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Telemarketers Put On Hold Again

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AP / CBS
Americans can again sign up for the national do-not-call list to fend off unwanted phone solicitations after a federal appeals court allowed the government to fully punish errant telemarketers — at least for now.

The 10th U.S. Circuit Court of Appeals on Tuesday temporarily blocked a lower court order barring the Federal Trade Commission from enforcing the registry of more than 50 million numbers.

"The Supreme Court has held that there is undoubtedly a substantial governmental interest in the prevention of abusive and coercive sales practices," the ruling said.

The court questioned the conclusions of U.S. District Judge Edward Nottingham of Denver, who said the list violates the telemarketing industry's free-speech rights by barring calls from businesses but not charities.

It also noted that Congress had found some telemarketing calls "subjected consumers to substantial fraud, deception and abuse."

FTC Chairman Timothy Muris called the latest ruling a victory for American consumers and said his agency will return to enforcing the list. The Federal Communications Commission had stepped in at the last minute to handle enforcement, allowing the registry to take effect last week.

"This is a victory for the FTC because it can now enforce its rules to a certain extent while the appellate process moves forward," said CBSNews.com Legal Analyst Andrew Cohen.

Nottingham's ruling had forced the FTC to shut down an Internet and telephone system that allowed people to register new numbers with the list and file complaints against telemarketers. FTC officials say it will take at least a day to get it up and running again.

The court fight isn't finished. The appeals court said the FTC can run the registry while a challenge from telemarketers winds its way through the courts. Oral arguments were scheduled in Tulsa, Okla., on Nov. 10.

"This could be an appeal that lasts for years," said Cohen.

"I think it's possible to read this ruling as a sign from the 10th Circuit that ultimately it will rule in favor of the FTC, but it's certainly not a guarantee. There are different standards in play," the legal analyst said. "I think all the court is saying is that it's not going to be the end of the world if the rules are enforced while the appeal is pending."

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

"This does not reverse the judge's ruling that the law is unconstitutional," he said.

Ed Kahn, a Denver attorney specializing in constitutional law, said Nottingham ignored the fact that FTC rules already allow consumers to put their phone numbers on charity no-call lists.

"This is not a case where government is acting on its own, but an action only after the consumer opts in and signs up," Kahn said.

The list has been the subject of at least two major court challenges by the telemarketing industry. A federal judge in Oklahoma said the FTC lacked the authority to create and enforce the list, a ruling made moot when President Bush signed a hastily passed law clarifying that authority.

It was Nottingham's ruling that had been closely watched because of the constitutional issues. His decision crippled the FTC's ability to fully punish telemarketers and kept it from sharing information about the list, hindering the FCC from enforcing it.

The FTC also had to stop providing the list to telemarketers, meaning they were free to call listed numbers without fear of reprisal.

The 10th Circuit has consolidated the appeal of Nottingham's decision with two related challenges — a case brought against the FCC by Denver telemarketers and the FTC's appeal of the ruling in Oklahoma. Arguments in all three cases will be heard at next month's hearing in Tulsa.

Attorneys for telemarketers argue the FTC has not shown charitable calls are different from commercial calls. They also said the First Amendment rights of telemarketers need to be protected.

"The court hasn't said that the FTC has won on the merits of the case, the court hasn't said that the First Amendment concerns aren't legitimate," said Cohen. "All the court has said is that the rules can go into effect while the federal courts are hashing out what's what."