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Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of )
)
DYNASTY MORTGAGE, L.L.C. ) File No. EB-03-TC-100
)
) NAL/Acct. No. 200432170005
Apparent Liability for ) FRN: 0012612156
Forfeiture )
)
)
NOTICE OF APPARENT LIABILITY FOR FORFEITURE
Adopted: February 28, 2005 Released: March 1,
2005
By the Commission:
I. INTRODUCTION
1. In this Notice of Apparent Liability for
Forfeiture (``NAL''), we find that Dynasty Mortgage, L.L.C.1
(``Dynasty'') apparently willfully or repeatedly violated
section 64.1200(c)(2) of the Commission's rules2 by making
telephone calls for the purpose of delivering telephone
solicitations to residential telephone consumers who had
registered their telephone numbers on the National Do-Not-
Call Registry. This NAL addresses 70 such calls made to 50
residential telephone consumers in Arizona and California
between March 2, 2004 and January 20, 2005. Based on our
review of the facts and circumstances surrounding these
apparent violations, we find that Dynasty is apparently
liable for a forfeiture in the amount of $11,000 for each of
the 70 violations for a total of $770,000.3
II. BACKGROUND
II.A. Rules Implementing the Telephone Consumer
Protection Act
2. The Telephone Consumer Protection Act (``TCPA'')
was enacted in 1991 as section 227 of the Communications Act
of 1934, as amended (``the Act''), to restrict certain
telemarketing practices. The TCPA required the Commission
to adopt rules governing such practices, including the
delivery of telephone solicitations to residential telephone
lines.4 Consistent with this statutory mandate, the
Commission first adopted rules to implement the TCPA in
1992, establishing a company-specific do-not-call regime
whereby residential telephone consumers may make do-not-call
requests to companies whose telephone solicitations they
seek to end.5 Following considerable changes in the
telemarketing industry,6 new telemarketing rules adopted by
the Federal Trade Commission (``FTC''),7 and further
statutory requirements,8 we amended our TCPA rules in 2003.9
While retaining a company-specific do-not-call option to
prevent telemarketing calls from particular entities, the
amended rules, inter alia, expand this system to include a
National Do-Not-Call Registry that provides residential
consumers with a one-step option to prohibit unwanted
telephone solicitations.
3. Section 64.1200(c)(2) of the Commission's rules
requires that ``no person or entity shall initiate any
telephone solicitation . . . to . . . a residential
telephone subscriber who has registered his or her telephone
number on the National Do-Not-Call Registry of persons who
do not wish to receive telephone solicitations that is
maintained by the federal government.''10 Not every
promotional call,
however, constitutes a prohibited telephone solicitation
under this rule. As established by the TCPA, the term
``telephone solicitation'' means:
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, but such term does not
include a call or message:
(i) To any person with that person's prior express
invitation or permission.11
(ii) To any person with whom the caller has an
established business relationship12; or
(iii) By or on behalf of a tax-exempt nonprofit
organization.13
Accordingly, an advertising call that falls within one of
these exclusions does not violate section 64.1200(c)(2). In
addition to these statutory exemptions, section
64.1200(c)(2)(iii) also permits delivery of telephone
solicitations to National Do-Not-Call registrants in the
limited situation in which the caller has a personal
relationship with the called party.14 Moreover, religious
and political messages are not considered to be ``telephone
solicitations'' and are, therefore, exempt from the
Commission's National Do-Not-Call rules.15
4. To protect against prohibited telemarketing calls,
entities that advertise through telephone solicitations are
required to pay fees to access the do-not-call database and
must ``scrub'' their calling lists of non-exempt residential
telephone numbers contained in the Registry.16 Recognizing
that parties who have made good faith efforts to comply with
the national do-not-call rules may, nonetheless,
occasionally make some calls in error to registered
telephone lines, the Commission established standards for a
safe harbor exemption from liability.17
5. In order to qualify for safe harbor protection, a
seller must first demonstrate that, as part of its routine
business practice it has: (1) established and implemented
written procedures to comply with the do-not-call rules; (2)
trained its personnel, and any entity assisting in its
compliance, in the procedures established pursuant to the
do-not-call rules; (3) maintained and recorded a list of
telephone numbers the seller may not contact; (4) used a
process to prevent telemarketing to any telephone number on
any list established pursuant to the do-not-call rules
employing a version of the National Do-Not-Call Registry
obtained from the administrator of the Registry within a
designated time frame,18 and has maintained records
documenting this process; and (5) used a process to ensure
that it does not sell, rent, lease, purchase, or use the
Registry for any purpose except national do-not-call
compliance, and that it has purchased access to the Registry
from the Registry administrator without participating in any
cost sharing arrangement with any other entity. Finally,
the safe harbor only applies if the seller is able to show
that the violative calls made in spite of adherence to the
enumerated do-not-call procedures were the result of error.
6. The Commission's do-not-call rules closely
correspond to those of the FTC, which maintains the National
Registry and shares federal enforcement responsibilities
with this Commission. As provided in the 2003 TCPA Order,
we have focused our enforcement efforts on entities that
fall outside the FTC's jurisdiction: communications common
carriers, airlines, insurance companies, banks, credit
unions, savings and loans, and intrastate calls by any
entity. Enforcement of the National Do-Not-Call Registry
has been the top consumer protection enforcement priority
for this Commission since the Registry took effect in
October 2003.
B. Investigation of Complaints against Dynasty
7. The Telecommunications Consumers Division
(``Division'') of our Enforcement Bureau initiated this
investigation based upon its review of consumer complaint
data involving calls made to telephone lines contained in
the National Do-Not-Call Registry.19 The Division found a
significant volume of complaints involving Dynasty, a
mortgage services provider that apparently uses telephone
solicitations to market its services to consumers in Arizona
and southern California. In October and November 2003, the
Division sent letters to Dynasty seeking information both
about its telemarketing practices generally and about
specific complaints from consumers who allegedly received
calls from Dynasty despite their registration on the
National Do-Not-Call Registry.20 The November 18 letter to
Dynasty forwarded complaints from 114 consumers who are
registered on the National Do-Not-Call List and claim to
have received telephone solicitations from Dynasty between
October and early November 2003. The letter asked Dynasty
to provide information demonstrating that the reported calls
did not violate the Commission's do-not-call rules, and
warned that the Division would issue a citation21 against
Dynasty if it failed to provide such exculpatory evidence
within 20 days.
8. On December 22, 2003, following Dynasty's failure
to respond to the November letter, the Division issued a
citation against Dynasty.22 The citation warned Dynasty
that future delivery of telephone solicitations to
residential consumers registered on the National Do-Not-Call
Registry could subject it to monetary forfeitures of up to
$11,000 per call. In addition, the citation informed
Dynasty that it could, within 30 days of the citation,
either have a personal interview at a Commission field
office or submit a written response to the citation.
9. Dynasty's contacts with our staff following
issuance of the citation provided a series of shifting
positions on the company's response to the citation and
compliance with our rules. During the week of January 4,
2004, an individual who identified himself as Randy Sage
called the Division, on behalf of Dynasty, to discuss the
citation. On January 8, 2004, a Division staff member
returned Mr. Sage's call. Mr. Sage claimed that ``as a
government-regulated business,'' Dynasty is exempt from
federal do-not-call rules. The staff person informed Mr.
Sage that neither the TCPA nor the Commission's rules
contain such an exemption, and repeated the citation's
warning that Dynasty's continuing telephone solicitations to
consumers who had placed their residential telephone numbers
on the National Do-Not-Call Registry could result in
substantial monetary penalties. Nonetheless, the staff
person encouraged Dynasty to explain in a formal response to
the citation the circumstances surrounding its calls,
including any reliance on the so-called regulated entity
exemption. Mr. Sage stated that Dynasty would provide such
a response sometime during the week of January 11, 2004.
After the Commission did not receive any such response from
Dynasty and the 30-day date for its citation response
passed, the staff person called Dynasty's Phoenix office on
January 30, 2004. At this time, the staff person was
informed that Mr. Sage no longer worked at Dynasty. She was
connected to Dynasty employee Butch Hughes. Mr. Hughes
informed her that Dynasty had recently terminated Mr. Sage's
employment when it discovered that Mr. Sage had provided
Dynasty with incorrect information regarding its obligation
to comply with the Commission's do-not-call rules. Mr.
Hughes indicated that Dynasty had taken steps to subscribe
to the National Do-Not-Call Registry and to ensure
compliance. Finally, Mr. Hughes stated that he believed
Dynasty had already responded to the staff's November 18
letter. The staff person informed Mr. Hughes that the
Commission had not received any written response from
Dynasty, either to the October or November letters or to the
citation, and encouraged Dynasty to respond in writing to
the citation as soon as possible.
10. On February 19, 2004, Dynasty's president Curtis
L. White called a manager in the Telecommunications
Consumers Division. Mr. White repeated the information that
Mr. Hughes had provided to the staff person and reiterated
Dynasty's determination to comply with the Commission's do-
not-call rules. Mr. White also claimed that Dynasty had
receipts showing delivery to the Commission of Dynasty's
written responses to the citation and the November letter.
The Division manager informed Mr. White that the Division
had not received any written response from Dynasty and
suggested that Dynasty outline in writing its claims and
defenses and also forward copies of any prior responses
along with documentation of delivery.
11. By letter dated February 20, 2004, Dynasty
responded in writing to the citation by reiterating the
information provided orally to the Division staff person and
manager.23 Dynasty did not provide copies of any previous
responses or proof of delivery. In short, Dynasty claimed
that ``prior to December 21, 2003 [Dynasty] outsourced it's
[sic] compliance department'' to Mr. Sage's company,
Mortgage Marketing Consultants, and relied upon Mr. Sage's
advice that Dynasty was exempt from federal do-not-call
requirements by virtue of its status as ``an approved
lending institution'' with a license from the Department of
Housing and Urban Development. Dynasty stated, that
``[o]bviously we now know that this information was
incorrect and have fired Mr. Randall Sage and have taken the
appropriate actions to comply with the National Do Not Call
List.'' Outlining those actions, Dynasty emphasized that it
had recently subscribed to the National Do-Not-Call
Registry24 and had put into effect a company-specific do-
not-call list ``for the people that are not on the National
list but still do not want a courtesy call from our
company.'' Dynasty claimed that it scrubs its lead lists
using both its company-specific do-not-call list and the
National Registry. Dynasty also mentioned its plan to
enhance its compliance efforts with the acquisition of a
dialing system that will ``suppress all the [prohibited]
leads automatically.''
12. Despite Dynasty's assurances, consumers whose
residential telephone numbers are registered on the National
Do-Not-Call Registry have continued to complain about
telephone solicitations made by Dynasty, even after its
February 20 citation response. Accordingly, on July 6,
2004, the Division sent to Dynasty a Letter of Inquiry
(``LOI'') seeking information about consumer complaints
received after issuance of the citation, 45 of which were
filed after Dynasty's February 20 letter. The LOI directed
Dynasty to provide information regarding each complaint
including, inter alia, whether and why it called the
complainants. In addition, the LOI sought information
regarding Dynasty's internal procedures to ensure compliance
with the National Do-Not-Call Registry and its own company-
specific list. The LOI directed Dynasty to support its
response with an affidavit or declaration from a company
officer attesting, under penalty of perjury, to the accuracy
of the information provided in any response.
13. Dynasty responded to the LOI on July 28, 2004.
Dynasty provided some information regarding its do-not-call
efforts but did not fully answer the LOI. In particular,
Dynasty did not address the complaints individually, instead
providing a broad general response regarding the purpose of
its telephone solicitations. Dynasty did not deny making
the calls in question but appeared to invoke the safe harbor
defense, claiming to have routine business practices largely
consistent with the safe harbor standards set forth in
section 64.1200(c)(2)(i).25
14. All of the consumers whose complaints form the
basis of this NAL filed a complaint with either this
Commission or the FTC alleging that Dynasty failed to honor
their registration on the National Do-Not-Call Registry by
making a phone call or calls to the registered telephone
lines.26 The FTC's database shows that each telephone
number was, in fact, properly and timely registered on the
National Do-Not-Call Registry27 at the time each complainant
alleges receipt of a call from Dynasty.28 Further, each
complainant has signed a declaration, under penalty of
perjury, asserting (1) receipt of a telephone call or calls
from Dynasty Mortgage on the complainant's residential
telephone line despite registration of that number on the
National Do-Not-Call Registry;29 (2) absence of prior
express permission or invitation for the call(s); and (3)
absence of a transaction with Dynasty or any of its
affiliated companies within the 18 months immediately
preceding the call(s), or an inquiry or application to any
of these entities within the three months immediately
preceding the call(s).30 In addition, three complainants
who recorded the name of the individual calling on behalf of
Dynasty attest that they do not, to the best of their
knowledge, have a personal relationship with the caller.
Finally, 30 complainants attest to receipt of caller ID
information, which either explicitly identified Dynasty or
displayed a telephone number traceable to Dynasty. These
violations are listed in Appendix A.
III. DISCUSSION
III.A. Apparent Violations Evidenced in the Record
15. The evidence developed in this investigation
warrants a finding of apparent liability for Dynasty's
failure to comply with the requirement that it refrain from
initiating telephone solicitations to consumers registered
on the National Do-Not-Call Registry. As indicated above,
declarations from 50 residential telephone consumers
registered on the National Do-Not-Call Registry detail 70
calls made by Dynasty. The declarations, and information
from Dynasty itself, provide convincing evidence that
Dynasty apparently made the telemarketing calls without any
mitigating circumstances necessary to establish an exemption
or support a safe harbor defense.
III.A.1. Dynasty's Calls Are Non-Exempt Telephone
Solicitations
16. By its own admission, Dynasty places telephone
calls for the purpose of promoting its mortgage services.
Although Dynasty has failed to provide information regarding
the particular circumstances associated with any of the
specific calls at issue here, Dynasty appears to concede in
its LOI response that it (1) made the calls for which the
staff sought explanation and (2) that those calls were made
to promote its mortgage services.31 Dynasty states:
Reasons for the calls made by Dynasty Mortgage from
complaints listed . . .
As a Mortgage Broker we save homeowners an average of
$300 to $500 each month by lowering payments through
interest rates, debt consolidation, etc. We solicit
homeowners for the opportunity to show how we can
place them in a better financial position. Our
telemarketing team schedules appointments for these
homeowners to attend a free consultation with a Loan
Officer.32
17. The consumer declarations indicate that the 70
calls at issue here are non-exempt telephone solicitations.
Most consumers provide specific information regarding the
advertisement delivered by Dynasty.33 Each consumer
describes a Dynasty call or calls apparently made without
benefit of prior express consent or the contacts necessary
to establish a business relationship. Further, the
consumers who noted the name of the Dynasty representative
who called them declare that they do not have personal
relationships with the callers, i.e, the caller is not a
friend, acquaintance, or family member. Given the specific,
detailed information provided by the consumer declarations,
and the fact that Dynasty has made no claim or provided no
evidence to demonstrate that its advertising calls were
justified by prior express consent, an established business
relationship, or a personal relationship, we conclude that
Dynasty's calls are apparently prohibited telephone
solicitations.
III.A.2. Dynasty's Calls Do Not Fall within the
Safe Harbor
18. Dynasty briefly asserts in its LOI response that
it complies with the do-not-call standards that underlie a
safe harbor defense pursuant to section 64.1200(c)(2)(i).34
Specifically, Dynasty states that it has, among other
things, (1) established and implemented written procedures
to comply with national do-not-call rules, (2) trained
personnel in these procedures, (3) implemented procedures to
scrub its telemarketing leads against the National Do-Not-
Call Registry and its own company-specific list, and (4)
purchased access to the National Registry. Dynasty includes
a document that purportedly outlines its do-not-call
procedures as well as scripts for its telemarketing calls.
Dynasty's blanket assertions, however, are not supported by
the meager documentation that it provides; indeed, some of
the materials provided by Dynasty are, in fact, inconsistent
with the safe harbor requirements. As an initial matter,
however, Dynasty provides no information to satisfy a
crucial element of the safe harbor: that the calls were
made in error. For this reason alone, Dynasty's safe harbor
defense fails. Nevertheless, we address other obvious
deficiencies in Dynasty's safe harbor defense as well to
further demonstrate Dynasty's noncompliance.
III.A.2.a. Error
19. The error aspect of the safe harbor defense
exempts telephone solicitations made despite a seller's
efforts to prevent unlawful telemarketing as evidenced by
compliance with the do-not-call standards outlined above and
discussed in more detail below.35 Error, however, does not
apply simply because an entity meets all other safe harbor
criteria or incorrectly believes that it need not comply
with national do-not-call requirements.36 An error claim
should be supported by evidence showing that otherwise
unlawful telephone solicitations were made unintentionally
and detailing any procedural breakdowns that led to such
calls, as well as the steps that the seller has taken to
minimize future errors.
20. In its LOI Response, Dynasty neither explicitly
states that any of the telemarketing calls at issue here
were made in error nor provides any information that would
support such a determination. On this basis alone,
Dynasty's safe harbor defense fails. Moreover, information
provided by complainants belies any assumption or claim that
Dynasty's calls were made in error. Several consumers who
received Dynasty's telemarketing calls outline conversations
with Dynasty representatives that clearly demonstrate that
Dynasty deliberately made the calls at issue here and, in
fact, was aware of the unlawful nature of such calls and the
potential penalties. First, a Dynasty supervisor told a
consumer that Dynasty does not use the National Do-Not-Call
Registry.37 Further, despite the fact that Dynasty's LOI
response explicitly concedes that the company is subject to
the Commission's do-not-call rules and pledges to abandon
the erroneous exemption claim that the company previously
relied upon, three consumers report that during calls from
Dynasty at least three months after the LOI response,
Dynasty asserted that it is exempt from the National Do-Not-
Call Registry.38 Finally, one consumer reports that when he
warned a Dynasty telemarketer that the company could be
subject to a $10,000 forfeiture for the call, the
telemarketer responded that the potential forfeiture was
actually $11,000.39 The facts of this case clearly preclude
an error claim, and, accordingly, Dynasty's safe harbor
defense fails.
III.A.2.b. Written Procedures
21. To qualify for the safe harbor exemption, a seller
must demonstrate that as part of its routine business
practice, ``it has established and implemented written
procedures to comply with the national do-not-call
rules.''40 With regard to this requirement, we find that
the record does not support a finding of compliance. In its
LOI Response, Dynasty asserts that its written procedures to
comply with the national do-not-call rules are reflected in
three documents attached to the LOI Response. None of the
three brief internal documents, however, constitutes or
could be considered a plan for compliance with the national
do-not-call rules. One document simply presents promotional
scripts, which do not mention either the National Do-Not-
Call Registry or Dynasty's company-specific do-not-call
list. Another document, entitled ``Process for DNC
Documentation,'' contains two very brief scenarios for
recording company-specific do-not-call requests. The final
document contains two scripts for Dynasty representatives to
follow when called parties seek to make or enforce do-not-
call requests. With respect to the National Do-Not-Call
Registry, the script reads:
Going forward,41 the following responses will be used
for homeowners who identify themselves as being on
the National Dot [sic] Not Call List. . . .
``I'm on the National DNC List!''
``In that case, I do apologize for the call and any
inconvenience, and I want to assure you that we make
every effort to comply with the national do-not-call
rules and regulations. I'll add you to our company
DNC list to insure that we never call your home
again, okay?''
This material does not address or describe the steps Dynasty
and its representatives should take to comply with the
National Do-Not-Call Registry and to prevent calls to
numbers listed on the Registry. In fact, rather than
presenting a plan that seeks to avoid making calls to
telephone numbers contained on the National Registry, the
script instead addresses a scenario in which Dynasty calls
such a number.
22. In short, Dynasty fails to provide a document
explaining, for example, any of the following things that
reasonably could be expected to be included in a company's
written compliance procedure: a statement explaining what
the do-not-call rules are and how they operate; the legal
requirements for do-not-call compliance; the company's
policies regarding compliance; the consequences for non-
compliance; the company's policies regarding compliance by
outside lead generators and its means of communicating those
policies with the outside parties; or any type of ongoing
compliance monitoring.
23. Notwithstanding the absence of written procedures
for compliance with the national do-not-call rules, Dynasty
asserts that it does, in fact, have a process for
compliance:
When we purchase any new leads we suppress the list
against our own DNC list as well as against the
national DNC list before we load the leads into our
dialer. Before purchasing leads to call, our lead
broker uses or [sic] S.A.N. number on the National
DNC Registry to insure that we are not receiving any
phone numbers that are currently registered on the
national list.
This assertion, however, does not satisfy the requirement in
the rules that Dynasty have written compliance procedures
that set the parameters of Dynasty's telemarketing
activities.
24. Finally, even assuming that Dynasty has
established written do-not-call procedures, evidence
suggests that it has failed to implement any such procedures
as the rule requires. Several complainants provide
information indicating that Dynasty made telemarketing calls
without regard to the National Do-Not-Call list.42 Most
notably, one complainant reports that during an August 2004
telemarketing call from Dynasty, a supervisor stated that
the company ``doesn't check its numbers against the National
Do-Not-Call Registry.''43
III.A.2.c. Training of Personnel
25. The safe harbor defense also requires a seller to
demonstrate that as part of its routine business practice,
``it has trained its personnel, and any entity assisting in
its compliance, in procedures established pursuant to the
national do-not-call rules.''44 Dynasty points again to the
written materials described above to support its claim that
it meets this prong of the safe harbor defense. Based on
the paucity of evidence in the record, we cannot so
conclude. Dynasty does not discuss in any way the manner in
which it undertakes to train its telemarketers. Even more
significantly, Dynasty's documents in no way reflect that
Dynasty telemarketers are provided the most basic
information: that they must avoid calling non-exempt
telephone numbers contained on the National Do-Not-Call
Registry. Instead, as noted above, the materials deal with
recording company specific do-not-call requests and handling
calls that it has already made to consumers registered on
the National Do-Not-Call Registry.45
III.A.2.d. Accessing the National Do-Not-
Call Registry
26. The safe harbor defense applies only to an entity
that can demonstrate that as part of routine business
practices, it ``use[d] a process to prevent telephone
solicitations to any telephone number on any list
established pursuant to the do-not-call rules, employing a
version of the national do-not-call registry obtained from
the administrator of the registry . . . [within a specified
timeframe], and maintains records documenting this
process.''46 For most of the calls at issue here, Dynasty
was required to use a version of the Do-Not-Call Registry
that it obtained no more than three months prior to the date
it made any telemarketing call. Six calls made by Dynasty
after January 1, 2005 are subject to a rule amendment that
requires use of a version of the Registry obtained no more
than 31 days before any telemarketing call.47
27. Dynasty itself provided no records to demonstrate
that the company or any authorized telemarketers ever
accessed the National Do-Not-Call Registry or that it
maintains records documenting its use of the Registry. Our
staff has obtained FTC do-not-call records that show that
Dynasty's do-not-call Subscription Account Number has been
used to access portions of the National Registry twice in
the past year: first, over the course of one week in March
2004, and second, on January 6, 2005.48 Dynasty's lapse of
nearly ten months in accessing the Registry automatically
removes the safe harbor defense for all telemarketing calls
made by Dynasty between June 15, 2004 and January 5, 2005.49
28. Apart from Dynasty's failure to timely access the
National Registry, Dynasty fails to demonstrate that it
correctly performed any scrub of its calling list against
the National Registry. Dynasty's summary statement that its
lead broker scrubs potential leads against the National Do-
Not-Call Registry before Dynasty purchases them does not
evince a process that complies with the safe harbor
requirement. Dynasty does not discuss how it ensures that
the broker performs the scrub properly. Moreover, Dynasty
does not state that such leads are the sole source of its
database of telephone numbers used for telemarketing
purposes.
III.A.2.e. Purchasing the National Do-
Not-Call Registry
29. The safe harbor requires a telephone solicitor to
demonstrate that it ``uses a process to ensure that it does
not sell, rent, lease, purchase, or use the national do-not-
call database, or any part thereof, for any purpose except
compliance with [the do-not-call rules] and any such state
or federal law to prevent telephone solicitations to
telephone number registered on the national database.''50
It must demonstrate that it ``purchases access to the
relevant do-not-call data from the administrator of the
national database and does not participate in any
arrangement to share the cost of accessing the national
database, including any arrangement with telemarketers who
may not divide the cost to access the national database
among various client sellers.''51 Dynasty provides no
information or statement regarding this aspect of the safe
harbor.
III.B. Forfeiture Amount
30. Based upon our review of the record in this case,
we conclude that Dynasty apparently willfully or repeatedly
violated section 64.1200(c)(2) of the Commission's rules by
making 70 telephone solicitations to 50 consumers who had
registered on the National Do-Not-Call Registry.
Accordingly, a proposed forfeiture is warranted against
Dynasty for its apparent willful or repeated violations of
the Commission's national do-not-call rules.
31. Section 503(b) of the Act authorizes the
Commission to assess a forfeiture of up to $11,000 for each
violation of the Act or of any rule, regulation, or order
issued by the Commission under the Act, by a non-common
carrier or other entity not specifically designated in
section 503 of the Act.52 In exercising such authority, we
are to take into account ``the nature, circumstances,
extent, and gravity of the violation and, with respect to
the violator, the degree of culpability, any history of
prior offenses, ability to pay, and such other matters as
justice may require.''53
32. The Commission's Forfeiture Policy Statement does
not establish a base forfeiture amount for violating the
prohibition on making telephone solicitations to customers
who have registered on the National Do-Not-Call Registry.54
We have, however, previously proposed a $10,000 forfeiture
for each violation of our company-specific do-not-call
rules.55 We believe that a violation of National Do-Not-
Call Registry rules implicates the same concern: that
telemarketing was initiated to a consumer who took specific
steps to prevent such contact by lodging a do-not-call
request, in this case, by signing onto the National Do-Not-
Call Registry. Accordingly, we believe that $10,000 is an
appropriate base amount for a violation of section
64.1200(c)(2). The Forfeiture Policy Statement does,
however, contemplate upward or downward adjustments based on
the severity of the violation and nature of the violator.56
33. In this case, we believe that the record supports
imposition of the maximum forfeiture of $11,000 per
violation against Dynasty. As we have described above, both
Dynasty's own responses and information provided by
consumers who have received Dynasty's calls reveal Dynasty
as an apparent chronic and persistent violator of our do-
not-call rules.57 Dynasty's do-not-call procedures and
training efforts appear to be wholly inadequate to promote
compliance with our rules governing the National Do-Not-Call
Registry. Dynasty's violations have continued despite being
informed by the Commission's staff that it was relying upon
a non-existent exemption to justify its calls. Most
notably, Dynasty has continued to misinform consumers that
it is exempt from national do-not-call rules even after
admitting, in correspondence to this Commission, that it is,
in fact, subject to these rules.
34. Our enforcement goal is compliance, not imposition
of forfeiture penalties and collection of monies for the U.
S. Treasury. We did not, therefore, commence this
forfeiture proceeding immediately after discovering
Dynasty's first post-citation violations. Instead, in light
of Dynasty's claims that its violations were the result of
erroneous advice from a contractor, that it no longer
employed the contractor, and that it had instituted
procedures to ensure compliance, the staff began to monitor
Dynasty's complaint levels to determine whether Dynasty's
new compliance procedures were effective. Although the
complaint levels have dropped somewhat after January 2004,
significant numbers consumers have continued to report
receiving Dynasty's telephone solicitations despite
registration on the National Do-Not-Call Registry, many of
which occurred after Dynasty's February 20, 2004
correspondence that acknowledged the company's previous
violations and promised a rigorous compliance plan. Our NAL
includes only violations after Dynasty's February 20, 2004
letter.
35. Dynasty has persisted in making prohibited
telephone solicitations and attempting to deceive consumers
regarding the unlawful nature of such calls despite
admitting its violations to this Commission. Accordingly,
based on the nature and gravity of Dynasty's conduct and the
continued need to ensure compliance with section
64.1200(c)(2), we find Dynasty apparently liable in the
amount of $11,000 for each of 70 violations. This results
in a proposed total forfeiture of $770,000. As set forth
below, Dynasty may pay the proposed forfeiture in full or
submit evidence and arguments in response to this NAL to
show that no forfeiture should be imposed or that some
lesser amount should be assessed.58
IV. CONCLUSION AND ORDERING CLAUSES
36. We have determined that Dynasty apparently
committed 70 separate violations of section 64.1200(c)(2) of
the Commission's rules by failing to abide by our national
do-not-call requirements, as described above. We have
further determined that Dynasty is apparently liable in the
amount of $11,000 for each of 70 violations of section
64.1200(c)(2) of the Commission's rules, for a total of
$770,000.
37. Accordingly, IT IS ORDERED, pursuant to section
503(b) of the Communications Act of 1934, as amended, 47
U.S.C. § 503(b), and section 1.80 of the Commission's rules,
47 C.F.R. § 1.80, that Dynasty Mortgage, L.L.C. IS HEREBY
NOTIFIED of its Apparent Liability for Forfeiture in the
amount of $770,000 for willful or repeated violations of
sections 64.1200(c)(2) as described in the paragraphs above
and detailed in Appendix A.
38. IT IS FURTHER ORDERED, pursuant to section 1.80 of
the Commission's rules, 47 C.F.R. § 1.80, that within thirty
(30) days of the release of this Notice of Apparent
Liability, Dynasty SHALL PAY the full amount of the proposed
forfeiture OR SHALL FILE a response showing why the proposed
forfeiture should not be imposed or should be reduced.59
39. IT IS FURTHER ORDERED, pursuant to sections 4(i)
and 403 of the Communications Act of 1934, as amended, 47
U.S.C. §§ 154(i), 403, that within forty-five (45) days of
the release of this Notice of Apparent Liability, Dynasty
SHALL FILE a report, supported by affidavit or statement
under penalty of perjury, detailing the steps that Dynasty
has taken to ensure compliance with section 64.1200(c)(2) of
the Commission's rules, 47 C.F.R. § 64.1200(c)(2).
40. IT IS FURTHER ORDERED that copies of this Notice
of Apparent Liability for Forfeiture SHALL BE SENT by
certified mail to Dynasty Mortgage, L.L.C. at: (1) 2633
E. Indian School Rd., Suite 370, Phoenix, Arizona 85016; (2)
5701 W. Talavi Blvd., Suite 110, Glendale, Arizona 85306;
and (3) 4660 E. LaJolla Village Dr., Suite 400, San Diego,
California 92122.
FEDERAL COMMUNICATIONS
COMMISSION
Marlene H. Dortch
Secretary Appendix A
DYNASTY MORTGAGE, L.L.C.
NATIONAL DO-NOT-CALL VIOLATIONS SUBJECT TO FORFEITURE
Telephone Telephone Caller ID
Solicitation Solicitation Displayed
Recipient Date
1 Adams, Robert 8/3/04
2 Atkinson, Nigel 8/31/04
3 Berens, Barbara 12/27/04 602-218-9221
4 Bonomo, Robert 8/3/04
5 Carlson, Jay E. 3/9/04 602-445-9276
6 Chute, William P. 8/14/04 Dynasty
Mortgage
602-218-9221
7 Demchak, Barry 3/26/04 858/362-8695
8 Denisac, Frank 3/2/04 858-362-8695
9 Epps, John 7/13/04 602-218-9221
10 8/2/04 602-218-9221
11 8/11/04 602-218-9221
12 Ferguson, Bruce 8/14/04 602-218-9221
13 Fernando, E. Joe 4/13/04 858-362-8585
A. IV
14 Finnegan, Philip 4/12/04
(Jay)
15 Frank, Kevin 11/30/04 888-508-5592
16 Gittus, Michael 6/7/04 602-445-9277
17 Grimes, Larry A. 5/10/04 858-362-8468
18 5/11/04 858-362-8598
19 Hansen, Patricia 8/7/04 602-218-9221
20 Holland, 3/5/04
Christopher J.
21 Holmes, Mark 11/22/04 888-508-5592
22 Jaycox, 8/2/04
Antoinette
23 Johnson, Todd 10/26/04
24 Kertesz, Joe 8/16/04 602-218-9221
25 Koepke, Kevin 1/6/05 602-218-9221
26 1/19/05 602-218-9221
27 1/20/05 602-218-9221
28 Langevin, Edwin 9/27/04 Dynasty
Mortgage
888-508-5592
29 Lauterbach, 12/13/04 602-218-9221
30 Lynette 12/13/04 602-218-9221
31 Lewis, Jeffrey 7/10/04
32 Logan, Michelle 11/30/04 602-218-9221
33 12/1/04 602-218-9221
34 12/6/04 602-218-9221
35 12/18/04 602-218-9221
36 12/19/04 602-218-9221
37 Madden, William 7/8/04 602-218-9221
38 7/19/04 602-218-9221
39 8/11/04 602-218-9221
40 8/18/04 602-218-9221
41 Marler, James 7/19/04
42 McKenzie, James 12/7/04
43 McKenzie, Thomas 7/8/04
44 Mitchell, Kelly 4/6/04
45 Neuberg, Karen 12/20/04 602-445-0070
46 Novitz, Stuart 7/20/04 Dynasty
Mortgage
602-218-9221
47 Oleska, Myron 8/18/04
48 Pickwell, Sheila 3/2/04
49 Ramsey, Marian 5/8/04 Dynasty
Mortgage
602-445-9256
50 Recker, Irene 7/12/04
51 Rice, Marilyn Sometime
between
52 10/27/04 602-218-9221
and11/8/04
11/8/04
53 Rippetoe, Patrick 8/9/04
54 Rumsey, Eric 4/10/04
55 Scotti, Diane 12/30/04 602-218-9221
56 1/4/05 602-218-9221
57 1/6/05 602-218-9221
58 1/13/05
59 Stewart, Hal 12/22/04 602-445-0070
60 12/22/04 602-445-0070
61 12/29/04 602-445-0070
62 Taub, Charles 3/9/04
63 Torkington, 5/13/04 858-362-8585
Adrian
64 Van Hoven, Lynn 3/8/04 602-445-9276
65 3/8/04 602-445-9276
66 Vizcarra, Victor 7/13/04 602-218-9221
67 Walker, Claire 9/23/04 888-508-5592
68 Wassel, Theodore 6/1/04 Dynasty
A. Mortgage
858-362-8585
69 Worthington, Mary 8/25/04
70 Zanelli, 8/6/04
Elizabeth
_________________________
1Dynasty Mortgage, L.L.C is owned by Curtis L. White, who
serves as President and Chief Executive Officer. Dynasty
has two offices in Arizona and one in California: (1)
2633 E. Indian School Rd., Suite 370, Phoenix, Arizona
85016; (2) 5701 W. Talavi Blvd., Suite 110, Glendale,
Arizona 85306; and (3) 4660 E. LaJolla Village Dr., Suite
400, San Diego, California 92122. During the relevant time
period, Dynasty had two affiliated companies: Dynasty
Lending and Dynasty Title Agency.
247 C.F.R. § 64.1200(c)(2).
3See 47 U.S.C. § 503(b)(1). The Commission has the
authority under this section of the Act to assess a
forfeiture against any person who has ``willfully or
repeatedly failed to comply with any of the provisions of
this Act or of any rule, regulation, or order issued by the
Commission under this Act . . . .'' Section 503 provides
that the Commission must assess such penalties through the
use of a written notice of apparent liability or notice of
opportunity for hearing. Id. § 503(b)(3), (4).
4Telephone Consumer Protection Act of 1991, Pub. L. No. 102-
243, 105 Stat. 2394 (1991), codified at 47 U.S.C. § 227.
The TCPA amended Title II of the Communications Act of 1934,
47 U.S.C. § 201 et seq. Section 227(c)(1) required the
Commission to conduct a rulemaking proceeding ``concerning
the need to protect residential telephone subscribers'
privacy rights to avoid receiving telephone solicitations to
which they object.''
5See Rules and Regulations Implementing the Telephone
Consumer Protection Act of 1991, CC Docket No. 92-90, Report
and Order, 7 FCC Rcd 8752 (1992) (1992 TCPA Order); see also
47 C.F.R. § 64.1200. Pursuant to petitions for
reconsideration, the Commission adopted amendments to the
TCPA rules in 1995 and 1997. Rules and Regulations
Implementing the Telephone Consumer Protection Act of 1991,
CC Docket No. 92-90, Memorandum Opinion and Order, 10 FCC
Rcd 12391 (1995) (1995 TCPA Reconsideration Order); Rules
and Regulations Implementing the Telephone Consumer
Protection Act of 1991, CC Docket No. 92-90, Order on
Further Reconsideration, 12 FCC Rcd 4609 (1997) (1997 TCPA
Reconsideration Order).
6See Rules and Regulations Implementing the Telephone
Consumer Protection Act of 1991, Report and Order, 18 FCC
Rcd 14014, 14021-22 (2003) (2003 TCPA Order) (describing
expansion of telemarketing industry since 1992).
7In 2003, the FTC amended its Telemarketing Sales Rule, 16
C.F.R. Part 310, to include a National Do-Not-Call Registry.
8Do-Not-Call Implementation Act, Pub. L. No. 108-10, 117
Stat. 557 (2003), codified at 15 U.S.C. § 6101 (Do-Not-Call
Act). The Do-Not-Call Act authorizes the establishment of a
national do-not-call registry and directs the FCC to adopt
rules that maximize consistency with those of the FTC.
92003 TCPA Order, 18 FCC Rcd 14014.
1047 C.F.R. § 64.1200(c)(2).
11Section 64.1200(c)(2)(ii) of our rules requires that prior
express invitation or permission ``must be evidenced by a
signed, written agreement between the consumer and seller
which states that the consumer agrees to be contacted by
this seller and includes the telephone number to which the
calls may be placed.'' 47 C.F.R. § 64.1200(c)(2)(ii).
12For do-not-call purposes, the term ``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).
1347 U.S.C § 227(a)(3); see also 47 C.F.R. § 64.1200(f)(9).
14The term ``personal relationship'' means ``any family
member, friend, or acquaintance of the telemarketer making
the call.'' 47 C.F.R. § 64.1200(f)(11).
152003 TCPA Order, 18 FCC Rcd at 14040. Such speech,
however, may not be exempt if it merely ``serve[s] as a
pretext to an otherwise prohibited advertisement.'' Id. at
n. 141.
16``Scrubbing'' refers to comparing a company's call list to
the National Do-Not-Call Registry and eliminating from the
call list all numbers contained in the National Registry
that are not covered by an exemption.
172003 TCPA Order, 18 FCC Rcd 14014, 14040; 47 C.F.R. §
64.1200(c)(2).
18We recently amended our rules to require telemarketers to
use a version of the Registry that is no more 31 days old.
Rules and Regulations Implementing the Telephone Consumer
Protection Act of 1991, Order, FCC 04-204 (Sept. 21, 2004).
Prior to January 1, 2005, and during the time period
relevant to most of the calls at issue here, telemarketers
were permitted to use a version of the Registry that was no
more than three months old.
19Enforcement Bureau staff reviewed do-not-call complaints
received by both this Commission and the FTC.
20Letters from Kurt A. Schroeder, Deputy Chief,
Telecommunications Consumers Division, to Dynasty Mortgage,
dated Oct. 6, 2003 and Nov. 18, 2003.
21If, as here, an alleged violator does not hold a
Commission license, permit, certificate, or authorization,
the Commission may not initiate a forfeiture proceeding
without first issuing a warning citation. 47 U.S.C. §
503(b)(5). If the citation recipient continues the unlawful
behavior after receiving the citation, the Commission may
propose monetary penalties, but only for those violations
that occur after issuance of the citation.
22Letter from Kurt A. Schroeder to Dynasty Mortgage, dated
Dec. 22, 2003.
23Letter from Curtis L. White, President, Dynasty, to Kurt
A. Schroeder, FCC, dated Feb. 20, 2004.
24Dynasty provided its subscription account number (``SAN'')
and expiration date as evidence of its subscription.
25See para. 18, infra.
26These apparently violative calls are listed in Appendix A.
27During the time relevant to most of the calls at issue
here, our rules required telephone solicitors to use a
version of the National Do-Not-Call Registry that was no
more than three months old. In other words, telephone
solicitors were, in effect, required to have scrubbed their
calling lists against the National Do-Not-Call Registry no
more than three months before making any call.
Consequently, a consumer's registration was not enforceable
until three months passed. As indicated above, effective
January 1, 2005, the Commission has amended the rules to
reduce the three-month time frame to 31 days. The 31-day
time frame applies to three calls at issue here. See
Appendix A (Scotti, Diane); see also n. 18, supra.
28The FTC's internet do-not-call complaint system
automatically checks the complainant's telephone number to
determine whether and when that number was added to the
National Do-Not-Call Registry. The system then compares the
registration date against the date of the alleged
telemarketing call, and only accepts complaints in which the
complainant's telephone number was timely registered at the
time of the alleged call. Our staff has independently
confirmed that each complainant's telephone number was
registered on the National Do-Not-Call Registry for at least
three months before the alleged call was made.
29Thirty-six declarants describe Dynasty's telephone
solicitations that promoted its mortgage financing services.
Fourteen declarants report receiving a total of 26 telephone
calls from Dynasty but apparently terminated those calls
before delivery of any advertisement. See n. 33, infra.
30A transaction or inquiry within the respective time frames
constitutes an established business relationship. See 47
U.S.C. § 64.1200(f)(3).
31Dynasty offers no reason other than telephone solicitation
to explain these calls. For example, Dynasty does not
suggest that any of the calls at issue were made for non-
solicitation purposes, such as to collect monies owed or to
complete pending transactions.
32LOI Response. We note here that we have previously found
that offers for free goods or services and so-called
``information-only'' messages may be prohibited unsolicited
advertisements when they are ``part of an overall marketing
campaign to sell property, goods, or services.'' 2003 TCPA
Order, 18 FCC Rcd at 14097. We have stressed that ``[t]he
TCPA's definition [of unsolicited advertisement] does not
require a sale to be made during the call in order for the
message to be considered an advertisement.'' Id.
33As indicated above, 36 consumers affirmatively indicate
that Dynasty promoted its mortgage financing services in the
calls that they received while 14 other consumers apparently
terminated Dynasty's calls before the Dynasty representative
could convey an advertisement. See n. 29, supra. Given
Dynasty's admission that it makes calls to promote its
mortgage services, and its failure to provide any other
rationale for any of its calls, we believe that it is
reasonable to conclude that each call was initiated for the
purpose of delivering an advertisement.
34As set forth above and discussed in more detail below, the
safe harbor insulates sellers and their telemarketers from
liability for delivering telephone solicitations to
residential telephone consumers who are registered on the
National Do-Not-Call Registry when such a solicitation is
the result of error and the seller or telemarketer adheres
to specified policies and procedures designed to prevent
prohibited calls to registered telephone numbers. See
paras. 4-5, supra; paras. 19-28, infra.
35See paras. 21-28, infra.
36Ignorance of the law is not a defense or mitigating
circumstance. Southern California Broadcasting Co., 6 FCC
Rcd 4387, 4388 (1991) citing Vernon Broadcasting, Inc., 60
RR 2d 1275, 1277 (1986) and Fay Neel Eggleston, 19 FCC 2d
829 (1969).
37Declaration of Nigel Atkinson (attesting that Dynasty
supervisor stated that it does not check its calling lists
against the National Do-Not-Call Registry); Declaration of
William P. Chute (attesting that Dynasty caller stated that
Dynasty ``did not have the list; they had their own
database'').
38Declaration of Theodore A. Wassel (during June 1, 2004
call, Dynasty manager stated Dynasty is exempt from the
National Do-Not-Call Registry); declaration of Stuart Novitz
(during July 20, 2004 call, Dynasty claimed to be a
``federally exempt company for telemarketing purposes'');
declaration of Edwin Langevin (during September 27, 2004
call, Dynasty claimed that ``certain financial institutions
are exempt'').
39Declaration of Thomas McKenzie.
4047 C.F.R. § 64.1200(c)(2)(i)(A).
41Dynasty's document is undated.
42See para. 20, infra.
43Declaration of Nigel Atkinson.
4447 C.F.R. § 64.1200(c)(2)(i)(B).
45See para. 21, supra.
4647 C.F.R. § 64.1200(c)(2)(i)(D).
47See n. 18, 27, supra.
48Between March 8 and March 15, 2004, Dynasty accessed
portions of the Do-Not-Call Registry for three Arizona and
three California area codes. On January 6, 2005, Dynasty
accessed these same portions of the Registry and, in
addition, portions for two new Arizona area codes, one new
California area code, and one Nevada area code.
49As shown in Appendix A, Dynasty made 46 of the calls at
issue here between June 15, 2004 and January 5, 2005.
5047 C.F.R. § 64.1200(c)(2)(i)(E).
51Id.
52Section 503(b)(2)(C) provides for forfeitures up to
$10,000 for each violation in cases not covered by
subparagraphs (A) or (B), which address forfeitures for
violations by licensees and common carriers, among others.
See 47 U.S.C. § 503(b). Pursuant to the Debt Collection
Improvement Act of 1996, P.L. 104-134, 110 Stat. 1321-358,
the statutory maximum amount for a forfeiture penalty shall
be adjusted for inflation at least once every four years.
Accordingly, the $10,000 forfeiture ceiling has been
adjusted to $11,000. 47 C.F.R. § 1.80(b)(5). Amendment of
Section 1.80 of the Commission's Rules and Adjustment of
Forfeiture Maxima to Reflect Inflation, 15 FCC Rcd 18221
(2000); Amendment of Section 1.80 of the Commission's Rules
and Adjustment of Forfeiture Maxima to Reflect Inflation, 19
FCC Rcd 10945 (2004).
5347 U.S.C. § 503(b)(2)(D); 47 C.F.R. § 1.80(b)(4).
54The Commission's Forfeiture Policy Statement and Amendment
of Section 1.80 of the Rules to Incorporate the Forfeiture
Guidelines, Report and Order, 12 FCC Rcd 17087 (1997),
recon. denied, 15 FCC Rcd 303 (1999) (Forfeiture Policy
Statement).
55AT&T Corporation, Notice of Apparent Liability for
Forfeiture, 18 FCC Rcd 23398 (2003).
56Forfeiture Policy Statement, 12 FCC Rcd at 17100-01.
57We remind Dynasty that it may be subject to additional
enforcement actions if it continues to call residential
telephone consumers in violation of section 64.1200(c)(2) or
if it engages in other violations of our telemarketing
rules. We instruct the staff to continue monitoring
complaints against Dynasty to determine whether Dynasty
should be subject to additional enforcement action.
58See 47 U.S.C. § 503(b)(4)(C); 47 C.F.R. § 1.80(f)(3). The
Commission will not consider reducing or canceling a
forfeiture in response to a claim of inability to pay unless
the petitioner submits: (1) federal tax returns for the most
recent three-year period; (2) financial statements prepared
according to generally accepted accounting practices
(``GAAP''); or (3) some other reliable and objective
documentation that accurately reflects the petitioner's
current financial status. Any claim of inability to pay
must specifically identify the basis for the claim by
reference to the financial documentation submitted.
59The forfeiture amount should be paid by check or money
order drawn to the order of the Federal Communications
Commission. Reference should be made on Dynasty's check or
money order to ``NAL/Acct. No. 200432170005. Such
remittances must be mailed to Forfeiture Collection section,
Finance Branch, Federal Communications Commission, P.O. Box
73482, Chicago, Illinois 60673-7482. Requests for payment of
the full amount of this Notice of Apparent Liability under
an installment plan should be sent to: Chief, Revenue and
Receivables Operations Group, 445 12th Street, S.W.,
Washington, D.C., 20554. See 47 C.F.R. § 1.1914.