The Federal Communications Commission (FCC) is currently accepting public comments in its review of a business’ liability for the unlawful telemarketing by third parties who purportedly act “on behalf of ” a business even without authorization. All comments must be submitted by May 4, 2011.

What Happened

The FCC review arose from a joint petition filed by DISH Network, LLC (DISH), the United States, and the States of California, Illinois, North Carolina, and Ohio (the States) requesting expedited clarification of and declaratory ruling on the Telephone Consumer Protection Act (TCPA) and the Commission’s related rules. Both DISH and the States present questions related to TCPA liability for companies when third-party retailers make unlawful telemarketing calls.

The TCPA states that it is unlawful “to initiate any telephone call to any residential telephone line using an artificial or prerecorded voice to deliver a message without the prior express consent of the called party,” unless the call is an emergency or exempted by the FCC. 47 U.S.C. § 227(b)(1)(B); see also 47 C.F.R. § 64.1200(a)(2). The FCC provides for both a national Do-Not-Call Registry and company-specific do-not-call lists that protect consumers from these unwanted telephone solicitations. 47 U.S.C. § 227(c); see also 47 C.F.R. § 64.1200(c).

In its petition to the FCC, DISH requested the FCC declare that the TCPA does not impose liability on a company for telemarketing calls by third-party retailers that allegedly violate the TCPA. DISH argues that liability should only be found in instances where the calls are made at the “direction and request” of the company at issue or where federal common law principles of agency apply. An additional petition was filed with the FCC on this issue in response to an order of the Sixth Circuit Court of Appeal’s referring the same question to the FCC.

The United States and the States asked the FCC to hold companies liable where third parties solicit the sale of the company’s goods or services in violation of the TCPA.

What It Means

The FCC’s decision on this issue could significantly broaden the scope of liability to a business that works with third parties – independent retailers, dealers or contractors – as strict liability for the actions of the third parties could be applied to the business. If the FCC adopts the position preferred by the United States and the States, a business would be strictly liable for TCPA violations of a third party that the business neither directs nor controls. As a result, businesses would be forced to consider adjusting their business relationships and practices which could have considerable effects on legitimate telemarketing practices.

What You Should Do

Click here to file a comment with the FCC. If you have questions about how any FCC action might affect your company, please contact your Lathrop & Gage attorney or any of the attorneys listed below.