DMA SUES FTC OVER 'DO NOT CALL' LIST

Alleges Feds Violated Telemarketers' First Amendment Rights

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WASHINGTON (AdAge.com) -- The Direct Marketers Association and the American Teleservices association each separately sued the Federal Trade Commission over the FTC's "do not call" telemarketing rules today.

The DMA's suit, filed in Oklahoma City, contends the FTC has overstepped its legal authority to prevent fraud by attempting to ban legitimate telemarketing, and that its action also violates marketers' First Amendment rights at free speech. The American Teleservices Association, which represents callers, filed its suit in Denver and made similar claims.

Official enforcement
The FTC's rules, which were announced Dec. 18, were formally published today in the Federal Register, formalizing when the rules will begin to be enforced. The FTC today said a number of rules will take effect March 31.

Some of the new rules affect

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calls that are dialed by marketers with the expectation that many won't be answered. When too many people answer, those people pick up their phones to hear nothing. The rules limit the percentage of callers who can get dead air and require marketers to insert a recording if no sales rep comes on within two seconds. The new rules also affect calls made by nonprofit groups

List awaits funding
The bigger change, the do-not-call list, will take effect about seven months after Congress approves funding for the list, an action that could happen in the next two weeks. The Senate has already approved $16 million to implement the list. The money will eventually be repaid by marketers, who are required to buy the list and stop calling consumers who have asked to be taken off, unless those consumers are current customers with an "existing" business relationship.

The DMA, which has been wavering on whether it would sue, today said the FTC should have waited for the Federal Communications Commission to act on its similar telemarketing rules. The FCC rules would cover more telemarketers. The DMA said it had decided to sue "to protect the U.S. telemarketing industry."

The ATA in its suit said the FTC's new exemptions and exclusions would impose "a prior restraint on speech by callers in certain categories that are disfavored by the government, and imposes various other unlawful restrictions." The suit also alleges the do-not-call list "substitutes the judgment of the government [for callers] regarding which calls should be permitted and which ones should be banned."

'Grave concerns'
"The FTC is singling out this form of advertising now, what will be next?" said H. Robert Wientzen, the DMA's president-CEO. "The recently proposed actions also raise grave concerns about regulation of constitutionally protected commercial free speech."

The DMA's suit named four telemarketers as additional plaintiffs. They are U.S. Security, which sells security alarm services; Chartered Benefit Services, which sells telemarketing services to the financial services industry; Global Contact Services, which offers telemarketing services for retailers; and InfoCision Management, which offers telemarketing services to both nonprofit and Fortune 500 companies.

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