Accountability and Oversight

Courts Uphold Do Not Call Rule

The Tenth Circuit Court of Appeals unanimously upheld the constitutionality of the Do Not Call rule. The court rejected plaintiffs’ argument that the Federal Trade Commission's Do Not Call rule violates the First Amendment by treating charitable and political calls differently than commercial sales calls. The ruling, issued on February 17, 2004, leaves unchanged the Do Not Call restrictions and registry for for-profit telemarketers and the exemption for solicitations by charities. Full opinion.

In a separate case, the Federal District Court in Maryland upheld the Do Not Call rule’s requirement that professional telemarketers follow certain restrictions, even when calling on behalf of charities.  The restrictions pertain to caller identification, company specific do-not-call provisions, abandoned calls, and prohibitions on calls during certain times of day.  U.S. District Court J. Frederick Motz noted that the Federal Trade Commission does not have direct jurisdiction over nonprofits, and that FTC was correct in its determination that it can treat nonprofits differently than their for-profit agents. He added that it is the entity, not its activity that makes the difference in these cases—“Courts have held that an entity’s exemption from FTC jurisdiction is based on that entity’s status, not its activity.” Lawyers for the charities say they may appeal the ruling, which was issued on February 24, 2004.  Full opinion. 

Background
Enforcement of the Federal Trade Commission's "Do Not Call" Registry was temporarily delayed by court challenges.  An appeals court ruling on October 7, 2003 ultimately allowed enforcement of the rule to proceed while a challenge to the rule's constitutionality continued. 

The "Do Not Call" rules do not apply to nonprofits making calls on their own behalf using their own employees or volunteers, but they do apply to for-profit firms working on behalf of nonprofit organizations. Such firms do not have to search the national registry before placing calls for nonprofits, however, they must honor requests not to call again. The rules also impose new specific requirements on for-profit firms conducting solicitations for nonprofits, including:

• Telephone solicitors must disclose “truthfully, promptly, and in a clear and conspicuous manner” to the person receiving the call the identity of the charitable organization on behalf of which the request is being made and that the purpose of the call is to solicit a charitable contribution.
• Telephone solicitors are prohibited from misrepresenting, directly or by implication: a) the nature, purpose, or mission of any entity on behalf of which a charitable contribution is being requested; b) that any charitable contribution is tax-deductible in whole or in part; c) the purpose for which any charitable contribution will be used; d) the percentage or amount of any charitable contribution that will go to a charitable organization or program; e) any material aspect of a prize promotion (e.g., the odds of receiving a prize, the nature or value of a prize, or that a charitable contribution is required to win a prize); or f) a charitable organization’s or telemarketer’s affiliation with, or endorsement or sponsorship by, any person or government entity.
• Telephone solicitors may not make calls to any individual (or household) who has stated that he or she does not wish to receive calls made by or on behalf of the charitable organization for which a contribution is being solicited.
   

Last Updated March 26, 2004