July 2007
DNC.com Monthly Compliance Update
State Holiday Alerts
Outbound calling is prohibited in Utah on Tuesday, July 24th, 2007 in observance of Pioneer Day.
Featured Article
Metaphors Gone Wild: "Pre-Scrubbed" and "Squeaky Clean" Lists
by Joseph Sanscrainte
Joseph Sanscrainte is an attorney with Bryan Cave, LLP, specializing in telemarketing law.
Visit us at DNC.com for information on contacting Joseph Sanscrainte.
One of the most enduring myths in telemarketing today is that liability for Do Not Call violations can be avoided merely by relying upon the representations of others. The most common scenario for this is as follows - Seller A obtains a "scrubbed" lead list from List Broker B that is used in Seller's A's calling campaigns. Seller A (either by itself or via an outside vendor) makes calls to consumers using the list, and rather than conducting a separate analysis of the list information before calling, simply relies upon the broker's representations that the list is good to go. Despite numerous enforcement actions to the contrary, there are still many in the teleservices arena who follow this scenario in the misguided notion that the FTC's enforcement hammer will somehow be deflected from them.
The FTC has addressed liability issues in many cases, and the one thread that clearly emerges is that the FTC will fine any entity in the telemarketing chain that it deems appropriate. For example, in the context of outside telemarketers calling Do Not Call numbers, the FTC fined DirecTV $5.4 million, holding that "sellers are on the hook for calls placed on their behalf and for their benefit." In the meantime, list managers setting up deals between list brokers and list renters are on the "hook" when they simply transfer scripts between the parties involved (see FTC v. Guidestar, ListData, and NeWorld). Finally, the FTC had this to say about sellers/telemarketers purchasing "scrubbed" lists:
"The bottom line is that telemarketers are responsible for complying with the Do Not Call provisions of the Telemarketing Sales Rule, and cannot hide behind the claims of their service providers. If a telemarketer purchases a ?scrubbed' list, they better make sure that it is current and squeaky clean or else they may be violating the law and subject to penalties."
- Lydia B. Parnes, Director,
Bureau of Consumer Protection
The quote above came from a recent case where the FTC required a California-based mortgage broker to pay $50,000 for violating the national Do Not Call registry. Although the defendant argued that it had purchased lead lists from outside list brokers, and that it had relied upon the broker's representations that the lists were properly scrubbed, the FTC held that the defendant was still liable since it was not enough to simply rely on the list broker's claims. In the process, the FTC also introduced a new standard heretofore unknown in the lexicon of American law - "squeaky clean."
"Squeaky clean" might mean different things to, say, a fifth grader and an adult, but the FTC's position is crystal clear - all telemarketers and the sellers that hire them are held to a very high standard when it comes to Do Not Call liability, one that does not allow for "pass-through" liability. Whenever a telemarketer receives a "pre-scrubbed" list from another entity for the purpose of making telemarketing calls, simple reliance upon the representations of the other entity is not nearly enough. The telemarketer, in order to have any chance of being able to claim protection under the FTC's Do Not Call "safe harbor" provisions, must put the third-party list through an additional layer of processing aimed at ensuring that all Do Not Call numbers have in fact been removed.
Compliance Tools
Questions about Do Not Call regulations?
DNC.com is now offering a complimentary audio CD filled with 13 tracks of commentary from a panel of leading industry experts. Get detailed information on scrub lists, safe harbor provisions, exemptions, enforcement actions and more! To get your free CD visit DNC.com.
Regulatory Alerts
On June 26th, 2007, Kentucky discontinued use of a separate State "Do-Not-Call" list in favor of the Federal "Do-Not-Call" list when Kentucky House Bill 430 (passed in April 2007) went into effect.
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