902 Notice, 17 FCC Red at 17487-88, para. 49 (also noting that the

FTC had received over 40,000 comments in response to its Notice on

telemarketing). »

82 5002 Notice, 17 FCC Red at 17464, para. 7, n.34 (citing estimate

that as many as 104 million outbound calls are made every day).

6lla

telemarketing today. In particular, the Commis-sion sought

comment on: (1) whether the cost, accuracy, and privacy

concerns noted in 1992 remain relevant today; (2) the

effectiveness of the company-specific list in protecting

consumer privacy rights; (3) changes in the technology or the

marketplace that might influence this analysis; (4) the consti-

tutionality of a national database; (5) satisfying the statutory

requirements of section 227(c); and (6) the potential reiation-

ship of a national database with the FTC’s proposed rules and

various state-adopted do-not-call registries.*°

19. The issues relating to the adoption and implementation

of a national do-not-call registry generated extensive com-

ment from consumers, businesses, and state governments.

Individual consumers and consumer interest groups over-

whelmingly support the adoption of a national do-not-call

list.** In fact, several commenters support more restrictive

alternatives such as adopting an “opt-in” list for those con-

sumers that wish to receive telephone solicitations.” Com-

menters supporting a national do-not-call list cite the

numerous and increasing receipt of unwanted telephone

solicitation calls; inadequacies of the company-specific

approach due to the failure of many telemarketers to honor

do-not-call requests or, the impossibility of relaying such

requests in the case of “dead air” or hang-up calls initiated by

predictive dialers; the burdens of making do-not-call requests

for every such call, particularly on the elderly and individuals

with disabilities; and the costs imposed on consumers in

acquiring technologies to reduce the number of unwanted

83 See 2002 Notice, 17 FCC Red at 17487-96, paras. 49-66.

84 '

See, .g., Maureen Matthews Comments; Gloria Toso Comments;

Shirley A. Weaver Comments. See also ACUTA Comments at 2;

NACAA Comments at 2; Telecommunications for the Deaf Comments at

4; NJ Ratepayer Further Comments at 2.

8° See, e.g., EPiC Comments at 2-5; Private Citizens, Inc. Comments at

3: Teresa Wilkie Comments; Benjamin Philip Johnson Comments.

612a

calls.*° Many such commenters argue that unwanted tele-

phone solicitations have reached the point of harassment that

constitutes an invasion of privacy within their homes.’

Others indicate that consumers are often frightened by dead-

air and hang-up calls generated by predictive dialers believing

they are being stalked.*® Several consumers indicate that they

no longer answer their telephones or they disconnect the

phone during the day to avoid telemarketing calls. These

commenters support the adoption of a one-step option for

those consumers that desire to reduce the number of

unwanted solicitation calls that they receive each day.

20. Many consumers indicate that their state lists have

reduced the number of unwanted calls that they receive and

express concern that any federal do-not-call registry not

undermine the protections afforded by the state do-not-call

laws.*? Assuming that a national do-not-call database (is

adopted, commenters encourage the Commission to work

closely with the FTC to adopt a single national registry that

operates as consistently and efficiently as possible for all

86 see, e.g., Terry L. Krodel Comments (disabled individual has diffi-

culty answering phone); Brian Lawless (contends that consumers should

not be forced to pay additional charges to stop telemarketing calls); J.

Raymond de Varoza Comments (telemarketers hang up when he requests

to be added to do-not call list); Mandy Burkart Comments (elderly

grandmother targeted by telemarketers). See also AARP Comment: at |

(noting that elderly consumers are often the subject of telemarketing

fraud).

87 See, e.g., Emily Malek Comments, Lester D. McCurrie Comments,

Andrea Sattier Comments; Sanda S. West Comments (receives aS many

as 20 telemarketing calls per day).

88 Edwin Bailey Hathaway Comments; Cynthia Stichnoth Comments.

® See, e.g., Brenda J. Donat Comments (cancer patient appreciates

reduction in calls due to Indiana Telephone Privacy Act); Alice and Bill

Frazee Comments; Tammy Puckett Comments (Indiana law provides

quiet for terminally ill family member).

613a

interested parties.” State regulators generally support a

national data-base provided that it does rot preempt state

do-not-call rules or preclude the states from enforcing

these laws.”’

21. Industry representatives generally oppose the adoption

of a national do-not-call database, but some support this

approach provided the Commission adopts an established

business relationship exemption and preempts state lists.”

These commenters contend that the concerns noted by the

Commission in 1992, including the costs, accuracy, and

privacy issues involved in creating and maintaining such a

database remain valid today.” In addition, industry com-

menters argue that a national do-not-call database is not

necessary because the current rules are sufficient to protect

consumer privacy rights.” Several note the economic impor-

tance of telemarketing and indicate that a national registry

would have severe economic consequences for their

” See, e.g., Verizon Comments at 2; Bank of America Further

Comments at 2.

si See, e.g, NAAG Comments at 8-13; New York State Consumer

Protection Board Comments at 7; Ohio PUC Comments at 3-7; Texas

PUC Comments at 10.

» See, e.g., Bank of America Comments at 2-4 (endorse national list

provided it establishes a uniform national standard and retains established

business relationship); Cox Enterprises Comments at 4-9 (would not

oppose national list if established business relationship exemption is

retained); Sprint Comments at 11-12 (state lists should be preempted);

Verizon Wireless Cominents at 4-6 (support national list if state lists

preempted and established business relationship retained). See also DMA

Further Comments at 3 (should preempt states); DirectTV Further

Comments at 3 (preempt); Nextel Further Commeniz at 8.

3 See, e.g., MBA Comments at 2; NAII Comments at 2; SBC

Commeiits et 6: WorldCom Comments at 17.

See, e.x, ABA Comments at 7; BellSouth Reply Comments at 5.

614a

industry.”> Several industry representatives request specific

exemptions from the national do-not-call requirements for

newspapers, magazines, insurance companies and small busi-

nesses.” These commenters contend that they provide

valuable goods or services to the public and _ that

telemarketing is the most cost-effective means to promote

those services.”” Representatives of various non-profit organi-

zations oppose any extension of the national do-not-call rules

to their organizations.” Several commenters argue that a

national registry would impose an unconstitutional restriction

on commercial speech.” They urge more stringent enforce-

ment of the Commission’s current rules.

22. FTC Order. On December 18, 2002, the FTC released

an order establishing a national do-not call registry." The

FTC cited an extensive record that revealed that the current

rules on telemarketing were not sufficient to protect consumer

privacy. The FTC’s do-not-call rules provide several options

for consumers to manage telemarketing calls—one of which

is to allow consumers who do not want to receive telephone

solicitation calls to register their telephone number with a

national do-not-call database.'"' The FTC indicates that

- See, e.g., Dial America Comments at 15-18; Technion Comments at

3-4; Vector Comments at 14-15.

™ See, e.g., MPA Comments at 13-14; NAA Comments at 12-14;

Seattle Times Comments at 2; Vector Comments at 14-15.

7 See, e.g., MPA Comments at 4, 13-14; NAA Commenis at 13; PLP

Comments at !.

7 See, e.g., March of Dimes Comments at 2; Leukemia and

Lymphoma Society Comments; Special Olympics Hawaii Comments at 2.

” See, e.g., ATA Comments at 58-91; SBC Comments at 6, 16-17;

WorldCom Comments at 19-30.

1 See FTC Order, 68 Fed. Reg. at 4628-33.

10! The FTC has awarded a contract to AT&T Government Solutions

for $3.5 million to create the national registry of consumers who do not

want to be contacted by telemarketers.

615a

consumers may do so at no cost by two methods: either

through a toll-free call from the phone number that they wish

to register or over the Internet.'°’ Consumer registrations will

remain valid for a period of five years, with the registry

purged on a monthly basis of numbers that have been discon-

nected or reassigned. Each seller engaged in tele-marketing or

on whose behalf telemarketing is conducted will be required

to pay an annual fee for access to the database based on the

number of area codes of data that the company wishes to

access.'°? The only consumer information that telemarketers

will receive from the national registry is the registrants’

telephone numbers. The FTC’s rules prohibit the sale, pur-

chase, rental, lease, or use of the national registry for any pur-

pose other than compliance with the do-not-call provision.“

23. The FTC’s national do-not-call rules will not apply to

those entities over which it has no jurisdiction, including

common carriers, banks, insurance companies, and airlines.

The FTC rules also will not apply to intrastate telemarketing

calls. In addition, the FTC exempts certain types of calls from

? The FTC indicates that calls will be answered by an Interactive

Voice Response (IVR) system. Consumers will be directed to enter their

telephone numbers. That number will then be checked against an

automatic number information (ANI) that is transmitted with the call.

Consumers will alsc ve able to verify or cancel their registration in the

same way. See FTC Order, 68 Fed. Reg. at 4638-39.

103 “

As discussed herein, the terms “seller” and “telemarketer” may refer

to the same entity or separate entities. The “telemarketer” is the entity

that actually initiates the telephone call. The “seller” is the entity on

whose benalf the telephone call is being made. See amended 47 C.F.R.

§ 64.1200(f)(5) and (6). Sellers may often hire telemarketing entities to

contact consumers on their behalf. See amended 47 C.F.R.

§ 64.1200(f)(7) for the definition of “telemarketing.” Pursuant to the

FTC’s do-not-call program, each seller must pay for access to the do-not-

call database., Thus, telemarketing entities cannot share do-not-call data

among various client sellers.

1 See 16 C.F.R. § 310.4(b)(2).

616a

the national do-not-call provisions. Specifically, the FTC has

established exemptions for calls made by or on behalf of

charitable organizations,'” calls to consumers with whom the

seller has an “established business relationship”'”’ (as long as

the consumer has not asked to be placed on the seller’s

company-specific do-not-call list), and calls to businesses.

The FTC also decided to retain the provision of its rules that

allows sellers to obtain the express agreement of consumers

who wish to receive calls from that seller. The FTC requires

that such express agreement be evidenced by a signed, written

agreement. As a result, consumers registered on the national

do-not-call list may continue to receive calls from those

sellers that have acquired their express agreement. The FTC

also adopted a “safe harbor” from liability under its do-not-

call provisions concluding that sellers or telemarketers that

have made a good faith effort to provide consumers with an

opportunity to exercise their do-not-call rights should not be

liable for violations that result from an error.'°’ The FTC

clarified that because wireless subscribers are often charged

for the calls they receive, they will be allowed to register

105 The FTC has concluded, however, that calls on behalf of charitable

organizations will be subject to the company specific do-not-call

provisions. See FTC Order, 68 Fed. Reg. at 4629.

'6 The FTC defines an “established business relationship” as a rela-

tionship between a seller and consumer based on: (1) the consumer’s

purchase, rental, or lease of the seller’s goods or services or a financial!

transaction between the consumer and seller, within the eighteen months

immediately preceding the date of a telemarketing call; or (2) the con-

sumer’s inquiry or application regarding a product or service offered by

the seller, within the three months immediately preceding the date of a

telemarketing call. 16 C.F.R. § 310.2(n). Regarding the interplay

between the established business relationship and do-not-call rules, the

FTC concluded that if the consumer continues to do business with the

seller after asking not to be called, the consumer cannot be deemed to

have waived their company-specific do-not-call request. F7C Order, 68

Fed. Reg. at 4634.

07 See 16 C.F.R. § 310.4(b)(3).

617a

their wireless telephone numbers on the national do-not-

call database.

24. The FTC concluded that it does not intend its rules

establishing a national do-not-call registry to preempt state

do-not-call laws. The FTC indicated its desire to work with

those states that have enacted such laws, as well as this

Commission, to articulate requirements and procedures dur-

ing what it anticipates will be a relatively short transition

period leading to one harmonized registry system. The FTC

has articulated a goal whereby consumers, in a single trans-

action, can register their requests not to receive calls to solicit

sales of goods or services, and sellers and telemarketers can

obtain a single list to ensure that they do not contravene

consumer requests not to be called.'

B. Discussion

25. As discussed in greater detail below, we conclude that

the record compiled in this proceeding supports the

establishment of a single national database of telephone

numbers of residential subscribers who object to receiving

telephone solicitations. Consistent with the mandate of Con-

gress in the Do-Not-Call Act, the national do-not-call rules

that we establish in this order “maximize consistency” with

these of the FTC."” The record clearly demonstrates wide-

spread consumer dissatisfaction with the effectiveness of the

current rules and network technologies available to protect

'°* FTC Order, 68 Fed. Reg. at 4638-41.

See also H.R. REP. NO. 108-8 at 3 (2003), reprinted in 2003

U.S.C.C.A.N. 688, 670 (“[i]t is the strongly held view of the Committee

that a national do-not-call list is in the best interest of consumers,

businesses and consumer protection authorities. This legislation is an

important step towar< a one-stop solution to reducing telemarketing

abuses.”).

618a

consumers from unwanted telephone solicitations.''® Indeed,

many consumers believe that with the advent of such tech-

nologies as predictive dialers that the vices of telemarketing

have become inherent, while its virtues remain accidental. We

have compared and evaluated alternative methods to a

national do-not-call list for protecting consumer privacy

rights and conclude that these alternatives are costly and/or

ineffective fer both telemarketers and consumers. '"'

26. A national do-not-call registry that is supplemented by

the amendments made to our existing rules will provide

consumers with a variety of options for managing telemar-

keting calls. Consumers may now: (1) place their number on

the national do-not-call list; (2) continue to make do-not-call

requests of individual companies on a case-by-case basis;

and/or (3) register on the national list, but provide specific

companies with express permission to call them. Telemar-

keters may continue to call individuals who do not place their

numbers on a do-not-call list and consumers with whom they

have an established business relationship. We believe this

result.is consistent with Congress’ directive in the TCPA tha

“{iJndividuals’ privacy rights, public safety interests, and

commercial freedoms of speech and trade must be balanced

in a way that protects the privacy of individuals and permits

legitimate telemarketing practices.”""”

27. We agree with Congress that consistency in the under-

lying regulations and administration of the national do-not-

call registry is essential to avoid consumer confusion and

regulatory uncertainty in the telemarketing industry. In so

10 See, e.g., Joseph A. Durle Comments (forced to turn phone off due

to constant telemarketing calls and missed call that family member had a

stroke); John D. Milhous Comments; Gregory Reichenbach Comments;

Christopher C. Parks Comments (receives numerous calls every day).

'! See 47 U.S.C. § 227(c)(1)(A).

'? See TCPA, Section 2(9), reprinted in 7 FCC Red at 2744.

arene

619a

doing, we emphasize that there will be one centralized

national do-not-call database of telephone numbers. The FTC

has set up and will maintain the national database, while both

agencies will coordinate enforcement efforts pursuant to a

forthcoming Memorandum of Understanding.''’? The states

will also play an important role in the enforcement of the do-

not-call rules. The FTC has received funding approval from

Congress to begin implementation of the national do-not-call

registry. Because the FTC lacks jurisdiction over certain

entities, including common carriers, banks, insurance com-

panies, and airlines, those entities would be allowed to

continue calling individuals on the FTC’s list absent FCC

action exercising our broad authority given by Congress over

telemarketers. In addition, the FTC’s jurisdiction does not

extend to intrastate activities. Action by this Commission to

adopt a national do-not-call list, as permitted by the TCPA,

requires all commercial telemarketers to comply with the

national do-not-call requirements, thereby providing more

comprehensive protections to consumers and consistent

treatment of telemarketers.

I. National Do-Not-Call Registry

28. Pursuant to our authority under section 227(c), we

adopt a national do-not-call registry that will provide

residential consumers with a one-step option to prohibit

unwanted telephone solicitations. This registry will be

maintained by the FTC. Consistent with the FTC’s

determination, the national registry will become effective on

October 1, 2003.''* Subject to the exemptions discussed

3 In the FTC Order, the FTC outlines in detail how the national

registry will be administered, inciuding how consumers may register and

how sellers may purchase the list. See also infra, Enforcement Priorities

section, paras. 211-214.

'l4 We decline to extend the effective date for the national do-not-call

rules beyond October 1, 2003. See Ex Parte Presentations from

WorldCom to FCC, filed May 23, 2003 and June 16, 2003 (advocating a

620a

below, telemarketers will be prohibited from contacting those

consumers that register their telephone numbers on the

national list. In reaching this conclusion, we agree with the

vast majority of consumers in this proceeding and the FTC

that a national do-not-call registry is necessary to enhance the

privacy interests of those consumers that do not wish to

receive telephone solicitations. In response to the widespread

consumer dissatisfaction with telemarketing practices, Con-

gress has recently affirmed its support of a national do-not-

call registry in approving funding for the FTC’s national

database.''* In so doing, Congress has indicated that this

Commission should adopt rules that “maximize consistency”

with those of the FTC.''® The record in this proceeding is

replete with exam-ples of consumers that receive numerous

unwanted calls on a daily basis.''’ The increase in the number

of telemarketing calls over the last decade combined with the

widespread use of such technologies as predictive dialers has

encroached significantly on the privacy rights of consu-

mers.''® For example, the effectiveness of the protections

9.5-month implementation period for the national do-not-call list

requirements).

"IS Soe H.R. J. Res. 2, 108" Congress at 96 (2003) (Consolidated

Appropriations Resolution). See also H.R. REP. NO. 108-8 at 3 (2003),

reprinted in 2003 U.S.C.C.A.N. 688, 670 (‘“[i]t is the strongly held view of

the Committee that a national do-not-call list is in the best interest of

consumers, businesses and consumer protection authorities. This

legislation is an important step toward a one-stop solution to reducing

telemarketing abuses.”).

116 See Do-Not-Call Act, Sec. 3.

"7 See, e.g., Sean Herriott Comments (receives numerous

telemarketing calls each day); Lester D. McCurrie (receives between 8-12

call per day); David K. McClain Comments; Greg Rademacher

Comments (receives so many calls that he now refuses to answer the

phone); john Rinderle Comments; Steven D. Thorton Comments; Sandra

West Comments (receives 20 calls per day).

18 See supra para. 8.

ee ee

621a

afforded by the company-specific do-not-call rules have been

reduced significantly by dead air and hang-up calls that result

from predictive dialers. In these situations, consumers have

no opportunity to invoke their do-not-call rights and the Com-

mission cannot pursue enforcement actions. As detailed

previously, such intrusions have led many consumers to

disconnect their phones during portions of the day or avoid

answering their telephones altogether. The adoption of a

national do-call-list will be an important tool for consumers

that wish to exercise control over the increasing number of

unwanted telephone solicitation calls.

29. Although some industry commenters attempt to charac-

terize unwanted solicitation calls as petty annoyances and

suggest that consumers purchase certain technologies to block

unwanted calls, the evidence in this record leads us to believe

the cumulative effect of these disruptions in the lives of

millions of Americans each day is significant. As a result, we

conclude that adoption of a national do-not-call list is now

warranted. We believe that consumers should, at a minimum,

be given the opportunity to determine for themselves whether

or not they wish to receive telephone solicitation calls in their

homes. The national do-not-call list will serve as an option

for those consumers who have found the company-specific .

list and other network technologies ineffective. The tele-

phone network is the primary means for many consumers to

remain in contact with public safety organizations and family

members during times of illness or emergency. Consumer

frustration with telemarketing practices has reached a point in

which many consumers no longer answer their telephones

while others disconnect their phones during some hours of the

day to maintain their privacy. We agree with consumers that

incessant telephone solicitations are especially burdensome

for the elderly, disabled, and those that work non-traditional

SS —™

622a

hours.''? Persons with disabilities are often unable to register

do-not-call requests on many company-specific lists because

many telemarketers lack the equipment necessary to receive

that request.'”” Given the record evidence, along with Con-

gress’s recent affirmative support for a national do-not-call

registry, we adopt a national do-not-call registry.'”’ As dis-

cussed more fully below, however, we are mindful of the

need to balance the privacy concerns of consumers with the

interests of legitimate telemarketing practices. Therefcre, we

have provided for certain exemptions to the national do-not-

call registry.

30. While we agree that concerns regarding the cost,

accuracy, and privacy of a national do-not-call database

remain relevant, we believe that circumstances have c ianged

significantly since the Commission first reviewed this issue

over a decade ago such that they no longer impose a sub-

stantial obstacle to the implementation of a national registry.

As several commenters in this proceeding note, advances in

computer technology and software now make the compilation

and maintenance of a national database a more reasonable

proposition.'” In addition, considerable experience has been

gained through the implementation of many state do-not-call

'!? See, e.g., Karen M. Meyer Comments (86 year-old receives as many

as 10 solicitation calls per day); Vivian Sinclair Comments (85 year old

with cane receives numerous telephone solicitations); Mr. and Mrs.

Joseph Stephanik Comments (works at night and telemarketing calls

interfere with sleep); Mavis Selway Comments (husband who works at

night must answer telemarketing calls during day).

120 See Telecommunications for the Deaf Comments at 2-3 (noting that

telemarketers often lack TTY or telecommunications relay service),

121 coe H.R. REP. NO. 108-8 at 3 (2003), reprinted in 2003

U.S.C.C.A.N. 688, 670 (“i]t is the strongiy held view of the Committee

that a national do-not-call list is in the best interest of consumers,

businesses and consumer protection authorities.”).

122 See, e.g., LSSi Comments at 5-6; NCS Comments at 2-4.

623a

lists. In 1992, it was estimated by some commenters that the

cost of establishing such a list in the first year could be as

high as $80 million. As noted above, Congress has recently

reviewed and approved the FTC’s request for $18.1 million to

fund the national do-not-call list.'” We believe that the ad-

vent of more efficient technologies and the experience

acquired in dealing with similar databases at the state level is

responsible for this substantial reduction in cost.

Similarly, we believe that technology has become more

proficient in ensuring the accuracy of a national database. The

FTC indicates that to guard against the possibility of

including disconnected or reassigned telephone numbers,

technology will be employed on a monthly basis to check all

registered telephone numbers against national databases, and

remove those numbers that have been disconnected or

reassigned.'* The length of time that registrations remain

valid also directly affects the accuracy of the registry as

telephone numbers change hands over time. As discussed

more fully below, we conclude that the retention period for

both the national and company-specific do-not-call requests

will be five years.'* This is consistent with the FTC’s

determination and our own record that reveals that the current

ten-year retention period for company-specific requests is too

long given changes in telephone numbers. Consumers must

also register their do-not-call requests from either . the

'23 As noted above, the FTC has awarded a contract to AT&T

Government Solutions for $3.5 million to create the national registry. The

Congressional Budget Office estimates that the FTC will collect and

spend a total of about $73 million in fees over 2003-2008 to implement

the national database. See H.R. REP. NO.108-8 at 6 (2003), reprinted in

2003 U.S.C.C.A.N. 688, 673.

124 ETC Order, 68 Fed. Reg. at 4640.

125 Soe FTC Order, 68 Fed. Reg. at 4640. Our rules previously required

a company-specific do-not-call request to be honored for ten years. See 47

C.F.R. § 64.1200(e)(2)(vi).

624a

telephone number of the phone that they wish to register or

via the Internet. The FTC will confirm the accuracy of such

registrations through the use of automatic number identi-

fication (ANI)'”° and other technologies. We believe that a

five-year registration period coupled with a monthly purging

of disconnected telephone numbers adequately balances the

need to maintain accuracy in the national registry with any

burden imposed on consumers to re-register periodically their

telephone numbers.

32. We conclude that appropriate action has been taken to

ensure the privacy of those registering on the national list.

Specifically, the only consumer information telemarketers

and sellers will receive from the national registry is the

registrant’s telephone number.'”’ This is the minimum amount

of information that can be provided to implement the national

registry. We note that the majority of telephone numbers are

publicly available through telephone directories. To the extent

that consumers have an unlisted number, the consumer will

have to make a choice as to whether they prefer to register on

a national do-not-call list or maintain complete anonymity.

We reiterate, however, that the only information that will be

provided to the telemarketer is the telephone number of the

consumer.'”® No corresponding name or address information

will be provided. We believe that this approach reduces the

privacy concerns of such consumers to the greatest extent

possible. As an additional safeguard, we find that restrictions

should be imposed on the use of the national list. Consistent

126 The term “ANI” refers to the delivery of the calling party’s billing

number by a local exchange carrier to any interconnecting carrier for

billing or routing purposes, and to the subsequent delivery of such number

to end users. 47 C.F.R. § 64.1600(b).

'27 ETC Order, 68 Fed. Reg. at 4640.

128 As noted above, the “seller” and “telemarketer” may be the same

entity or separate entities. Each entity on whose behalf the telephone call

is being made must purchase access to the do-not-call database.

625a

with the FTC’s determination and section 227(c)(3)(K), we

conclude that no person or entity may sell, rent, lease,

purchase, or use the national do-not-call database for any

purpose except compliance with section 227 and any such

state or federal law to prevent telephone solicitations to tele-

phone numbers on such list.'”” We conclude that these safe-

guards adequately protect the privacy rights of those con-

sumers who choose to register on the national do-not-call list.

33. We conclude that the national database should allow

for the registration of wireless telephone numbers, and that

such action will better further the objectives of the TCPA and

the Do-Not-Call Act. In so doing, we agree with the FTC and

several commenters that wireless subscribers should not be

excluded from the protections of the TCPA, particularly the

option to register on a national-do-not-call list.'"” Congress

has indicated its intent to provide significant protections

under the TCPA to wireless users.'*' Allowing wireless

subscribers to register on a national do-not-call list furthers

the objectives of the TCPA, including protection for wireless

subscribers from unwanted telephone solicitations for which

they are charged.

34. Nextel argues, however, that, because the “TCPA only

authorizes the Commission to regulate solicitations to ‘resi-

dential telephone subscribers,’” wireless subscribers may not

129 See 47 U.S.C. § 227(c)(3)(K). See also 16 C.F.R. § 310.4(b)(2). We

also note that telemarketers will be prohibited from selling the list to

others or dividing the costs of accessing the list among various client

sellers. Such action would threaten the financial support for maintaining

the database.

1 See, e.g., AT&T Wireless Reply Comments at 22; Charles Ferguson

Comments; City of New Orleans Comments at 12; Texas Office of Public

Utility Counsel Comments at 7. See also NAAG Comments at 35-36

contending that public safety implications may arise if wireless consumers

receive unsolicited marketing calls while operating automobiles.

'5! 47 U.S.C. § 227(b)(1)(iii).

626a

participate in the do-not-call list.'’* Nextel states we should

define “residentia) subscribers” to mean “telephone service

used primarily for communications in the subscriber’s resi-

dence.”’'*’ However, Nextel’s application would result in “[a]t

most, the Commission [having the] authority to regulate

solicitations to wireless subscribers in those circumstances

where wireless service actually has displaced a residential

land line, and functions as a consumer’s primary residential

telephone service.”'™

35. Nextel’s definition of “residential subscribers” is far

too restrictive and inconsistent with the intent of section 227.

Specifically, there is nothing in section 227 to suggest that

only a customer’s “primary residential telephone service” was

all that Congress sought to protect through the TCPA. In

addition, had Congress intended to exclude wireless sub-

scribers from the benefits of the TCPA, it knew how to

address wireless services or consumers explicitly. For exam-

ple, in section 227(b)(1), Congress specifically prohibited

calls using automatic telephone dialing systems or artificial or

prerecorded voice to telephone numbers assigned to “paging

service [or] cellular telephone service .. . .” Moreover, under

Nextel’s definition, even consumers who use their wireless

telephone service in their homes to supplement their resi-

dential wireline service, such as by using their wireless

'32 Nextel Comments at 19. We note that section 227(c )(1) uses the

phrase “residential telephone subscribers” and that section 227(c)(3),

which more specifically discusses the do-not-call database, uses the

phrase “residential subscribers.” Neither of these terms is defined in the

TCPA. Thus, we see no basis in the legislative language or history for

considering them to be materially different. Nor do we see a basis for

distinction in common usage. Therefore, we will interpret them to be

synonymous and will refer to both by using the term “residential

subscribers.”

_ Nextel Comments at 19.

i Nextel Comments at 21.

627a

telephone service to make long distance phone calls to avoid

wireline toll charges, would be excluded from the protections

of the TCPA. Such an interpretation is at odds even with

Nextel’s own reasoning for its definition—that the TCPA’s

goal is “to curb the ‘pervasive’ use of telemarketing ‘to

market goods and services to the home’.”'” As described, it is

well-established that wireless subscribers often use their

wireless phones in the same manner in which they use their

residential wireline phones.'*° Indeed, as even Nextel recog-

nizes, there is a growing number of consumers who no longer

maintain wireline phone service, and rely only on their

wireless telephone service. Thus, we are not persuaded by

Nextel’s arguments.

36. Moreover, we believe it is more consistent with the

overall intent of the TCPA to allow wireless subscribers to

benefit from the full range of TCPA protections. As indicated

above, Congress afforded wireless subscribers particular

protections in the context of autodialers and prerecorded

calls.'*’ In addition, although Congress expressed concern

with residential privacy, it also was concerned with the

nuisance, expense and burden that telephone solicitations

'35 Nextel Comments at 20.

136 For example, the Commission recently relied on wireless broadband

PCS substitution to support “Track A” findings in two section 27]

proceedings where residential customers in New Mexico and Nevada had

replaced their landline service with wireless service. See Application by

SBC Communications Inc., Nevada Bell Telephone Company, and

Southwestern Bell Communications Services, Inc., for Authorization to

Provide In-Region, InterLATA Services in Nevada, WC Docket No. 03-

10, Memorandum Opinion and Order, FCC 03-80 at paras. 16 - 26 (rel.

April 14, 2003); see also Federal Communications Commission, Seventh

Annual Report and Analysis of Competitive Market Conditions With

Respect to Commercial Mobile Services at 32-36 (Seventh Annual CMRS

Competition Report).

'57 47 U.S.C. § 227(b)(1)(A)(iii).

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628a

place on consumers.'* Therefore, we conclude that wireless

subscribers may participate in the national do-not-call list. As

a practical matter, since determining whether any particular

wireless subscriber is a “residential subscriber” may be more

fact-intensive than making the same determination for a

wireline subscriber, we will presume wireless subscribers

who ask to be put on the natiorial do-not-call list to be

“residential subscribers.”’*? Such a presumption, however,

may require a complaining wireless subscriber to provide

further proof of the validity of that presumption should we

need to take enforcement action. .

37. We emphasize that it is not our intent in adopting a

national do-not-call list to prohibit legitimate telemarketing

practices. We believe that industry commenters present a

false choice between the continued viability of the tele-

marketing industry and the adoption of a national do-not-call

list. We are not persuaded that the adoption of a national do-

not-call list will unduly interfere with the ability of tele-

marketers to contact consumers. Many consumers will

undoubtedly take advantage of the opportunity to register on

the national list. Several industry commenters suggest,

however, that consumers derive substantial benefits from

telephone solicitations. If so, many such consumers will

choose not to register on the national do-not-call list and will

opt instead to make do-not-call requests on a case-by-case

basis or give express permission tc be contacted by specific

companies.'” In addition, as discussed further below, we have

provided for certain exemptions to the do-not-call registry in

198 S. REP. No. 102-178 at 1 (noting that telephone solicitations are

both a nuisance and an: invasion of privacy).

'° This presumption is only for the purposes of section 227 and is not

in any way indicative of any attempt to classify or regulate wireless

carriers for purposes of other parts of Title II.

'° We also note that numerous alternative marketing outiets remain

available to sellers, such as newspapers, television, radio, and direct mail.

eee

v29a

recognition of legitimate telemarketing business practices.

For example, sellers of goods or services via telemarketing

may continue to contact consumers on the national list with

whom they have an established business relationship. We also

note that calls that do not fall within the definition of

“telephone solicitation” as defined in section 227(a)(3) will

not be precluded by the national do-not-call list. These may

include surveys, market research, political or religious speech

calls.'*' The national do-not-call rules will also not prohibit

calls to businesses and persons with whom the marketer has a

personal relationship. Telemarketers may continue to contact

all of these consumers despite the adoption of a national do-

not-call list. Furthermore, we deciine to adopt more restrictive

do-not-call requirements on telemarketers as suggested by

several commenters. For example, we decline to adopt an

“opt-in” approach that would ban telemarketing to any con-

sumer who has not expressly agreed to receive telephone

solicitations. We believe that establishing such an approach

would be overly restrictive on the telemarketing industry. As

discussed more fully below, we also decline to extend

the national do-not-call requirements to tax-exempt non-

profit organizations or entities that telemarket on behalf of

nonprofit organizations.

38. We agree with the FTC that a safe harbor should be

established for telemarketers that have made a good faith

'4' Such calls may be prohibited if they serve as a pretext to an

otherwise prohibited advertisement or a means of estabiishing a business

relationship. Moreover, responding to such a “survey” does not constitute

express permission or establish a business relationship exemption for

purposes of a subsequent telephone solicitation. See H.R. REP. No. 102-

317 at 13 (“{T]he Committee does not intend the term ‘telephone

solicitation’ to include public opinion polling, consumer or market

surveys, or other survey research conducted by telephone. A call

encouraging a purchase, rental, or investment would fall within the

definition, however, even though the caller purports to be taking a poll or

conducting a survey.”).

630a

effort to comply with the national do-not call rules.'*’ A seller

or telemarketer acting on behalf of the seller that has made a

zood faith effort to provide consumers with an opportunity to

exercise their do-not-cali rights should not be liable for

violations that result from an error. Consistent with the FTC,

we conclude that a seller or the entity telemarketing on behalf

of the seller will not be liable for violating the national do-

not-call rules if it can demonstrate that, as part of the seller’s

or telemarketer’s routine business practice: (i) it has estab-

‘lished and implemented written procedures to comply with

the do-not-call rules; (ii) it has trained its personnel, and any

entity assisting in its compliance, in the procedures

established pursuant to the do-not-call rules; (111) the seller, or

telemarketer acting on behalf of the seller, has maintained and

recorded a list of telephone numbers the seller may not

contact; (iv) the seller or telemarketer uses a process to

prevent telemarketing to any telephone number on any list

established pursuant to the do-not-call rules employing a

version of the do-not-call registry obtained from the admini-

strator of the registry no more than three months prior to the

date any call is made, and maintains records documenting this

process; and (v) any subsequent call otherwise violating the

do-not-call rules is the result of error.'** We acknowledge that

the three-month safe harbor period for telemarketers may

prove to be too long to benefit some consumers. The national

do-not-call jist has the capability to process new registrants

virtually instantaneously and telemarketers will have the

capability to download the list at any time at no extra cost.

The Commission intends to carefully monitor the impact of

this requirement pursuant to its annual report to Congress and

may consider a shorter time frame in the future.

42 See FTC Order, 68 Fed. Reg. at 4645-46.

13 Soe 16 C.F.R. § 310.4(b)(3).

63la

39. As required by section 227(c)(1)(A), we have

compared and evaluated the advantages and disadvantages of

certain alternative methods to protect consumer privacy

including the use of network technologies, special directory

markings, and company-specific lists in adopting a national

do-not-call database.'“* As noted below, the effectiveness of

the company-specific approach has significantly eroded as a

result of hang-up and “dead air” calls from predictive dialers.

Consumers in these circumstances have no opportunity to

assert their do-not-call rights. As discussed more fully below,

we believe that, as a stand-alone option, the company-specific

approach no longer provides consumers with sufficient

privacy protections. We also conclude that the availability

of certain network technologies to reduce telephone solici-

tations is often ineffective and costly for consumers. Al-

though technology has improved to assist consumers in

blocking unwanted calls, it has also evolved in such a way as

to assist telemarketers in making greater numbers of calls and

even circumventing such blocking technologies.'*” Millions

of consumers continue to register on state do-not-call lists

despite the availability of such technologies. Several com-

menters note that they continue to receive unwanted calls

despite paying for technologies to reduce telephone solici-

tations.'*° Several commenters also note that telemarketers

routinely block transmission of caller ID. In particular, we are

concerned that the cost of technologies such as caller ID, call

blocking, and other such tools in an effort to reduce

telemarketing calls fall entirely on the consumer. We believe

144 See 47 U.S.C. § 227(c)(1)(A).

‘4S See “New telemarketer tool trumps TeleZapper,” CNN.com

(February 26, 2003) <http://edition.cnn.com/2003/TECH/ptech/02/26/

telemarket.tool.ap/> (noting development of software that allows

telemarketers to circumvent the telezapper and other blocking devices).

4 See, e.g., Leslie Price Comments (telezapper ineffective); Josephine

Presley Comments (call blocking ineffective).

‘|

632a

that reliance on a solution that places the cost of reducing the

number of unwanted solicitation calls entirely on the

consumer is inconsistent with Congress’ intent in the

TCPA.'”’ For the reasons outlined in the 1992 TCPA Order,

we also decline to adopt special area codes or prefixes for

telemarketers.'“* We believe this option is costly for telemar-

keters that would be required to change their telephone

numbers and administratively burdensome to implement. We

also decline to adopt special directory markings of area white

page directories because it would require telemarketers to

purchase and review thousands of local telephone directories,

at great cost to the telemarketers.” We also note that

telemarketers often compile solicitation lists from many

sources other than local telephone directories. In addition,

such directories do not include unlisted or unregistered

telephone numbers and are often updated infrequently. We

also note that the record in this proceeding provides little

support for this option.

40. We now review the other requirements of section

227(c)(1). As required by section 227(c)(1)(B), we have

evaluated AT&T Government Solutions, the entity selected

by the FTC to administer the national database, and conclude

that it has the capacity to establish and administer the national

database.'® Congress has reviewed and approved funding for

the implementation of that database. We believe that it is

'47 For. example, section 227(c) prohibits consumers from being

charged to place their number on a national do-not-call list. See 47 U.S.C.

§ 227(c)(3)(E).

148 Soe 1992 TCPA Order, 7 FCC Red at 8761-62, paras. 16-17.

9 See 47 U.S.C. § 227(c)(4\(C) (requiring the Commission to

consider “whether the needs of telemarketers operating on a local basis

could be met through special markings of area white page directories”).

This conclusion is consistent with the Commission’s conclusion in 1992.

150 coe Letter from Michael Del Casino, AT&T, to Marlene Dortch,

FCC, dated March 18, 2003.

633a

unnecessary to evaluate any other such entities at this time.

As discussed in greater detail below, we have considered

whether different methods and procedures should apply for

local telephone solicitations and small businesses as required

by section 227(c)(1)(C).'*' For the reasons outlined below, we

conclude that the national do-not-call database takes into

consideration the costs of those conducting telemarketing on

a local or regional basis, including many small businesses. In

particular, we note that the national do-not-call database will

permit access to five or fewer area codes at no cost to the

seller. Pursuant to section 227(c)(1)(D), we have considered

whether there is a need for additional authority to further

restrict telephone solicitations. We conclude that no such

authority is required at this time.'*’ Pursuant to the Do-Not-

Call Act, the Commission must report to Congress on an

annual basis the effectiveness of the do-not-call registry.

Should the Commission determine that additional authority is

required over telephone solicitations as part of that analysis;

the Commission will propose specific restrictions pursuant to

that report. As required by section 227(c)(1)(E), we have

developed regulations to implement the national do-not-call

database in the most effective and efficient manner to protect

consumer privacy needs while balancing legitimate tele-

marketing interests.

41. As noted above, the FTC’s decision to adopt a national

do-not-call list is currently under review in federal district

5! See infra para. 54.

'? This finding is dependent, in large part, on conclusions that we have

reached elsewhere in this order. For example, our conclusion that the

McCarran-Ferguson Act does not necessarily prohibit the application of

the national registry to insurance companies; rather, the implications of

the McCarran-Ferguson Act will need to be evaluated on a case-by-case

basis. The Commission may seek further clarification or authority from

Congress as necessary to support these conclusions.

634a

court.'*? Because Congress has approved funding for the

administration of the national list only for the FTC, this

Commission would be forced to stay implementation of

any national list should the plaintiffs prevail in one of

those proceedings.

2. Exemptions

42. Established Business Relationship. We agree with the

majority of industry commenters that an exemption to the

national do-not-call list should be created for calls to

consumers with whom the seller has an established business

relationship.’ We note that section 227(a)(3) excludes from

the definition of telephone solicitation calls made to any

person with whom the caller has an established business

relationship.'** We believe the ability of sellers to contact

existing customers is an important aspect of their business

plan and often provides consumers with valuable information

regarding products or services that they may have purchased

from the company. For example, magazines and newspapers

may want to contact customers whose subscriptions have or

soon will expire and offer new subscriptions. This conclusion

is consistent with that of the FTC and the majority of states

that have adopted do-not-call requirements and considered

this issue. As discussed in further detail below, we revise the

definition of an established business relationship so that it is

limited in duration to eighteen (18) months from any

purchase or transaction and 3 months from any inquiry

or application.'”°

See supra note 39.

- See, e.g., NCTA Comments at 6; NAA Comments at 14; MBA

Further Comments at 4.

'5 47 U.S.C. § 227(a)(3).

'56 See amended 47 C.F.R. § 64.1200(f)(3).

635a

43. To the extent that some consumers oppose this

exemption, we find that once a consumer has asked to be

placed on the seller’s company-specific do-not-call list, the

seller may not call the consumer again regardless of whether

the consumer continues to do business with the seller. We

believe this determination constitutes a reasonable balance

between the interests of consumers that may object to such

calls with the interests of sellers in contacting their customers.

This conclusion is also consistent with that of the FTC.

44. Prior Express Permission. In addition to the established

business relationship exemption, we conclude that sellers may

contact consumers registered on a national do-not-call list if

they ‘have obtained the prior express permission of those

consumers. We note that section 227(a)(3) excludes from the

definition of telephone solicitation calls to any person with

“that person’s prior express invitation or permission.”"*’

Consistent with the FTC’s determination, we conclude that

for purposes of the national do-not-call list such express

permission must be evidenced only by a signed, written

agreement between the consumer and the seller which states

that the consumer agrees to be contacted by this seller,

including the telephone number to which the calls may be

placed.'** Consumers registered on the national list may wish

to have the option to be contacted by particular entities.

'57 47 U.S.C. § 227(a)(3). See also H.R. REP. NO. 102-317 at 13 (1991)

(suggesting that Congress did not believe such prior express permission

need be in writing) We believe that in discussing the form in which prior

express permission must be given, Congress was addressing an exemption

to the definition of telephone solicitation. Here, we are addressing the

type of prior express permission that would allow calls to consumers who

already have indicated that they do not wish to receive telemarketing calls

(by registering on the do-not-call list).

'8 For purposes of this exemption, the term “signed” shall include an

electronic or digital form of signature, to the extent that such form of

signature is recognized as a valid signature under applicable federal or

state contract law.

sdpidebake wey ae ORF ORT RDS a I a RW are Fo Lt

636a

Therefore, we conclude that sellers may obtain the express

written agreement to call such consumers. The express

agreement between the parties shall remain in effect as long

as the consumer has not asked to be placed on the seller’s

company-specific do-not-call list. If the consumer subse-

quently requests not to be called, the seller must cease calling

the consumer regardless of whether the consumer continues

to do business with the seller. We also note that telemarketers

may not call consumers on the national do-not-call list to

request their written permission to be called unless they fall

within some other exemption. We believe that to allow such

calls would circumvent the purpose of this exemption. Prior

express permission must be obtained by some other means

such as direct mailing.

45. Tax-Exempt Nonprofit Organizations. We agree with

those commenters that contend that the national do-not-call

requirements should not be extended to tax-exempt nonprofit

organizations or calls made by independent telemarketers on

behalf of tax-exempt nonprofit organizations.'” We note

that section 227(a)(3) specifically excludes calls made by tax-

exempt nonprofit organizations from the definition of

telephone solicitation.'” In so doing, we believe Congress

clearly intended to exclude tax-exempt nonprofit organi-

zations from prohibitions on telephone solicitations under the

TCPA. The legislative history indicates that commercial calls

constitute the bulk of all telemarketing calls.'*' A number of

commenters and the FTC agree with Congress’ conclusion as

it relates to a national do-not-call list.” For this reason, we

'? See, e.g., Association of Fundraising Professionals Comments at 3-

4: Fund for Public Interest Comments at 2; March of Dimes Comments at

2; Special Olympics of Hawaii Comments.

169 47 U.S.C. § 227(a)(3).

161 coe HR. REP. NO. 102-317 at 16 (1991).

102 See, e.g., Fund for Public Interest Comments at 2; March of Dimes

Comments at 2; Non-for-Profit Coalition Comments at 11-13; Special

637a

decline to extend the national do-not-call requirements to tax-

exempt nonprofit organizations. A few commenters seek

clarification that requests for blood donations will be exempt

from the national do-not-call list.'"’ When such requests are

made by tax-exempt nonprofit organizations, they will fall

within the exemption for tax-exempt nonprofit organizations.

46. Others. We decline to create specific exemptions to the

national do-not-call requirements for entities such as news-

papers, magazines, regional telemarketers, or small busi-

nesses.'“ For the reasons discussed above, we find unper-

suasive arguments that application of the national do-not-call

database adopted herein will result in severe economic

consequences for these entities. In particular, we note the

exemptions adopted for calls made to consumers with whom

the seller has an established business relationship and those

that have provided express agreement to be called. As noted,

many consumers may also determine not to register on the

national database. Telemarketers may continue to contact all

of these consumers. We believe these exemptions provide

telemarketers with a reasonable opportunity to conduct their

business while balancing consumer privacy interests.

Olympics Hawaii Comments. But see Wayne G. Strang Comments at 7-8;

Michael C. Worsham Comments at 10. Commenters also argue that

restrictions imposed on tax-exempt nonprofit organizations or organi-

zations acting on their behalf are subject to more stringent scrutiny under

the First Amendment as noncommercial speech. See NPCC Comments

at 15-18.

1 See, e.g., American Red Cross Comments at 2; America’s Blood

Centers Comments at 1.

14 See, e.g., Newspaper Association of America Comments at 12-14

(noting that newspapers are holders of second-class mail permits);

Personal Legal Plans Comments at 5 (contending that small businesses

should be exempt); Seattle Times Comments at 2 (proposing exemption

for newspapers); Vector Comments at 7 (proposing exemption for entities

that make a de minimis number of calls); Ameriquest Further Comments

at 2 (“face-to-face” exemption).

638a

Although we agree that newspapers and other entities may

often provide useful information and services to the public,

given our conclusion that adoption of the national do-not-call

list will not unduly interfere with the ability of telemarketers

to reach consumers, we do not find this to be a compelling

basis to exempt these entities.

47. We find that the national do-not-call rules adopted

today do not apply to calls made to persons with whom the

marketer has a personal relationship. As discussed herein, a

“personal relationship” refers to an individual personally

known to the telemarketer making the call. In such cases, we

believe that calls to family members, friends and acquain-

tances of the caller will be both expected by the recipient and

limited in number.'® Therefore, the two most common

sources of consumer frustration associated with telephone

solicitations-high volume and unexpected solicitations—are

not likely present when such calls are limited to persons with

whom the marketer has a personal relationship.'° Accord-

ingly, we find that these calls do not represent the type of

“telephone solicitations to which [telephone subscribers]

object” discussed in section 227(c)(1). Moreover, we con-

> In determining whether a telemarketer is considered a ‘friend’ or

‘acquaintance’ of a consumer, we will look at, among other things,

whether a reasonable consumer would expect calls from such a person

because they have a close or, at least, firsthand relationship. If a com-

plaining consumer were to indicate that a relationship is not sufficiently

personal for the consumer to have expected a call from the marketer, we

would be much less likely to find that the personal relationship exemption

is applicable. While we do not adopt a specific cap on the number of calls

that a marketer may make under this exemption, we underscore that the

limited nature of the exemption creates a strong presumption against those

marketers who make more than a jimited number of calls per day.

' We note that this conclusion is consistent with Congress’ rationale

in exempting tax-exempt nonprofit organizations and estadlished business

relationships from the definition of telephone solicitation, See H.R. Rep.

No, 102-317 at 14 and 16 (1991).

639a

clude that the Commission also has authority to recognize this

limited carve-out pursuant to section 227(c)(1)(E). This

subsection provides the Commission with discretion in

implementing rules to protect consumer privacy to “develop

proposed regulations to implement the methods and pro-

cedures that the Commission determines are the most

effective and efficient to accomplish the purpose of this

section.”"*’ To the extent that any consumer objects to such

calls, the consumer may request to be placed on the

telemarketer’s company’s company-specific do-not-call list.

We intend to monitor the rules we adopt today and caution

that any individual or entity relying on personal relationships

abusing this exemption may be subject to enforcement action.

48. In addition, we decline to extend this approas* seyond

persons that have a personal relationship with the marketer.

For example, Vector urges the Commission to adopt an

exemption that covers “face-to-face” appointment calls to

anyone known personally to the “referring source.”'®* We

note that such relationships become increasingly tenuous as

they extend to individuals not personally known to the

marketer and thus such calls are more likely to be unexpected

to the recipient and more voluminous. Accordingly, referrals

to persons that do not have a personal relationship with

the marketer will not fall within the category of calls

discussed above.

49. We also decline to establish an exemption for calls

made to set “face-to-face” appointments per se.'” We

'67 47 U.S.C § 227(c)(1)(E).

168 See Vector Further Comments at Att. 2. Vector makes

approximately 4 million calls per year. Vector Comments at 6.

Such calls may, however, be permissible when they fall within

exemptions for personal or established business relationships as discussed

herein.

pada aia vad

640a

conclude that such calls are made for the purpose of

encouraging the purchase of goods and services and therefore

fall within the statutory definition of telephone solicitation.

We find no reason to conclude that such calls are somehow

less intrusive to consumers than other commercial telephone

solicitations. The FTC has reviewed this issue and reached

the same conclusion.'” In addition, we decline to exempt

entities that make a “de minimis” number of commercial

telemarketing calls.'”' In contrast to Congress’ rationale for

exempting nonprofit organizations, we believe that such

commercial cails continue to be unexpected to consumers

even if made in low numbers. As defined by one commenter,

a de minimis number of calls would not be based on the total

number of calls originating from one organization, but would

be based on the number of calls placed by individual

employees of the company.'” Thus, the telemarketing entity

could circumvent the do-not-call regulations by hiring any

number of individual marketers, so long as they each did not

make more than 20 calls per day. We believe that such

an exemption, extrapolated to the entire direct marketing

industry, would result in a significant number of unwanted

telephone solicitations. This would undoubtedly result in

consumer confusion and frustration regarding the application

of the national do-not-call rules. In addition, we believe that it

would be difficult, if not impossible, to monitor and enforce

such a requirement. For the reasons discussed below, we do

not believe the costs to access the national database is

unreasonable for any small business or entity making a “de

minimis” number of calls.

'0 ETC Order, 68 Fed. Reg. 4655-56.

For example, Vector suggests that the Commission exempt

individual direct sellers who make no more than 20 calls per day. Vector

Commenis at 8-10.

72 Vector Further Comments at 4. Vector makes approximately 4

million calls per year. Vector Comments at 6.

641a

50. In response to the Further Notice, a few commenters

contend that any new rules the Commission adopts would not

apply to entities engaged in the business of insurance,

because such rules would conflict with the McCarran-

Ferguson Act.'” The McCarran-Ferguson Act provides that

“[t]he business of insurance . . . shall be subject to the laws of

the . . . States which relate to the regulation . . . of such

business.”'”* The McCarran-Ferguson Act further provides

that “[n]Jo Act of Congress shall be construed to invalidate,

impair, or supersede any law enacted by any State for the

purpose of regulating the business of insurance . . . unless

such Act specifically relates to the business of insurance.”'”

American Council of Life Insurers (ACLI) explains that

insurers’ marketing activities are extensively regulated at the

state—level. The Commission’s proposal, ACLI argues,

“intrudes upon the insurance regulatory framework estab-

lished by the states” and, therefore, should not be applicable

to insurers sder McCarran-Ferguson.'”°

51. The McCarran-Ferguson Act does not operate to

exempt insurance companies wholesale from liability under

the TCPA. It applies only when their activities constitute the

“business of insurance,” the state has enacted laws “for the

purpose of regulating” the business of insurance, and the

TCPA would “impair, invalidate, or supersede” such state

"3 See ACLI Further Comments at 1-3; Stonebridge Further

Comments at 5-7; Cendant Further Comments at 3-4; NAII Further

Comments at 3. We note that many other commenters representing

insurance interests did not raise this issue before or during the Further

Notice comment period.

4 15 U.S.C. § 1012(a).

5 15 U.S.C. § 1012(b).

sa See ACLI Further Cemments at 1-2.

SORE NR CSL ORE RPO ih SANGER IAAIL ED a tal

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laws.'”’ In the one case cited by commenters as addressing the

interplay between McCarran-Ferguson and the TCPA, a

federal district court dismissed a claim brought against two

insurance companies under the TCPA for sending unsolicited

facsimile advertisements.’ The Chair King court found that

the TCPA conflicted with a Texas law that proh:bited untrue,

deceptive, or misleading advertising by insurers and their

agents. In its analysis, the court determined that insurance

advertising was part of the “business of insurance,”'” and that

the Texas law in question was enacted for the purpose of

regulating the business of insurance." The court then

concluded that because the TCPA “prohibits unsolicited

insurance advertising by facsimile while the Texas [laws]

permit [such] advertising . . . so long as the advertisements

are truthful and not misleading,” the TCPA conflicts with the

Texas law and is preempted under McCarran-Ferguson.'*!

52. To the extent that any state law regulates the “business

of insurance”'’ and the TCPA is found to “invalidate, impair,

7 See 15 U.S.C. § 1012(b); see also The Chair King, Inc. v. Houston

Cellular Corp., 1995 WL 1760037 (S.D. Tex. 1995), vacated for lack of

subject matter jurisdiction 131 F.3d 507 (Sth Cir. 1997).

"8 The Chair King, Inc. v. Houston Cellular Corp., 1995 WL 1760037

(S.D. Tex. 1995).

' See Chair King, 1995 WL 1760037 at 3 (citing SEC v. National

Securities Inc., 393 U.S. 453, 460 (1960) and FTC v. National Casualty

Co., 357 U.S. 560 (1958)).

'89 See Chair King, 1995 WL 1760037 at 4.

We note that the TCPA’s prohibition does not specifically reference

insurance advertising. The TCPA also permits facsimile advertising to

persons who have given their prior express invitation or permission. See

47 U.S.C. §§ 227(b)(1)(C) and (a)(4).

182

181

NAII explains that “[s]tate insurance codes prohibit a variety

of unfair trade practices, such as rebating, deceptive advertising,

inequitable claim settlement and unfair discrimination.” See NAII Further

Comments at 2.

643a

or supersede” such state law, it is possible that a particular

activity involving the business of insurance would not fall

within the reach of the TCPA. Any determination about the

applicability of McCarran-Ferguson, however, requires an

analysis of the particular activity and State law regulating it.

In addition, McCarran-Ferguson applies only to federal

statutes that “invalidate, impair, or supersede” state insurance

regulation. Courts have held that duplication of state law

prohibitions by a federal statute do not “invalidate, impair, or

supersede” state laws regulating the business of insurance. '*’

Nor 1s the mere presence of a regulatory scheme enough

to show that a state statute is “invalidated, impaired

or superseded.”'™

53. We believe that the TCPA, which was enacted to

protect consumer privacy interests, is compatible with states’

regulatory interests.’ In fact, the TCPA permits States to

enforce the provisions of the TCPA on behalf of residents of

- their State.'*° In addition, we believe that uniform application

of the national do-not-call registry to all entities that vse the

telephone to advertise best serves the goals of the TCPA. To

exempt the insurance industry from liability under the TCPA

8 See, e.g., Merchant Home Delivery Serv. Inc. v. Frank B. Hall &

Co. Inc., 50 F.3d 1486, 1492 (9th Cir. 1995) (holding federal statute

prohib‘ting acts also prohibited under state law not to “invalidate, impair,

or supersede” state law under McCarran-Ferguson); United Farm Bureau

Mut. Ins. Co. v. Metropolitan Human Relations Comm'n, 24 F.3d 1008,

1016 (7th Cir. 1994) (holding duplicate prohibition of redlining

under Indiana law not to preempt Fair Housing Act under McCarran.

Ferguson Act).

1 See, e.g., Mackey v. Nationwide Ins. Companies, 724 F.2d 419, 421

(4th Cir. 1984).

85 See U.S. v. Calvin, 39 F.3d 1299, 1305 (Sth Cir. 1994) (noting that

government charges of fraud not barred by McCarran-Ferguson Act where

interest in fraud protection is completely compatible with state’s

regulatory interests).

186 See 47 U.S.C. § 227(f)(1).

56 Si ERR Get eI Sa ne es BORER

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644a

would likely confuse consumers and interfere with the pro-

tections provided by Congress through the TCPA. Therefore,

t) the extent that the operation of McCarran-Ferguson on the

TCPA is unclear, we will raise this issue in our Report to

Congress as required by the Do-Not-Call Act.

54. We conclude that the national do-not-call mechanism

established by the FTC and this Commission adequately takes

into consideration the needs of small businesses and entities

that telemarket on a local or regional basis in gaining access

to the national database. As required by section 227(c)(1)(C),

we have considered whether different procedures shou!d

apply for local solicitations and small businesses. We decline,

however, to exempt such entities from the national do-not-

call requirements. Given the large number of entities that

solicit by telephone, and the technological tools that allow

even small entities to make a significant number of

solicitation calls, we believe that to do so would undermine

the effectiveness of the national do-not-rules in protecting

consumer privacy and create consumer confusion and

frustration. In so doing, we conclude that the approach

adopted herein satisfies section 227(c)(4)’s requirement that

the Commission, in developing procedures for gaining access

to the database, consider the different needs of telemarketers

conducting business on a national, regional, State, or local

level and develop a fee schedule for recouping the cost of

such database that recognizes such differences.'*’ The

national database will be available for purchase by sellers on

an area-code-by-area-code basis. The cost to access the

database will vary depending on the number of area codes

requested. Sellers need only purchase those area codes in

which the seller intends to telemarket. In fact, sellers that

request access to five or fewer area codes will be granted

access to those area codes at no cost. We note that thirty-three

'87 47 U.S.C. § 227(c)(4)(A)-(B)} (emphasis added).

éi|

: ;

645a

states currently have five or fewer area codes. Tus,

telemarketers or sellers operating on a “local” or “regional”

basis within one of these thirty-three states will have access to

all of that states’ national ¢o-not-call registrants at no cost. In

addition, the national database will provide a single number

lookup feature whereby a small number of telephone numbers

can be entered on a web page to determine whether any of

those numbers are included on the national registry. We

believe this fee structure adequately reflects the needs

of regiorial telemarketers, small business and those marketing

on a de minimis level. For these reasons, we conclude that

this approach will not place any unreasonable costs on

small businesses. '**

3. Section 227(c)(3) Requirements

55. We conclude that the national do-not-call database

adopted jointly by this Commission and the FTC satisfies

each of the statutory requirements outlined in section

227(c)(3)(A)-(L). We now discuss each such requirement.

Section 227(c)(3)(A) requires the Commission to specify the

method by which an entity ic administer the national database

will be selected. On August 2, 2002, the FTC issued a

Request for Quotes (RFQ) to selected vendors on GSA

schedules seeking proposals to develop, implement, and

operate the national registry. After evaluating those pro-

posals, the FTC selected a competitive range of vendors and

issued an amended RFQ to those vendors on November 25,

2002. After further evaluation, the FTC selected AT&T

Government Solutions as the successful vendor for the

national do-not-call database on March i, 2003.'*? As noted

above, Congress has approved the necessary funding for

implementation of the national database.

188 See 47 U.S.C. § 227(c)(4)(B)(iii).

189 ‘See also Letter from Michael Del Casino, AT&T, to Marlene

Dortch, FCC, dated March 18, 2003.

SA a a il is

646a

56. Pursuant to sections 227(c)(3)(B)-(C), we require each

common carrier providing telephone exchange service to

inform subscribers for telephone exchange service of the

opportunity to provide notification that such subscriber

objects to receiving telephone solicitations. Each telephone

subscriber shall be informed, by the common carrier that

provides local exchange service to that subscriber, of (i) the

subscriber’s right to give or revoke a notification of an

objection to receiving telephone solicitations pursuant to the

national database and (11) the methods by which such righis

may be exercised by the subscriber. Pursuant to section

227(c)(3)(C), we conclude that, beginning on January 1,

2004, such common carriers shall provide an annual notice,

via an insert in the customer’s bill, to inform their subscribers

of the opportunity to register or revoke registrations on the

national do-not-call database. Although we do not specify the

exact description or form that such notification should take,

such notification must be clear and conspicuous. At a

minimum, it must include the toll-free telephone number and

internet address established by the FTC to register or revoke

registrations on the national do-not-call database.

57. Section 227(c)(3)(D) requires the Commission to

specify the methods by which registrations shall be collected

and added to the database. As discussed above, consumers

will be able to add their telephone numbers to the national do-

not-call registry either through a toll-free telephone call or

over the Internet.' Consumers who choose to register by

phone will have to call the registration number from the

telephone line that they wish to register. Their calls will be

answered by an Interactive Voice Response (IVR) system.

The consumers will be asked to enter on their telephone

keypad the telephone number from which the consumer is

calling. This number will be checked against the ANI that is

'° FTC Order, 68 Fed. Reg. at 4638-39.

647a

transmitted with the call. If the number entered matches the

ANI, then the consumer will be informed that the number has

been registered. Consumers who choose to register over the

Internet will go to a website dedicated to the registration

process where they will be asked to enter the telephone

number they wish to register.'’' We encourage the FTC to

notify consumers in the TVR message that the national

registry will prevent most, but not all, telemarketing calls.

Specifically, we believe consumers should be informed that

the do-not-call registry does not apply to tax-exempt

nonprofit organizations and companies with whom consumers

have an established business relationship. The effectiveness

and value of the national registry depends largely on an

informed public. Therefore, we also intend to emphasize in

our educational materials and on our website the purpose and

scope of the new rules.

58. Section 227(c)(3)(E) prohibits any residential sub-

scriber from being charged for giving or revoking notification

to be included on the national do-not-call database. As

discussed above, consumers may register or revoke do-not-

call requests either by a toll-free telephone call or over the

Internet. No charge will be imposed on the consumer. Section

227(c)(3)(F) prohibits any person from making or trans-

mitting a telephone solicitation to the telephone number of

any subscriber included on the national database. Subject to

the exemptions discussed above, we adopt rules herein that

will prohibit telephone solicitations to those consumers that

have registered on the national database. '”*

59. Section 227(c)(3)(G) requires the Commission to

specify (i) the methods by which any person deciding to make

telephone solicitations will obtain access to the database, by

area code or local exchange prefix, and (ii) the costs to be

19! ETC Order, 68 Fed. Reg. at 4639.

122 Soe also 16 C.F.R. § 310.4(b)(1)(iii)(B).

aie pas nt tm,

648a

recovered from such persons. Section 227(c)(3)(H) requires

the Commission to specify the methods for recovering, from

the persons accessing the database, the costs involved in the

operations of the database. To comply with the national do-

not-call rules, telemarketers must gain access to the telephone

numbers in the national database. Telemarketers will have

access to the national database by means of a fully-

automated, secure website dedicated to providing information

to these entities.'”’ The first time a telemarketer accesses the

system, the company will be asked to provide certain limited

identifying information, such as name and address, contact

person, and contact person’s telephone number and address.

If a telemarketer is accessing the registry on behalf of a client

seller, the telemarketer will also need to identify that client.'™

When a telemarketer first submits an application to access

registry information, the company will be asked to specify the

area codes they want to access. An annual fee will be

assessed based upon the number of area codes requested.'”°

Each entity on whose behalf the telephone solicitation is

being made must pay this fee via credit card or electronic

funds transfer. After payment is processed, the telemarketer

will be given an account number and permitted to access the

appropriate portions of the registry.'"° Telemarketers will be

permitted to access the registry as often as they wish for no

additional cost, once the annual fee is paid.

60. Section 227(c)(3)(1) requires the Commission to

specify the frequency with which the national database will

'? ETC Order, 68 Fed. Reg. at 4640.

FTC Order, 68 Fed. Reg. at 4640.

Telemarketing Sales Rule Fees, 68 Fed. Reg. 16238 (April 3, 2003)

(FTC Fees Notice). The FTC has proposed that sellers be charged $29 per

area code with a maximum annual fee of $7,250 for access to the entire

national database. Sellers may request access to five or less areas codes

for free.

196

194

195

FTC Order, 68 Fed. Reg. at 4640.

649a

be updated and specify the method by which such updates

will take effect for purposes of compliance with the do-not-

call regulations. Because the registration process will be

completely automated, updates will occur continuously.

Consumer registrations will be added to the registry at the

same time they register-or at least within a few hours after

they register. As discussed above, the safe harbor provision

requires telemarketers to employ a version of the registry

obtained not more than three months before any call is made.

Thus, telemarketers will be required to update their lists at

least quarterly. Instead of making the list available on specific

dates, the registry will be available for downloading on a

constant basis so that telemarketers can access the registry at

any time.'”’ As a result, each telemarketer’s three-month

period may begin on different dates.'” In addition, the

administrator will check all telephone numbers in the do-not-

call registry each month against national databases, and those

numbers that have been disconnected or reassigned will be

removed from the registry.'” We encourage parties that may

have specific recommendations on ways to improve the

overall accuracy of the database in removing disconnected

and reassigned telephone numbers to submit such proposals

to our attention and to the FTC directly.

61. Section 227(c)(3)(J) requires that the Commission’s

regulations be designed to enable states to use the database

for purposes of administering or enforcing state law.’

Section 227(c)(3)(K) prohibits the use of the database for any

'"? ETC Order, 68 Fed. Reg. at 4647.

” Appropriate state and federal regulators will be capable of verifying

when the telemarketer last accessed the list. F7C Order, 68 Fed. Reg.

at 4641.

' ETC Order, 68 Fed. Reg. at 4640.

oF ts fact, section 227(e)(2) prohibits states from using any database

that does not include the part of the national database that relates to such

state. See 47 U.S.C. § 227(e)(2).

LSS UU

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650a

purpose other than compliance with the do-not-call rules and

any such state law and requires the Commission to specify

methods for protection of the privacy rights of persons whose

numbers are included in such database. Consistent with the

determination of the FTC, we conclude that any law

enforcement agency that has responsibility to enforce federal

or state do-not-call rules or regulations will be permitted to

access the appropriate information in the national registry.””'

This information will be obtained through a secure Internet

website. Such law enforcement access to data in the national

registry is critical to enable state Attorneys General, public

utility commissions or an official or agency designated by a

state, and other appropriate law enforcement officials to

gather evidence to support enforcement of the do-not-call

rules under the state and federal law. In addition, as discussed

above, we have imposed restrictions on the use of the national

list.°°* Consistent with the FTC’s determination, we have

concluded that no person or entity may sell, rent, lease,

purchase, or use the national do-not-call database for any

purpose except compliance with section 227 and any such

state or federal law to prevent telephone solicitations to

telephone numbers on such list. We specifically prohibit any

entity from purchasing this list from any entity other than the

national do-not-call administrator or dispensing the list to any

entity that has not paid the required fee to the administrator.

The only information that will be made available to tele-

marketers is the telephone number of consumers registered on

the list. Given the restrictions imposed on the use of the

national database and the limited amount of information

provided, we believe that adequate privacy protections have

been established for consumers.

201

See FTC Order, 68 Fed. Reg. at 4641.

202 See supra para. 32.

65la

62. Section 227(c)(3)(L) requires each common carrier

providing services to any person for the purpose of making

telephone solicitations to notify such person of the

requirements of the national do-not-call rules and the regu-

lations thereunder. We therefore require common carriers,

beginning January 1, 2004, to make a one-time notification to

any person or entity making telephone solicitations that is

served by that carrier of the national do-not-call requirements.

We do not specify the exact description or form that such

notification should take. At a minimum, it must include a

citation to the relevant federal do-not-call rules as set forth in

47 C.F.R. § 64.1200 and 16 C.F.R. Part 310, respectively.

Although we recognize that carriers may not be capable of

identifying every person or entity engaged in telephone

solicitations served by that carrier, we require carriers to

make reasonable efforts to comply with this requirement. We

note that failure to give such notice by the common carrier to

a telemarketer served by that carrier will not excuse the

telemarketer from violations of the Commission’s rules.

~ 4, Constitutionality

63. We conclude that a national do-not-call registry is

consistent with the First Amendment. As discussed in more

detail below, we believe, like the FTC, that our regulations

satisfy the criteria set forth in Central Hudson Gas & Elec. v.

Pub. Serv. Comm. of N.Y., in which the Supreme Court

established the applicable analytical framework for deter-

mining the constitutionality of a regulation of commercial

speech.” Our conclusion is also consistert vith every Court

203 Central Hudson Gas & Elec. v. Pub. Serv. Comm. of N.Y., 447 U.S.

557 (1980). NAAG argues that Central Hudson may not even be the

appropriate analytical framework to determine the constitutionality of

regulations implementing the national do-not-call registry, since “[flar

from being an impermissible regulation of s»eech, the registry merely

works to prevent ‘a form of trespass.”” NAAG Comments at 34. We

would note, however, that the Supreme Court has analyzed other measures

Se es

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652a

of Appeals decision that has considered First Amendment

challenges to the TCPA.™

64. Under the framework established in Central Hudson, a

regulation of commercial speech will be found compatible

with the First Amendment if (1) there is a substantial

government interest; (2) the regulation directly advances the

substantial government interest; and (3) the proposed regu-

lations are not more extensive than necessary to serve that

interest.””> Under the first prong, we find that there is a

substantial governmental interest in protecting residential

privacy. The Supreme Court has “repeatedly held that

individuals are not required to welcome unwanted speech into

that protected residential privacy as restrictions on commercial speech.

See Florida Bar v. Went For It, Inc., 515 U.S, 618 (1995) (applied Central

Hudson analysis to Florida Bar rules that prohibited lawyers from using

direct mail to solicit personal injury or wrongful death clients within 30

days of accident.) See also State of Missour’ +. American Blast Fax, 323

F.3d 649 (8th Cir. 2003) (American Blast rax), pet. for rehearing pending

and Destination Ventures v. Federal Communications Commission, 46

F.3d 54 (9th Cir.1995) (Destination Ventures), where both the Eighth and

Ninth Circuits applied the Central Hudson analysis to the TCPA

provisions banning unsolicited fax advertising.

24 See Kathryn Moser v. Federal Communications Commission, 46

F.3d 970 (9th Cir. 1995) (Moser) cert. denied, 515 U.S. 1161 (1995)

(upholding ban on prerecorded telephone calls); American Blast Fax

(upholding ban on unsolicited fax advertising) and Destination Ventures

(upholding ban on unsolicited fax advertising).

205 Central Hudson, 447 U.S. at 566. Specifically, the Court found that

“{flor commercial speech to come within the First Amendment, it at least

must concern lawful activity and not be misleading. Next, it must be

determined whether the asserted governmental interest to be served by the

restriction on commercial speech is substantial. If both inquiries yield

positive answers, it must then be decided whether the regulation directly

advances the governmental interest asserted, and whether it is not more

extensive than is necessary to serve that interest.” /d. at 557.

653a

their homes and that the government may protect this

freedom.”

65. In particular, the government has an interest in

upholding the right of residents to bar unwanted speech from

their homes. In Rowan v. United States Post Office, the

Supreme Court upheld a statute that permitted a person to

require that a mailer remove his name from its mailing lists

and stop all future mailings to the resident:

The Court has traditionally respected the right of a

householder to bar, by order or notice, solicitors,

hawkers, and peddlers from his property. In this case the

mailer’s right to communicate is circumscribed only by

an affirmative act of the addressee giving notice that he

wishes no further mailings from that mailer. . . . In

effect, Congress has erected a wall—or more accurately

permits a citizen to erect a wall-that no advertiser may

penetrate without his acquiescence.”””

66. Here, the record supports that the government has a

substantial interest in regulating telemarketing calls. In 1991,

Congress held numerous hearings on telemarketing, finding,

among other things, that “[m]Jore than 300,000 solicitors call

more than 18,000,000 Americans every day” and “[u]nre-

stricted telemarketing can be an intrusive invasion of privacy

” Frisby v. Schultz, 487 U.S. 474, 485. See also Federal

Communications Commission v. Pacifica Foundation, 438 U.S. 726, 748

(1978) (“{I]n the privacy of the home, ... the individual’s right to be left

alone plainly outweighs the First Amendment rights of an intruder.”).

207 Rowan v. United States Post Office, 397 U.S. 728 at 737-738

(1970); see also Martin v. City of Struthers, 319 U.S. 141 (1943), in

which the Court struck down a ban on door-to-door solicitation because it

“substituted the judgment of the community for the judgment of the

individual householder,” id. at 144, but noted in dicta that a regulation

“which would make it an offense for any person to ring a bell of a

householder who has appropriately indicated that he is unwilling to be

disturbed” would be constitutional. /d. at 148.

654a

and, when an emergency or medical assistance telephone line

is seized, a risk to public safety.’ Our record, like the FTC’s,

demonstrates that telemarketing calls are even more of an

invasion of privacy than they were in 1991. The number of

daily calls has increased five fold (to an estimated 104

million), due in part to the use of new technologies, such as

predictive dialers.°” An overwhelming number of consumers

in the approximately 6,500 commenters in this proceeding

support the adoption and implementation of a national do-not-

call registry. In addition to citing concerns about the

numerous and ever-increasing number of calls, they complain

about the inadequacies of the company-specific approach, the

burdens of such calls on the elderly and people with

disabilities, and the costs of acquiring technologies to reduce

the number of unwanted calls.’'° Accordingly, we believe that

the record demonstrates that telemarketing calls are a sub-

staniial invasion of residential privacy, and regulations that

address this problem serve a substantial government interest.

67. Under Central Hudson's second prong, we find that the

Commission’s regulations directly advance the substantial

government interest. Under this prong, the government must

demonstrate that “the harms it recites are real and that its

restriction will in fact alleviate them to a material degree.”*"'

It imay justify the restrictions on speech “based solely on

history, consensus, and ‘simple common sense.’”’’* Creating

and implementing a national do-not-call registry will directly

advance the government’s interest in protecting residential

privacy from unwanted telephone solicitations. Congress,

208 HR. REP. NO. 102-317 at 2 (1991).

209

See supra para. 8.

See supra para. 19.

sin Florida Bar v. Went For It, Inc., 515 U.S. 618, 626 (1995) (citations

omitted).

212

“ Id. at 628 (citation omitied).

655a

consumers, state governments and the FTC have reached the

same conclusion. The history of state administered do-not-

call lists demonstrates that such do-not-call programs have a

positive impact en the ability of many consumers to protect

their privacy by reducing the number of unwanted telephone

solicitations that they receive each day.”'’ As noted above,

Congress has reviewed the FTC’s decision to establish a

national do-not-call list and concluded that the do-not-cali

initiative will provide significant benefits to consumers

throughout the United States.” We reject the arguments that

because our do-not-call registry provisions do not apply to

tax-exe:pt nonprofit organizations, our regulations do not

directly and materially advance the government interest of

protecting residential privacy.” “Government [need not]

make progress on every front before it can make

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