FTC eyes Plan B on junk calls

Federal Trade Commission Chairman Timothy J. Muris will propose an alternative to the national Do Not Call Registry tomorrow so consumers may block unsolicited telemarketing calls, sources close to the dispute said yesterday.

Officials at the regulatory agency declined to confirm they had plans for an alternative to the do-not-call list, but Mr. Muris said he would seek every recourse to give consumers "a choice to stop unwanted telemarketing calls."

The alternative that Mr. Muris will propose is an acknowledgement that legal issues surrounding the national registry won't be resolved by Wednesday, when the list was supposed to take effect.

U.S. District Judge Edward W. Nottingham put the do-not-call registry in legal limbo late Thursday when he said the FTC's plan was unconstitutional because it violated the First Amendment.

The FTC will appeal Judge Nottingham's (303/844-5018) decision in the 10th Circuit Court of Appeals in Denver.

"We are concerned it could be up to a two-year back-and-forth. We do think we will prevail, but it could take awhile," FTC spokeswoman Cathy MacFarlane said.

On Wednesday, U.S. District Judge Lee R. West invalidated the do-not-call list. He said Congress failed to give the agency the authority it needs to establish and enforce the list, which contains 50.6 million phone numbers.

Congress reacted swiftly on Thursday, and legislation giving the FTC the authority Judge West said it lacked sailed through the House and Senate.

But Judge Nottingham's decision presented a significantly greater hurdle than the problem raised by Judge West because Congress can't pass a law to fix a constitutional issue.

Despite that, legislators promised yesterday they would search for a solution that lets consumers block unsolicited telemarketing calls next week.

"Rest assured, we will examine the judge's opinion closely and will take whatever steps we can to ensure that the do-not-call registry is open for business as scheduled," Reps. Billy Tauzin, Louisiana Republican, and John D. Dingell, Michigan Democrat, said in a joint statement.

Robert Jackson, a telecommunications lawyer in the District, said Judge Nottingham's decision raised important issues.

"It's a well-reasoned order. There's some substance there," he said.

In its new telemarketing rules, the FTC planned to let consumers block calls from commercial telemarketers, but not from noncommercial telemarketers, who represent pollsters, politicians and charitable groups.

Judge Nottingham wrote that the FTC failed to prove there is a distinction between calls from commercial and noncommercial telemarketers, so it can't establish a rule to block calls from just one group.

Lawmakers said Judge Nottingham failed to recognize the privacy rights of consumers.

"This court decision is flawed, and I hope and believe it will be overturned on appeal. ... The right of commercial entities to speak is legitimate, but it must be balanced against the individual's right to privacy and the right of individuals to speak as well, indicating their desire not to receive unwanted calls," said Rep. Edward J. Markey, Massachusetts Democrat.

The FTC argued that each call the do-not-call registry blocks protects a consumer's privacy, even while other unwanted calls -- from charities and pollsters -- are not screened.

But Judge Nottingham said the FTC failed to prove that blocking only commercial telemarketing calls bolsters privacy. He indicated that a do-not-call list could withstand constitutional scrutiny if the FTC wanted to block all telemarketing calls.

"Were the do-not-call registry to apply without regard to the content of the speech ... it might be a different matter," he wrote.

Judge Nottingham also said the FTC failed to prove that blocking commercial telemarketing calls would prevent fraud because there was no evidence that people calling on behalf of charitable groups are beyond reproach.

"Many a [person] has utilized [an organization] ... to perpetuate fraud on unsuspecting consumers," he wrote.

While the do-not-call list appears to be in limbo, the head of the largest telemarketing industry group said this week he wants its members to respect the wishes of people who have placed their phone numbers on the registry.

Direct Marketing Association President H. Robert Wientzen asked telemarketers not to call numbers on the list.

Even while judges have put the future of the do-not-call list in doubt, both decisions this week let stand new rules on call abandonment.

Telemarketers must change their use of predictive dialers, the machines that tend to hang up on people or effectively put them on hold.

They must adjust the machines so they don't drop more than 3 percent of calls per day for each marketing campaign. They also must play a recorded message no more than two seconds after a consumer answers a call so they know who is calling.