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Journal of the Academy of Marketing Science. Volume 32, No. 4, pages 468-472. DOh 10.1y Academy of Marketing Science.
Marketing and the Law
Ann Morales Olazdbal, Anita Cava, and Rend Sacasas, Editors
University of Miami
Do Not Call Regulation Survives Constitutional Scrutiny
MARKETING AND THE LAW 469
database. Based on the telemarketers' estimates of 2.64 calls per week, the registry would block 6.85 billion sales calls per year. Clearly, then, the do-not-call list directly advances the interest of in-home privacy. Next, the court addressed whether the opt-out character of the do-not-call list satisfies the "narrow tailoring" requirement. Regulations based on individual choice of which messages to exclude are less offensive to free speech than direct prohibitions by the government. The do-not-call system is analogous to the postal regulation that allows households to register not to receive sexually explicit mailings. The Supreme Court, in analyzing that regulation, emphasized that the seller's right to communicate there was being circumscribed by the householder and not by the government. Furthermore, according to the 10th Circuit, the do-not-call regulation is narrowly tailored because it gives consumers the option to continue to receive certain welcome calls by providing written permission to those businesses. The regulation also continues the company-specific do-not-call requirements for individuals who do not register in the national database but request not to be called on a case-by-case basis, as set forth in the Telephone Consumer Protection Act of 1991. Plaintiffs argued that the companyspecific list created by that federal law is the most appropriately narrowly tailored option that protects consumers' privacy interest, contending that the shortcomings in that regulatory approach resulted from lack of both consumer education and government enforcement. The 10th Circuit answered that, unlike case-by-case do-not-call requests, the national registry blocks even that first unwanted call, is easier for consumers to use, and provides undisputed evidence about which phones are off-limits for calling. Alternatively, plaintiffs argued that call-blocking technology like Caller ID is a less restrictive way to accomplish the public interests regarding unwanted telephone solicitation. On the contrary, the court held that this approach puts the expense of avoiding the calls on the consumer. Also, for every technological blocking advance consumers acquire, the industry will likely find a mechanism for circumventing it, resulting in a technological "arms race" between consumers and the telemarketing industry, not an effective alternative to the national registry. Finally, plaintiffs complained that the subscription fee to access the registry violated the First Amendment. The court acknowledged that the government cannot impose a fee for the enjoyment of free speech rights. But the government is allowed to assess fees to defray the costs of administering legitimate regulations, such as parade permit fees that cover the cost of police escorts, barricades, or cleanup. These regulations are not based on any distinction between commercial or noncommercial speech, only on the need to pay for legitimate government administration. Nothing suggested to the court that the subscription fee would be used other than to administer the registry. Accordingly, the fee structure was upheld. The court's First Amendment analysis is thorough, well reasoned, and consistent with the current constitutional commercial speech doctrine. The only real likeli-
Mainstream Marketing Services, Inc. v. FTC, 358 F. 3d
1228 (10th Cir. 2004)
In 2003, the Federal Trade Commission (FTC) established a national "do not call" registry allowing consumers to opt out of most commercial telemarketing. Commercial telemarketers must pay a fee to access the registry and generally are prohibited from calling the listed numbers. Telemarketers have 3 months to comply once a number goes on the list, and a consumer's registration lasts 5 years. Political and charitable solicitation calls are not affected by the regulation, and telemarketers also may call consumers with whom they have an established business relationship. Recently, the 10th Circuit Court of Appeals upheld the registry's validity. Plaintiffs had challenged the do-notcall registry in four separate trial court actions, which were consolidated on appeal to the 10th Circuit. The plaintiffs' strategy of initiating these actions in each of the federal districts within the 10th Circuit was not likely happenstance. In 1999, the 10th Circuit Court had struck down a Federal Communications Commission (FCC) regulation restricting the telephone companies' rights to make certain telemarketing calls without prior customer permission, in a case called US West v. FCC. In that case, the court held that "opt in" requirements were an unreasonable restriction on commercial speech rights of the phone company. Presumably, the telemarketing industry hoped for an equally friendly result from the 10th Circuit regarding the do-not-call regulation. But as it turns out, the First Amendment free speech analysis that torpedoed the regulation in U.S. West does not apply to the opt-out approach underlying the do-not-call registry. Plaintiffs asserted four different challenges to the validity of the do-not-call system. First, they complained the regulation violates their free speech rights. The subscription fee also was challenged on First Amendment grounds.