Markets Wired

In a comment submitted to the Federal Communications Commission, the Federal Trade Commission has urged its sister agency to hold that sellers of goods and services should be held responsible for sales calls made by others on their behalf, even if the seller did not physically place the calls. The FTC stressed that the FCC should not allow such sellers to escape liability from federal telemarketing laws designed to protect consumers and their privacy when others place telemarketing calls on their behalf.

The FTC’s comment is based on the agency’s experience in enforcing the Telemarketing Sales Rule, which protects consumers’ privacy and protects them against deceptive and unfair telemarketing practices. The FTC also established and enforces the national Do Not Call Registry, which allows consumers to stop unwanted telemarketing calls. To date, the FTC has brought 59 law-enforcement actions alleging Do Not Call violations.

“The Do Not Call Registry is important to the FTC, but is absolutely critical to consumers who want a stop to the telemarketing and robocalls that interrupt their dinner hour,” said FTC Chairman Jon Leibowitz. “We hope that the FCC acts quickly to resolve this issue.”

The FTC comment addresses two questions put forward by the FCC regarding the Telephone Consumer Protection Act of 1991 (TCPA). First, does a call placed by an entity that markets a seller’s goods and services qualify as a call made on behalf of, and initiated by, the seller, even if the seller does not physically place the call?; and second, what should determine whether a telemarketing call is made “on behalf of” a seller, thus triggering liability under the TCPA?

The FCC also asked whether common law principles should apply in such cases and, if so, which should be used to define “on behalf of.” The FCC has undertaken this inquiry as a result of a joint petition filed by all of the parties in a still-pending lawsuit brought by the FTC and four states against Dish Network, LLC, alleging multiple Do Not Call violations.

In its comment, the FTC urged the FCC to find that: 1) under the TCPA, a call placed by an entity that markets a seller’s goods and services does indeed qualify as a call made on behalf of, and initiated by, the seller – even if the seller did not place the call; and 2) the plain meaning of “on behalf of” should be used when determining whether a seller should held liable for illegal conduct by its marketers. In addition, the FTC urged the FCC to rule that the TCPA creates a statutory cause of action that imposes liability on the seller or a marketer for its violations, unless the seller or marketer can show that it meets defined “safe harbor” provisions.

In response to the first question, the FTC comment notes that the FCC’s approach in its prior cases and the FTC’s practice in its telemarketing cases is to hold sellers responsible for calls made on their behalf, even if the seller did not physically place the call. “The FTC has consistently maintained that sellers are responsible for their marketers’ telephone calls to solicit purchases of the seller’s goods or services,” the comment states.

In addition, in response to the FCC’s second question, the FTC comment states that protecting consumers’ privacy demands a uniform and comprehensive interpretation of “on behalf of” in the context of telemarketing. “The plain meaning of the words ‘on behalf of,’ as well as the regulatory framework of the TCPA supports this interpretation,” according to the FTC, and a more restrictive interpretation of “on behalf of” could jeopardize Congress’s privacy-protection goals.

The Commission vote approving the comment and its submission to the FCC was 4-0, with Commissioner Julie Brill recused. It was submitted to the FCC on May 4, 2011.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. “Like” the FTC on Facebook and “follow” us on Twitter.