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Do-not-call list ‘up and running’

The nation’s popular do-not-call list is back in business, federal officials said Wednesday after an appeals court ruled that the registry is likely to survive legal challenges by the telemarketing industry. — By Martin Wolk
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The nation’s popular do-not-call list is back in business, federal officials said Wednesday after an appeals court ruled that the registry is likely to survive legal challenges by the telemarketing industry.

“The National Do Not Call Registry is fully up and running,” said Timothy Muris, chairman of the Federal Trade Commission. He called the latest ruling in the tangled legal battle over the industry’s future a “major victory for Americans.”

Industry groups, soon to face fines of up to $11,000 per telephone call for violating the rules, vowed to heed the wishes of consumers while considering their legal options.

“The myriad actions over the past few weeks have shown that the implementation of the government-run list has raised serious concerns that have yet to be answered,” the Direct Marketing Association said in a statement. The trade group, which has been leading the fight against the FTC rules, said it “continues to believe that it is not the proper role of government to create and implement a national do-not-call list.”

FTC clears high hurdles
In a 24-page ruling issued late Tuesday, the U.S. Court of Appeals for the 10th Circuit said “there is a substantial likelihood that the FTC will be able to show a reasonable fit between the substantial governmental interests it asserted and the national do-not-call list.”

Legal experts said the preliminary ruling by a three-judge appellate panel in Denver sets a high bar for the telemarketing industry to succeed in its claim that the list violates free-speech rights by discriminating between commercial callers, who are required to abide by the list, and non-profit organizations, who are not.

“It’s always dangerous to make that prediction, but yesterday’s order from the 10th circuit certainly weighs in favor of the Federal Trade Commission prevailing at the end,” said Chris Hoofnagle, associate director at the Electronic Privacy Information Center.

He said that for the judges to lift an order barring the FTC from enforcing the new regulations, the agency had to meet a four-pronged test, proving among other things that the industry would not suffer serious harm while the case is being litigated, even if the list is shown later to be illegal.

“It was a difficult standard to make, and the fact that the FTC satisfied the standard bodes well for the agency’s success ultimately,” said Hoofnagle.

The court promised an expedited schedule for the case, scheduling oral arguments for Nov. 10 in Tulsa, Okla.

Top enforcement priority
Consumers tired of being bothered by commercial solicitors have entered 52 million of the nation’s 130 million home telephone numbers into the FTC’s registry since it opened June 27. The list has been closed to new entries since late September, when a federal judge in Denver ruled the FTC regulations violate the First Amendment but will reopen Thursday to consumers and Friday to telemarketers, officials said.

As of Saturday, consumers who entered their number into the list before Sept. 1 will be able to file a complaint with the FTC if they receive a call they believe violates the law.

“I assure you that for the FTC this is our top enforcement priority,” Muris said.

Consumers who have signed on to the registry after Aug. 31 will have to wait three months before filing a complaint, FTC officials said.

Econimic impact
In addition to the free-speech issues, the industry has said the do-not-call list could prove economically devastating to an industry that generates some $211 billion in sales for companies selling everything from magazine subscriptions to vacation time-shares. The industry contends the new rules could result in the loss of 2 million of 6.5 million related jobs, but one Wall Street economist said this week that the total is likely to be far lower.

In a note published Tuesday, Goldman Sachs economist Andrew Tilton estimated 100,000 to 150,000 jobs would be lost over the next year due to the new rules, which he called relatively small compared with the 130 million people in the nation’s work force.

Tilton also noted that the regulations include broad exemptions that will allow telemarketers to continue calling households on the do-not-call list if they have an established business relationship or if they are calling on behalf of political campaigns or non-profits. And he speculates that the list could help boost the industry’s profitability by eliminating phone numbers that would be unlikely to result in a sale.

A roller-coaster ride
The appeals court ruling brings a roller-coaster ride for the regulations closer to a conclusion. On Sept. 23, an Oklahoma judge halted activity by ruling that the FTC did not have the authority to create the list. That was followed two days later by the broader ruling on free-speech issues by the Denver judge.

Congress acted swiftly to pass legislation granting the FTC the authority it already had claimed, and President Bush signed the bill into law Sept. 29. The case before the appeals court combines the two lower-level cases.