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Telemarketing Case Pits Small Business Against Consumer Privacy

December 21, 1992

WASHINGTON (AP) _ A handful of small business owners, including a chimney sweep in Oregon, are blocking the Federal Communications Commission from clamping down on the use of recorded telephone sales pitches.

A federal law against such calls would have gone into effect Sunday, but Katherine Moser, who runs the Lucky Leprechaun chimney sweep service of Keizer, Ore., and other users of the devices persuaded a federal judge to put it on hold.

Moser says her small business didn’t start to make a profit until she began contacting homeowners with her auto-dialing telephone and recorded message device, for which she paid $1,795. She says no other form of advertising brought her as much business.

She is president of the National Association of Telecomputer Operators, which is a plaintiff in the lawsuit. The group claims about 40 members including piano tuners, carpet cleaners, insurance agents and pest control companies.

U.S. District Judge James A. Reddin in Oregon told the FCC late Friday that he was delaying enforcement of the statute until the lawsuit is resolved.

Moser has argued that the law violates her free speech and equal protection rights under the U.S. Constitution because it would keep her from using the automated devices while allowing companies that can afford employees to do the talking to continue soliciting by telephone.

Ray Kolker whose company, Kolker Systems Inc., in Carlsbad, Calif., makes the equipment Moser uses, says his machines are used mostly by small businesses.

FCC counsel Jane Mago said the commission hoped to get a written opinion from the judge today so it could decide the extent to which Reddin’s order blocks enforcement of the law nationwide.

Michael Jacobson, whose Center for the Study of Commercialism lobbied for the new law, said he sympathizes with Moser, but ″her business success with the machine has to be balanced against people’s right to privacy. These junk phone calls are far more intrusive than junk mail.″

Ronald K.L. Collins, a George Washington University law professor specializing in the First Amendment and commercial speech, said the law was written to avoid constitutional problems.

He said the Supreme Court has never given commercial speech as much protection as political speech and that mechanical speech, like that on Moser’s recorded sales pitches, ″is way down at the bottom of the least protected.″

Under the law, recorded telemarketing calls would be illegal unless the company first obtained permission from the homeowner to make the call.

Non-profit groups, political pollsters and special telephone alert systems that notify people about community emergencies would continue to be allowed to used computerized, recorded calls.

Person-to-person live telephone pitches would be allowed, but would have to stop if the recipient said never to call again. The law would allow recipients of such calls to file a complaint with the FCC.

They also could make a complaint to the state attorney general and file a lawsuit seeking up to $500 in damages, or triple damages if the calls are willful or knowingly in violation of the law.