By Bob Sullivan Technology correspondent
msnbc.com
updated 7/20/2005 4:43:55 PM ET 2005-07-20T20:43:55

They’re back. Or they might be, those pesky telemarketing calls, after nearly two years of peaceful, interruption-free dinners. That's the warning a consumer protection group is about to issue.

Legal wrangling threatens to disrupt that dinnertime quiet, according to the Electronic Privacy Information Center, which plans to present its concerns to the Federal Communications Commission later this month.  Telemarketing groups are quietly mounting a campaign that would open the door to a floodgate of new calls, EPIC says, pointing to a series of requests filed with the FCC, essentially asking the agency to invalidate state laws regulating the practice.

Telemarketers deny they are trying to pry open the door to a wave of new calls. Industry representatives contend they simply want a single, national rule to follow.

Several industry groups, including powerful banking lobbyists, have come down on the side of the telemarketers. In April an ad-hoc group of firms ranging from the Direct Marketing Association to the National Children's Cancer Society filed a joint petition asking the FCC to declare that it has "exclusive jurisdiction over interstate telemarketing calls." Also signing on to the petition were the American Bankers Association and the Community Bankers Association, two of the nation's biggest financial lobbying groups.

A favorable ruling would open the door for a fresh round of telemarketing calls, EPIC says.

"The phone is going to start ringing off the hook," said EPIC's Chris Hoofnagle.  "What we're talking about here is an exception that allows telemarketers to call people who are on the Do Not Call list."

Existing business relationship exception is key
At issue are laws in five states — Indiana, Florida, New Jersey, Wisconsin and North Dakota — that are stricter than the federal Do Not Call list regulations, which took effect in October 2003. 

For example in Indiana, telemarketers cannot place calls to anyone on the state's list.  Under federal law, companies can call consumers on the Do Not Call list if they have an "existing business relationship."

In Florida, automated phone calls by computers are banned, although they are allowed under federal law.

If the FCC sides with telemarketers and pre-empts of state laws, it will lead to "an avalanche" of telemarketing calls, said Indiana Attorney General Steve Carter.

The exception for existing business relationships is a big loophole, Hoofnagle argues, saying it would allow companies to make millions of new solicitation phone calls.  

"Every month, people shop at dozens of places. ... Buying a cup of coffee can create a 'relationship' that would allow the coffee shop to call you, even if you are on the Do Not Call Registry," he said. "I really see this as an opportunity for there to be a lot more telemarketing."

A patchwork quilt
The five states with stricter laws are an important beachhead for consumers, Hoofnagle said.  They currently prevent telemarketers from using computerized callers or making calls based on existing business relationships because they need to avoid breaking any state laws when they do national marketing campaigns, he said.

But Bill Raney, a telecommunications lawyer who defends companies against Do Not Call lawsuits, said laws in places like Indiana and Florida are not preventing such calls in the 45 states where they are not banned. And consumers are not complaining about them, said Raney, who represents The Sports Authority, which has asked the FCC to pre-empt Florida's law prohibiting computer-dialed calls.

"There is no evidence that (a favorable FCC ruling) will lead to large increases in telemarketing calls," he said.

Raney said telemarketing firms need a uniform standard to follow. Implementing rules from 50 different states is costly and unfair, he said. His law firm, Copilevitz & Canter, also represents the ad-hoc alliance which has appealed to the FCC for pre-emption. In that petition, the group describes complicated and varied state laws. In Louisiana, for example, telemarketing calls are illegal on Acadian Day and Huey P. Long day.

"A patchwork quilt is not a good idea," Raney said. "The FCC needs to say to the states, 'This is the standard with regard to national telemarketing calls.' "

Tom Kelly, spokesman for JPMorgan Chase & Co., said his company is currently calling existing customers with new pitches, and a uniform national law is only sensible.

"If they have a credit card with us, we want to talk to them about a mortgage that's being offered," he said.  "The issue really is we're trying to do business in 50 states, and having individual rules in each state makes it much more complicated."

An extra layer of protection
The hugely popular federal Do Not Call list — which has been joined by 80 million Americans — is jointly administered by the Federal Communications Commission and the Federal Trade Commission. The list, 12 years in the making, is rooted in the Telephone Consumer Protection Act of 1991.

Last month, the FCC asked for public comments on the issue of state pre-emption, which are due July 29. FCC spokeswoman Rosemary Kimball said she could not guess when the commission might rule on the issue.

"There's no way of predicting. It depends on the volume of comments and the complexities of the issues," she said.

Jen Schwartzman, spokeswoman for the FTC, said she did not share EPIC's concerns that pre-emption would lead to a sharp increase in telemarketing calls. The federal list is working well, she said, and consumers who are contacted by companies they have done business with can always ask to be removed from their list.

"There is that extra layer of protection," she said.  "You can always request to be taken off their call list and they have to comply. Having an existing business relationship is not a life sentence to get telemarketing calls."

A step backward
But Indiana's attorney general Carter said such a requirement unfairly puts the onus back on consumers again.

"If you put that burden on citizens, they are back where they were five years ago. ... That's quite a step backward from where we are today," he said.  "We think we have prevented over 1 billion phone calls. Some of them are cold calls. But many would have been people calling existing customers to make new sales pitches."

Taking states out of the telemarketing rules game would give less teeth to do-not-call laws, said Terence McElroy, a spokesman for the Florida Department of Agriculture and Consumer Services. The agency enforces Florida's Do Not Call law, which was the first in the nation.

"I know our state and other states have been aggressively enforcing their laws," he said. Florida has filed more than 100 lawsuits against violators.  "If the federal law were to stand alone, unless there was aggressive enforcement, it wouldn't be terribly effective."

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