Microsoft Word - NCLC Comments


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Microsoft Word - NCLC Comments

  1. 1. BEFORE THE FEDERAL COMMUNICATIONS COMMISSION WASHINGTON, D.C. 20554 ) ) ) Rules and Regulations Implementing the ) CG Docket No. 02-278, Telephone Consumer Protection Act of 1991 ) ) DA Docket No. 05-1346 ) __________________________________________) COMMENTS OF THE NATIONAL CONSUMER LAW CENTER
  2. 2. I. INTRODUCTION AND SUMMARY OF COMMENTS The National Consumer Law Center1 respectfully submits these Comments on behalf of its low-income clients pursuant to the notices published in the Federal Register on June 29, 2005, seeking comment on the petition for declaratory ruling filed by a coalition of 33 organizations (”Joint Petitioners). The National Consumer Law Center has joined in the comments of the Electronic Privacy Center (EPIC) which focus on issue of whether the Telephone Consumer Protection Act (TCPA)2 preempts state telemarketing laws and strongly asserts that more protective state laws are not preempted. These comments focus on whether the FCC can preempt the marketing aspects of the state telemarketing laws. In seeking a blanket declaration from the FCC that “the FCC has exclusive regulatory jurisdiction over interstate telemarketing,”3 the Joint Petitioners have disregarded the role of the States and the Federal Trade Commission in regulating deceptive and abusive marketing practices. As the EPIC comments point out, with telemarketing “[t]he telephone is merely the device for delivering advertising to the consumers.”4 The TCPA is a narrow statute and gives the FCC only fairly narrow rulemaking authority. The TCPA statute does not give the FCC jurisdiction over matters arising once the consumer answers the phone, such as the sales pitch, payment methods and contract terms. As discussed in the EPIC comments, there is no merit to the Joint Petitioners’ attempt to preempt state telemarketing laws protecting consumers’ privacy. Furthermore, the Joint Petitioners have ignored the fact that Congress gave express authority for the Federal Trade Commission (FTC) to enact regulations regarding deceptive and abusive telemarketing practices in the Telemarketing and Consumer Fraud and Abuse Prevention Act (TCFAPA).5 Congress recognized that the FTC has “insufficient resources to combat 1 NCLC is a non-profit corporation organized under the laws of the Commonwealth of Massachusetts in 1971. Its purposes include representing the interest of low-income people and enhancing the rights of consumers. Throughout its history, NCLC has worked to make utility services (telephone, gas, electricity, and water) more affordable and accessible to low-income households. 2 P.L. 102-243 codified at 47 U.S.C. § 227. 3 Joint Petition for Declaratory Ruling That the FCC Has Exclusive Regulatory Jurisdiction Over Interstate Telemarketing (Joint Petition) at i, 45. 4 EPIC comments at 4. 5 The Telemarketing and Consumer Fraud and Abuse Prevention Act, P.L. 103-297 (1994), codified at 15 U.S.C. § 6101 et seq. 1
  3. 3. the abusive and deceptive telemarketing practices by itself” and that the FTC “will continue to need the states’ resource assistance in combating telemarketing fraud.”6 Thus, Congress did not intend to preempt state telemarketing laws when it enacted the FTC telemarketing statute. In both the TCPA and the TCFAPA, Congress expressly preserved the states’ traditional police powers regarding telemarketing practices. Furthermore, Congress could hardly have intended the TCPA to preempt state telemarketing laws that it declined to preempt when enacting the broader FTC telemarketing statute. II. CONGRESS PASSED THE TCPA AND THE TCFAPA IN RESPONSE TO INDUSTRY PRACTICES THAT WERE GENERATING A LARGE VOLUME OF CONSUMER COMPLAINTS The legislative and regulatory history of the federal telemarketing laws and regulations shows that the laws were created in response to the growing number of frustrated and angry consumers who are upset by telemarketing calls. A. The Congressional History of TCPA Shows Congress Was Responding to Intrusions Into Consumers Privacy When Congress passed the TCPA in 1991, it was responding to the increase in consumer complaints to the FCC, FTC, State regulatory agencies, local phone companies and congressional offices due to the growth in the size of the telemarketing industry and new technologies that made automated calls more cost-effective.7 The Committee found that “The evidence gathered by the Committee indicates that a substantial proportion of the public believes that these calls are a nuisance and an invasion of one’s privacy rights in the home. The Supreme Court has recognized explicitly that the right to privacy is founded in the Constitution, and telemarketers who place telephone calls to the home can be considered ‘intruders’ upon privacy.”8 6 H.R. Rep. No. 103-20, at 3 (1993). 7 Senate Rep. No. 102-178, at 2 (1991), reprinted in 1991 USCCAN 1968, 1969-70. 8 Id. at 9, 1976. 2
  4. 4. B. FCC Rationale In TCPA Rulemaking Highlights The Severity of Telemarketing Problems In the adoption of the July 3, 2003 TCPA rules and regulations, the Commission found that: It has now been over ten years since the Commission adopted a broad set of rules that respond to Congress’s directives in the TCPA . . . .The number of telemarketing calls has risen steadily; the use of predictive dialers has proliferated; and consumer frustration with unsolicited telemarketing calls continues despite the efforts of the states, the Direct Marketing Associations (DMA)[] and the company-specific approach to the problem. Consumers often feel frightened, threatened, and harassed by telemarketing calls. Many consumers who commented in this proceeding “want something done” about unwanted solicitation calls, and the vast majority of them support the establishment of a national do-not- call registry. Congress, too, has responded by enacting the Do-Not-Call Implementation Act . . .[], authorizing the establishment of a national do- not-call registry, and directing this Commission to issue final rules in its second major TCPA proceeding that maximize consistency with those of the FTC.”9 C. The Congressional History of the TCFAPA Points to a Severe Telemarketing Fraud Problem In 1993, two years after passing the TCPA, Congress passed the TCFAPA to address abusive and fraudulent telemarketing practices.10 The Committee found that “Interstate telemarketing fraud has become a problem of such magnitude that the resources of the Federal Trade Commission are not sufficient to ensure adequate 9 Report and Order, In the Matter of Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, CG Docket No. 02-278 (rel. Jul. 3, 2003) at ¶2 (footnotes omitted). 10 H.R. Rep. 103-20, at 2 (1993). 3
  5. 5. consumer protection from such fraud.”11 The Committee also cited a national survey that found more than 92 percent of adults had received some sort of fraudulent solicitation over the past two years and at least 30 percent had responded.12 D. The Extent and Speed That Consumers Responded to the No Not Call List Indicate Substantial Consumer Frustration With Telemarketing Practices The popularity of the National Do Not Call list is indicative of the sheer number of consumers frustrated by telemarketing calls. One month before the FTC’s compliance requirements were to go into effect, consumers had registered more than 50 million phone numbers.13 By June 18, 2004, consumers registered 62 million phone numbers.14 The scope and severity of the problems that the federal telemarketing laws are addressing, coupled with the preemption analysis provided in EPIC’s comments, support the interpretation that Congress intended the federal laws to supplement state efforts to address the problems. Both the TCPA and the TCFAPA provide a framework for federal, state and individual consumers to work together on problems with unwanted, abusive and deceptive telemarketing calls. III. STATE TELEMARKETING LAWS INCLUDE PROTECTIONS BEYOND THE SCOPE OF THE TCPA The TCPA and the FCC’s regulations deal with the narrow issues of how telemarketers use the phone lines. State telemarketing laws and the TCFAPA go well beyond the TCPA in that they cover what is said to the consumer once the phone is answered. The TCPA does not give the FCC any authority over marketing practices such as the sales pitch, payment methods and contract terms. 11 Id. at 3. 12 Id. at 3. 13 FTC Press Release, “Do Not Call Registrations Exceed 50 Million” (Sep 17, 2003) available at 14 FTC Press Release, “National Do Not Call Registry Celebrates One-Year Anniversary” (June 24, 2004). 4
  6. 6. Most States have enacted telemarketing laws to protect their citizens from deceptive and abusive telemarketing practices. Many state telemarketing laws provide protections that beyond those covered by the TCPA. These protections are in danger of being preempted if the Commission grants the overly broad declaration of exclusive federal jurisdiction sought by the Joint Petitioners. Because of the problems with fly-by- night fraudulent telemarketers, many state telemarketing laws require registration and bonding.15 State telemarketing laws also often require disclosures, and submissions of sales scripts and information about prizes to the state enforcement agency.16 Many state statutes give consumers the right to cancel a sale within a set time period.17 A number of states restrict or prohibit courier pickup of a consumer’s payments.18 The fact that the FTC regulates the marketing practices of telemarketers does not mean that state telemarketing laws are unnecessary. Many state telemarketing laws are more protective than the regulations for the TCFAPA (e.g., prohibition of courier pickups) or address issues not covered by the TCFAPA (e.g., right to cancel). In addition, the FTC does not have jurisdiction over common carriers, banks, credit unions, savings and loans, insurance companies and airlines. The Supreme Court has recognized “States traditionally have had great latitude under their police powers to legislate as to the protection of the lives, limbs, health, comfort and quite of all persons.”19 The Commission should not interpret the TCPA in a manner that undercuts the States’ ability to protect their citizens from unwanted, abusive and fraudulent telemarketing practices. 15 National Consumer Law Center, Unfair and Deceptive Acts and Practices, 6th Edition, Appx E (2004)(provides a summary of state telemarketing laws). 16 Id. 17 See e.g., Ala. Code § 8-19A-14; Okla. Stat. Tit. 15, § 775A.4; Utah Code Ann. § 13-26-5; Wash.Rev. Code Ann. § 19.158.120. Right to cancel is accomplished in different ways by the states. See, e.g., N.D. Cent. Code § 51-18-02 (explicitly grants 3 days or longer right to cancel); Ala. Code § 8-19A-21.2 (requires covered telephone sale to be confirmed by a signed written contract and prohibits charges to customer’s account before the signed contract is returned to the telemarketer); Va. Code § 59.1-21.2 (extends door-to-door sales law, which includes a right to cancel, to phone sales). 18 See e.g., Kan. Stat. Ann. § 50-670(e); Ky. Rev. Stat. § 367.46955(5) and (6); Me. Rev. Stat. Ann. Tit. 32 § 14716; Mich. Comp. Laws Ann. §§ 445.111c(d) and 445.112; Mo. Stat. Ann. § 407.1076 (8) and (9); Vt. Stat. Ann. Tit. 9, § 2464. 19 Medtronic, Inc. v. Lohr, 518 U.S. 470, 475 (1996) quoting Metro.Life Ins. Co. v. Mass., 471 U.S. 724,756(1985). 5
  7. 7. Congress gave express authority for the Federal Trade Commission to enact regulations regarding deceptive and abusive telemarketing practices.20 As with the TCPA,21 in adopting the TCFAPA Congress recognized that many states have telemarketing laws and that the federal law will provide states with additional tools to fight abusive and deceptive telemarketing practices, thus supplementing, not supplanting state laws.22 In the Committee report on the TCFAPA, Congress stated that: many States pursue fraudulent activities under state law, and some States have enacted specific telemarketing fraud legislation. Many states also have authorized other State officials other than the State attorney general to bring actions in that State for protection if consumers in such cases as telemarketing fraud. H.R. 868 recognizes the legitimate role of the States in pursuing and enforcing telemarketing rules to be developed by the Commission, while encouraging close cooperation between the States and the FTC.23 Congress thus did not intend to preempt state telemarketing rules with the TCFAPA and in implementing the FTC’s Do-Not-Call rules, the FTC declined to preempt state telemarketing laws, including state Do-Not-Call lists.24 In passing the TCFAPA, Congress thus made it clear that it did not intend to preempt state laws that regulate practices covered by that Act. The FCC has no authority to preempt state laws regarding practices covered by the FTC’s rule, including not only the rule’s prohibitions regarding deceptive sales pitches and payment methods, but also the topics the are covered by both the FTC rule and the TCPA. These topics include abandoned calls,25 time restrictions for telemarketing calls,26identification of callers,27 and Do-Not-Call lists.28 Congress could hardly have intended for the TCPA to preempt state telemarketing laws when, in enacting the much broader FTC telemarketing rule Congress declined to preempt these state laws. 20 The Telemarketing and Consumer Fraud and Abuse Prevention Act, P.L. 103-297 (1994), codified at 15 U.S.C. § 6101 et seq. 21 16 U.S.C. § 6101(2)Findings, and H.R. Rep. No. 103-20, at 3 (1993). See Van Bergan v. State of Minn., 59 F.3d 1541, 1548 (8th Cir. 1985)(TCPA was intended not to supplant state law but to provide interstitial law preventing evasion of state law by calling across state lines). 22 H.R. Rep. No. 103-20, at 3-5 (1993). 23 H.R. Rep. No. 103-20, at 5 (1993). 24 68 Fed. Reg. 4580, 4638 (Jan. 29, 2003). 25 16 C.F.R. § 310.4 (b)(1) ,(3)and 47 C.F.R. § 64.1200 (a)(5) and (6). 26 16 C.F.R. § 310.4 (c) and 47 C.F.R. § 64.1200 (c). 27 16 C.F.R. § 310.4 (d) and 47 C.F.R. § 64.1200 (c). 28 16 C.F.R. § 310.1 et seq. (passim) and 47 C.F.R. § 64.1200 (passim). 6
  8. 8. IV. STATE PRIVATE RIGHTS OF ACTION BETTER ACHIEVE CONGRESS’S “GOAL OF IMPROVING ENFORCEMENT OF LAW” IN THE AREA OF DECEPTIVE AND ABUSIVE TELEMARKETING PRACTICES The private rights of action in the TCPA and TCFAPA are less protective than the state private rights of action. When the Congressional Budget Office Reviewed H.R. 868, the legislation that was to become the TCFAPA, it estimated that “Civil suits brought by individuals would entail no significant cost because few disputes are likely to reach the threshold amount of $50,000.”29 Thus, citizen enforcement of the federal TCFAPA was not intended to play a major role in curbing telemarketing abuses. TCPA remedies are also less protective than the state private rights of action because a private right of action triggered by a violation of the Do Not Call rules only exists after two violative telemarketing calls are made within 12 months (in a sense allowing one free bite). The TCPA also provides a private right of action for a narrow range of violations of TCPA laws regarding restrictions on automated telephone equipment (autodialers, artificial or prerecorded voice messages, unsolicited faxes). On the other hand, most State telemarketing statutes allow a private right of action or make violations per se violations of the State’s unfair and deceptive acts and practices law.30 Many State telemarketing laws provide for enhanced penalties where the victim of abusive or deceptive telemarketing is elderly.31 These state remedies are an important deterrent for telemarketers who engage in scams targeting the elderly. These are important enforcement tools that should not be preempted by this Commission. 29 Congressional Budget Office letter to Chairman Dingell, House Committee on Energy and Commerce regarding the cost estimate for the TCFAPA legislation (Feb. 23, 1993) as reprinted in H.R. Rep. 103-20 (Feb.24, 1993). 30 National Consumer Law Center, Unfair and Deceptive Acts and Practices, 6th Edition, Appx E (2004)(provides a summary of state telemarketing laws). 31 Id. 7
  9. 9. V. CONCLUSION For the foregoing reasons discussed in these supplemental comments and the preemption arguments raised in the EPIC comments, the Commission should deny the Joint Petitioners’ request for a blanket preemption of state telemarketing laws. Respectfully Submitted, Olivia Wein, Staff Attorney Carolyn Carter, Staff Attorney National Consumer Law Center 1001 Connecticut Avenue, Suite 510 Washington, DC 20036 202-452-6252 (phone) 202-463-9462 (fax) July 29, 2005 8