A $6 Million Reminder That FCC Still Has Work To Do On Telemarketing And Federal Preemption

Last week came news that DISH Network LLC signed an Assurance of Voluntary Compliance (“AVC”) with the Attorneys General of 46 states, in which it agreed to pay nearly $6 million – plus, potentially, additional restitution – and to modify its sales practices to settle claims that it failed to follow telemarketing do-not-call laws and engaged in unfair trade practices.  The agreement, which DISH executed with regulators from every state but California, Illinois, North Carolina, and Ohio, notes that among the alleged violations were failure “to comply with federal, state and/or local laws regarding telemarketing,” but denies any wrongdoing.  The AVC also called for DISH to comply with such state laws going forward. The extent to which Attorneys General leveraged their states’ telemarketing laws in the settlement, and to require future compliance, is a troubling reminder that it has been more than half a decade that the Federal Communications Commission (“FCC”) has sat on petitions, declaratory ruling requests, and other calls for it to follow through on its promise to preempt the application of state laws to interstate telemarketing if they differ from federal standards.  Specifically, when it joined the Federal Trade Commission to update federal telemarketing rules in 2003, including creating of a National Do-Not-Call Registry, the FCC established certain limitations on application of state law thereafter.  It said its rules implementing the Telephone Consumer Protection Act (“TCPA”), which underlie the Registry, would serve as a “floor” with respect to all interstate and intrastate telemarketing calls.  That is, federal rules would govern all interstate calls, and with respect to intrastate calls, state rules that were less restrictive than their federal counterparts were preempted.  And, while the TCPA allows states to impose more restrictive rules to intrastate calls, the FCC said its rules would “almost certainly” preempt the application of such laws to interstate calls.  It also said that, rather than establishing blanket preemption (as with less-restrictive state laws), it would address preemption of such laws on a case-by-case basis. In the ensuing years, in the related context of unsolicited fax ads, the TCPA’s preemption provision, which applies equally to the law’s telemarketing and fax provisions, was interpreted in accord with the FCC’s position.  At the same time, multiple petitions were filed, targeting sundry state laws, asking that the FCC preempt various state telemarketing prohibitions or requirements.  In other cases, trade associations asked the FCC to impose 50-state preemption with respect to certain state laws and rules.  Some of these petitions have languished since 2004, or even 2003, and while the FCC has sought comment, all these matters remain pending. The AVC that DISH has entered with all but 4 states requires it to comply with state telemarketing rules that likely were preempted by federal law.  This is a significant reminder that the FCC needs to bring closure to this issue.  Indeed, it is likely that many of the calls at issue in the DISH enforcement action were interstate in nature and should not have been subject to state laws that differ from the TCPA rules.  The point is not that if preemption were clarified by the FCC, the issues surrounding DISH’s marketing practices would have disappeared.  Nonetheless, the settlement serves as a hefty reminder that telemarketers making interstate calls still face state laws that differ from – and as the FCC has said, are “almost certainly” preempted by – federal regulations intended to unify the rules in this area and to eliminate the patchwork of state requirements and prohibitions.  Perhaps, now that a new FCC installed by a new administration is poised to be at full strength, there is an opportunity to complete this last piece of long-unfinished business.