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FEDERAL COMMUNICATIONS COMMISSION
WASHINGTON, D.C. 20554
May 3, 2005
VIA CERTIFIED MAIL
RETURN RECEIPT REQUESTED
Direct Merchants Credit Card Bank, N.A.
Attn: Cathy Magnuson
Senior Corporate Counsel
16430 North Scottsdale Road
Phoenix, Arizona 85254
Dear Ms. Magnuson:
This is an official CITATION, issued pursuant to section
503(b)(5) of the Communications Act of 1934, as amended (the
Communications Act), 47 U.S.C. § 503(b)(5), for violations of the
Federal Communications Commission's rules that govern telephone
solicitations and unsolicited advertisements.1 As explained
below, future violations of the Commission's rules in this regard
may subject your company to monetary forfeitures.
By letter dated March 17, 2005, the Telecommunications
Consumers Division of the Commission's Enforcement Bureau
notified you of consumer complaints regarding telemarketing calls
that your company, or an entity acting on behalf of your company,
made to telephone lines that are contained in the National Do-
Not-Call Registry, and provided you an opportunity to submit
information to demonstrate the lawfulness of those calls. You
responded by letters dated April 1, 2005 and April 7, 2005.2 You
do not dispute making six such calls to persons with whom you do
not have an established business relationship.3 You claim that
you have downloaded the National Do-Not-Call Registry monthly
since September 19, 2003, and that the calls in question were
made prior to receiving the version of the National Do-Not-Call
Registry containing that person's telephone number, or were made
in error and should be covered by the Commission's safe harbor
provisions, 47 C.F.R. § 64.1200(c)(2)(i). In fact, all of the
telephone numbers listed had been registered on the National Do-
Not-Call-List for over a month, and in some cases over a year,
before the calls in question were made. Further, in order to
qualify for safe harbor protection, you must demonstrate that
the violative calls were the result of an ``error.'' For the one
number that you apparently claim was called in error, you say
that ``[t]elemarketing calls were made to this phone number but
were not directed at this consumer.'' The Commission has
determined in an analogous situation that ``the Commission's
rules require do-not-call lists to be maintained on a telephone
number basis (rather than requiring request from every individual
at a particular residence).''4 Similarly, once a residential
telephone subscriber ``has registered his or her telephone number
on the national do-not-call registry,''5 it is unlawful to call
that number for telephone solicitation purposes, regardless of
which person the telemarketer is seeking to contact.6
Accordingly, we issue this citation.
Section 64.1200(c)(2) of the Commission's rules generally
prohibits the delivery of telephone solicitations to residential
telephone numbers that are contained in the National Do-Not-Call
Registry except in certain limited situations. Under the
Communications Act and the Commission's rules, a ``telephone
solicitation'' is ``the initiation of a telephone call or message
for the purpose of encouraging the purchase or rental of, or
investment in, property, goods, or services, which is transmitted
to any person.''7 Calls made by or on behalf of tax-exempt
nonprofit groups are not considered to be telephone
solicitations. Similarly, calls that are made to a person who
either has provided prior express invitation or permission to
call8 or has an established business relationship9 with the
caller are not considered to be telephone solicitations.
Finally, the rules permit telephone solicitations to a consumer
whose number is listed on the National Do-Not-Call Registry if
that consumer has a personal relationship with the individual
making the calls.10
Accordingly, under the Commission's rules, it is unlawful to
deliver a telephone solicitation to a residential telephone line
on the National Do-Not-Call Registry unless: (1) the call is made
by or on behalf of a tax-exempt nonprofit group; (2) the call is
made by a person who has a personal relationship with the called
party; (3) the called party has provided signed, written consent
for the call to be made; or (4) the called party has made a
purchase from, or had a transaction with, the caller within the
18 months immediately preceding the call or has made an inquiry
or application regarding the caller's products or services within
the three months immediately preceding the call, and the called
party has not specifically asked the caller to stop all
Entities making telephone solicitations must honor do-not-
call registrations no later than 31 days after a number is placed
on the National Do-Not-Call Registry,11 and for a period of no
less than five years. To accomplish this, section
64.1200(c)(2)(i)(D) requires entities making telephone
solicitations to use a version of the National Do-Not-Call
Registry obtained no more than 31 days before any telephone
solicitation is made, and to document this process. An entity
that does not claim one of the exemptions set forth above is not
liable for calling a telephone number on the National Do-Not-Call
Registry only if it is able to demonstrate that it has fully
complied with the Commission's standards governing use of the
National Do-Not-Call Registry as set out in section
64.1200(c)(2)(i)(A)-(E) of the rules, and that the particular
telephone solicitation call was the result of error.
If, after receipt of this citation, you violate the
Communications Act or the Commission's rules in any manner
described herein, the Commission may impose monetary forfeitures
not to exceed $11,000 for each such violation or each day of a
continuing violation. 12
You may respond to this citation within 30 days from the
date of this letter either through (1) a personal interview at
the Commission's Field Office nearest to your place of business,
or (2) a written statement. Your response should specify the
actions that you are taking to ensure that you do not violate the
Commission's rules governing telephone solicitation and
unsolicited advertisements, as described above.
The nearest Commission field office appears to be the San
Diego Office in San Diego, CA. Please call Al McCloud at 202-
418-2499 if you wish to schedule a personal interview. You
should schedule any interview to take place within 30 days of the
date of this letter. You should send any written statement
within 30 days of the date of this letter to:
Kurt A. Schroeder
Federal Communications Commission
445-12th Street, S.W., Rm. 4-C222
Washington, D.C. 20554
Reference EB-05-TC-003 when corresponding with the Commission.
Reasonable accommodations for people with disabilities are
available upon request. Include a description of the
accommodation you will need including as much detail as you can.
Also include a way we can contact you if we need more
information. Please allow at least 5 days advance notice; last
minute requests will be accepted, but may be impossible to fill.
Send an e-mail to email@example.com or call the Consumer &
Governmental Affairs Bureau:
For sign language interpreters, CART, and other
202-418-0530 (voice), 202-418-0432 (tty);
For accessible format materials (braille, large print,
electronic files, and audio
format): 202-418-0531 (voice), 202-418-7365 (tty).
Under the Privacy Act of 1974, 5 U.S.C. § 552(a)(e)(3), we
are informing you that the Commission's staff will use all
relevant material information before it, including information
that you disclose in your interview or written statement, to
determine what, if any, enforcement action is required to ensure
your compliance with the Communications Act and the Commission's
The knowing and willful making of any false statement, or
the concealment of any material fact, in reply to this citation
is punishable by fine or imprisonment under 18 U.S.C. § 1001.
Thank you in advance for your anticipated cooperation.
Kurt A. Schroeder
Deputy Chief, Telecommunications
Federal Communications Commission
1 47 C.F.R. § 64.1200. A copy of these rules is enclosed for
2 Letters dated April 1, 2005 and April 7, 2005 from Cathy
Magnuson, Senior Corporate Counsel, to Kurt A. Schroeder, Deputy
Chief, Telecommunications Consumers Division, File No. EB-05-TC-
003 (``April 1, 2005 Letter'' and ``April 7, 2005 Letter'' ).
3 We have attached the six complaints on which this citation is
based. They are numbered as indicated in American Express
Company's, General Counsel's Office January 26, 2005 Letter. The
complaints are from the states of California, Arkansas, Illinois,
4 Consumer.net v. AT&T Corp., 15 FCC Rcd 281, 297 (1999).
5 47 C.F.R. § 64.1200(c)(2).
6 In fact, the only information on the National Do-Not-Call
Registry available to telemarketers is the telephone number, not
the name. See Rules and Regulations Implementing the Telephone
Consumer Protection Act of 1991, 18 FCC Rcd 14014, 14037 (2003).
Hence, telemarketers cannot legitimately make calling decisions
based only on the name of the called party.
7 47 U.S.C. § 227(a)(3); 47 C.F.R. § 64.1200(f)(9).
8 Prior express invitation or permission to call a number
contained on the National Do-Not-Call Registry must be evidenced
by a signed, written agreement between a consumer and seller.
The agreement must include both the consumer's consent to be
called by the particular seller and the telephone number to which
such calls may be placed. 47 C.F.R. § 64.1200(c)(2)(ii).
9 An ``established business relationship'' means ``a prior or
existing relationship formed by a voluntary two-way communication
between a person or entity and a residential subscriber with or
without an exchange of consideration, on the basis of the
subscriber's purchase or transaction with the entity within the
eighteen (18) months immediately preceding the date of the
telephone call or on the basis of the subscriber's inquiry or
application regarding products or services offered by the entity
within the three months immediately preceding the date of the
call, which relationship has not been previously terminated by
either party.'' 47 C.F.R. § 64.1200(f)(3). The established
business relationship exception does not apply when a telephone
subscriber has made a company-specific do-not-call request. A
company-specific do-not-call request terminates an established
business relationship for telemarketing purposes even if the
requester continues to do business with the company. 47 C.F.R.
§ 64.1200(f)(3)(i); see also Rules and Regulations Implementing
the Telephone Consumer Protection Act of 1991, Report and Order,
7 FCC Rcd 8752, 8766 n.47, 8770 n.63 (1992); see also H.R. Rep.
102-317, 1st Sess., 102nd Cong. at 15 (1991); Charvat v. Dispatch
Consumer Services, Inc., 95 Ohio St. 3d 505, 769 N.E.2d 829
10 47 C.F.R. § 64.1200(c)(2)(iii). A ``personal relationship''
exists if the recipient of the call is a ``family member, friend,
or acquaintance of the telemarketer making the call.'' 47 C.F.R.
11 The 31-day requirement applies to telephone solicitations
made on or after January 1, 2005. Rules and Regulations
Implementing the Telephone Consumer Protection Act of 1991,
Order, 19 FCC Rcd 19215 (2004). Previously, the Commission's
rules provided that do-not-call registrations had to be honored
within 3 months. Rules and Regulations Implementing the
Telephone Consumer Protection Act of 1991, Report and Order, 18
FCC Rcd 14014, 14040, para. 38 (2003). The 3-month provision
applied to telephone solicitations made before January 1, 2005.
12 See 47 C.F.R. § 1.80(b)(3).