The U.S. Federal Trade Commission (FTC) and telemarketing company Day Pacer faced off in a federal appeals court on Tuesday, where the telemarketer urged the court to overturn a nearly $29 million penalty for allegedly making millions of unsolicited, harassing calls to people listed on the national Do Not Call Registry. This case challenges the boundaries of the federal Telemarketing Sales Rule (TSR), adopted in 1995 to protect consumers from aggressive telemarketing practices.
The FTC sued Day Pacer in 2019, accusing the company of bombarding job seekers with over 3.6 million unwanted calls and generating leads sold to for-profit schools. Day Pacer contended that these calls were “purely informational” and not designed to sell a product or service, which, according to its attorney Terance Gonsalves, did not violate the TSR. The company argued in the 7th U.S. Circuit Court of Appeals that the calls were merely intended to collect consumer information rather than induce sales.
However, FTC lawyer Mark Hegedus countered this claim, asserting that the calls were the first step in a sales process. “The sales pitch starts with that initial contact,” Hegedus told the panel, defending the $28.9 million civil penalty imposed on Day Pacer by U.S. District Judge Lindsay Jenkins. The penalty, amounting to $6.88 per allegedly illegal call, was described as “far below” the maximum fine allowed under the law.
Judge Jenkins had previously ruled in favor of the FTC, citing the strong governmental interest in protecting consumer privacy. The outcome of this appeal could have significant implications for telemarketing practices and the enforcement of consumer protection regulations.
While Day Pacer pushes to reverse the ruling, the case remains a pivotal test of how telemarketing laws are applied in the digital age. Both the FTC and Day Pacer’s legal teams did not immediately respond to requests for comment following the hearing.
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