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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
Kierland I
16430 North Scottsdale Road
Phoenix, Arizona 85254

     Re:   EB-05-TC-003 

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 
telemarketing calls. 

     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
               Deputy Chief
                                    Telecommunications Consumers 
Division
               Enforcement Bureau
               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 fcc504@fcc.gov or call the Consumer & 
Governmental Affairs Bureau:

          For sign language interpreters, CART, and other 
reasonable accommodations: 
     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 
rules.  

     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.

                         Sincerely, 



                         Kurt A. Schroeder
                         Deputy Chief, Telecommunications 
                         Consumers Division
                         Enforcement Bureau
                         Federal Communications Commission

Enclosures



_________________________

1 47 C.F.R. § 64.1200.  A copy of these rules is enclosed for 
your convenience.

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, 
and Ohio. 
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 
(2002).  

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. 
§ 64.1200(f)(11).

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).