Despite the well-recognized growth of online business transactions, much of the consumer business won today is still achieved by conducting business the old-fashioned way: by telephone solicitation. Customer solicitation/retention studies show that among the most successful methods for businesses to win and retain customers is by telephone contact, which is why telemarketing remains a major source of new and repeat customer business in the U.S. Business telemarketing remains active in the U.S. despite the national Do-Not-Call Registry and company-specific do-not-call lists. (See, for example, our prior e-Alerts on this subject, including FCC Proposes Indefinite Extension to National Do-Not-Call Registry and FCC Further Clarifies Do-Not-Call Rules). Prerecorded calls are among the calls regulated by law, and they are the subject of increasing consumer regulatory complaints and litigation.

The FCC has requested comment by May 4, 2011 on certain issues raised under the Telephone Consumer and Protection Act ("TCPA"), which prohibits calls to residential telephone lines using "an artificial or prerecorded voice to deliver a message" without the called party's "express prior consent," absent established statutory or regulatory exemptions (such as emergency calls, non-telephone solicitation calls, calls by tax-exempt non-profit organizations, or calls made by an entity with an established business relationship with the called party). The TCPA provides a private right of action to remedy violations of the TCPA or the FCC's related rules when a person has received more than one telephone call within a 12-month period "by or on behalf of" the same entity. A state may also sue on behalf of its residents alleging such violations.

On February 22, 2011, the United States, the States of California, Illinois, North Carolina, and Ohio, and DISH Network, LLC (DISH) jointly filed a petition asking the FCC to resolve a question arising from litigation pending in United States et al v. DISH Network, LLC, No. 09 cv 3073-MPM-BGC (E.D. Ill.). Similarly, DISH, a class action plaintiff and various other parties have separate petitions. All are asking the FCC to determine whether an entity on whose behalf a third party solicits the sale of the entity's goods or services is liable for TCPA violations by the third party. The States, and private plaintiffs, seek to apply the "on behalf of" language of the private right of action statute to establish liability for violations of prerecorded call restrictions. By contrast, DISH argues that the TCPA does not impose liability on a company for telemarketing calls made by third-party retailers that violate the prohibition against prerecorded voice calls. DISH argues that the alternative private right of action provision under Section 227(b)(3) exclusively determines whether it should be liable for third-party prerecorded calls; that provision lacks the "on behalf of" language of Section 227(c)(5).