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May 2011: TCPA Third-Party Liability - It All Depends What Your Definition of "On Behalf Of" Is.*

by Joseph Sanscrainte, an attorney specializing in telemarketing law.

The FCC recently issued a Public Notice that may have escaped the attention of quite a few compliance professionals in the telemarketing space. Issued on April 4, 2011, this Public Notice represents the FCC's first steps toward attempting to reconcile arguably conflicting provisions of the TCPA as these provisions apply to telemarketing calls made by third-party retailers.

The marketing techniques of DISH Network, LLC form the basis of the FCC's quandary. Specifically, DISH Network (and its technology partner Echostar) rely upon third-party, separately incorporated entities to market their direct-broadcast satellite services. Accordingly, when one Philip J. Charvat received 30 telemarketing calls offering DISH Network/Echostar services, Mr. Charvat discovered to his chagrin that these calls were made by numerous independent third-party retailers (e.g., DISH TV Now, Marrick Dish Co., and Marketing Guru). Mr. Charvat took exception to these calls and, rather than file separately against each individual third-party retailer, he drove upstream and filed a TCPA-based lawsuit against, you guessed it, Echostar. In the meantime, the United States government, along with several states, separately sued DISH Network under the TCPA alleging violations of Do Not Call, abandoned call, and pre-recorded call rules.

Not surprisingly, DISH Network is of the opinion that it has no liability for calls made by third-party retailers offering DISH Network/Echostar services - Mr. Charvat and the government agencies suing DISH/Echostar beg to differ. Each side, however, has elements of the TCPA on their side.

47 U.S.C. 227(b)(3) and (b)(1)(B) (which govern pre-recorded calling) allow a person to bring "an action" against an entity that "initiates" a phone call using a pre-recorded device. Meanwhile, 47 U.S.C. 227(c)(5) (the do-not-call private right of action provision) allows "a person who has received more than one call by or on behalf of the same entity" to file a lawsuit. DISH Network asserts that the pre-recorded calling rules do NOT apply to its marketing methods, while Mr. Charvat (and the US and several states) assert that 227(c)(5) renders DISH/Echostar liable for calls made by third-party retailers because such calls are made "on behalf of" DISH/Echostar.

Some questions to ponder (if that's your bag):

  • Even though § 227(b) does not contain the "on behalf of" language of 227(c)(5), do both provisions apply equally to calls placed by agents of the entity sued?
  • Does § 227(c)(5) create liability for entities on whose behalf calls are made even when the calls are placed by independent contractors rather than by agents or employees?
  • Does § 227(c)(5) create liability for entities on whose behalf calls are made even though the section is labeled only as a private right of action and even though individuals still must sue for violations of regulations?

These questions are pretty important to the telemarketing industry, and could impact the manner in which many companies telemarket their goods in the future. The FCC requests comments by May 19, 2011. Enjoy!

* with apologies to former President Bill Clinton.

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