On March 25, 2009, the U.S. Department of Justice (DOJ), at the request of the Federal Trade Commission (FTC), filed a complaint in the U.S. District Court for the Central District of Illinois against DISH Network (formerly known as EchoStar) for violating the FTC Act and the Telemarketing Sales Rule (TSR).
DOJ’s complaint alleges that DISH Network placed prohibited telemarketing calls, directly and through its authorized dealers, to consumer telephone numbers on the National Do Not Call Registry and also delivered prerecorded telemarketing messages to consumers.
The attorneys general of California, Illinois, Ohio, and North Carolina joined the complaint as co-plaintiffs, alleging that DISH Network’s actions also violated the Telephone Consumer Protection Act (TCPA) and various state telemarketing and unfair competition laws.
The TSR prohibits telemarketers from calling numbers on the registry and from abandoning outbound telephone calls (i.e., delivering a prerecorded message to a live consumer if such call is not connected to a sales representative within two seconds of the person’s completed greeting) and also prohibits sellers from helping telemarketers to do so.
Any person that provides substantial assistance—" more than a mere casual or incidental dealing with a seller or telemarketer that is unrelated to a violation of the [TSR]"—to a telemarketer when he or she knows or consciously avoids knowing that the telemarketer is running afoul of Section 310.4 of the TSR is also violating the TSR.
Similarly, the TCPA and related Federal Communications Commission rules prohibit individuals from soliciting via telephone a residential telephone subscriber with a number listed on the registry or delivering a prerecorded message to a residential telephone number without the prior express written consent of the called party unless the call is exempted by rule or order.
If a state attorney general believes any person is making telephone calls to its residents in violation of the TCPA, the state may bring a civil action on behalf of its residents to enjoin such calls and recover actual monetary loss or $500 for each violation (subject to an increase of up to three times that amount if the court determines the violator knowingly and willfully violated the regulations).
In the complaint, DOJ cites that, in "numerous instances," DISH Network directly and through its authorized dealers placed calls to numbers on the registry since mid-October 2003. The complaint further states that DISH Network’s authorized dealers abandoned telemarketing calls to consumers by failing to connect the called party to a representative within two seconds of the consumer’s completed greeting.
Moreover, DOJ claims that even though DISH Network received complaints from consumers that they still received DISH Network telemarketing calls—despite listing their numbers on the registry—and that its authorized dealers were delivering prerecorded messages, DISH Network failed to take any action to remedy the reported abuses.
In response to these alleged violations of the TSR, TCPA and other state laws, DOJ and certain state attorneys general are seeking monetary damages and a permanent injunction to ensure that DISH Network does not continue its unlawful telemarketing practices and develops a compliance program whereby it monitors the actions of its authorized dealers.
Companies that act as or engage sellers and telemarketers should ensure that their telemarketing practices comply with the TSR, TCPA and other relevant state laws by establishing and following through with a compliance program to monitor and enforce employees’ and dealers’ observance of these laws. Based on the counts raised by DOJ against DISH Network, this appears particularly important in cases where a company provides "substantial assistance" to a third-party dealer (e.g., makes financial payments to the dealer, permits the dealer to use the company’s trademark, provides the dealer access to the company’s automated order system, and/or enters into contracts with the customers contacted by the dealer), as it may demonstrate that the company neither "consciously avoid[ed] knowing" that the dealers’ actions were unlawful nor caused the dealers to engage in such violations.
For an article about the amendments to the TSR that affect call abandonment and prerecorded calls, see Privacy Briefing (Issue 5) (October 2008)