Robocalls

Pinterest Contest Draws FTC Warning


Footwear company Cole Haan recently held a contest with Pinterest that offered a grand prize of a $1,000 shopping spree.  To win, contestants were required to create a board entitled “Wandering Sole,” and pin at least five images from the Read more

Mars v. Hersheys: Real Fruit or Fruit Flavoring?


In a recent decision by the National Advertising Division of the Better Business Bureau candy manufacturer Hershey’s was instructed to improve its advertising to make clear that its Brookside Dark Chocolate line is not made with pieces of fruit, Read more

Ignore at Your own Risk: Online Terms and Conditions are Enforceable


My rough guess is that one person out of 10,000 actually take the time to read the lengthy terms and conditions that they are required to accept before engaging in certain online activities, such as accepting an offer or Read more

The FTC's Privacy Protection Crusade


Over the course of the past few years, the Federal Trade Commission has managed to collect millions of dollars in fines for privacy-related violations, both from small Internet startups and behemoths such as Google.  In January alone,  the FTC Read more

Hulu Runs Afoul of California Automatic Renewal Law


It seems as though nearly every subscription-based service offers a free trial with an automatic renewal feature.  Often touted as a "convenience" feature, the automatic renewal of a subscription (also known as a negative option plan) is far more Read more

Data Security Guidelines for Small Businesses


Kamala Harris, California's Attorney General, recently issued a set of recommendations called "Cybersecurity in the Golden State, which provides guidance for small to medium-sized business for preventing and responding to cyber attacks and security breaches.  Small businesses often lack the Read more

Insurance Coverage for TCPA Violations?


The Telephone Consumer Protection Act (TCPA) restricts telephone solicitations and limits the use of automatic dialing systems, prerecorded voice messages, SMS text messages, and faxes, and provides consumers with a private right of action that enables them to recover Read more

California's new "Do Not Track" Rules take Effect on January 1, 2014


The California Online Privacy Protection Act of 2003 ("CalOPPA") has long required online service providers ("OSPs") to provide certain information to consumers regarding the collection of personally identifiable information online, and how that information is used.  CalOPPA's requirements apply Read more

The TCPA and the Corporate Veil: Personal Liability is a Distinct Possibility


A recent Michigan case adopted the holdings of other courts in Texas and Maryland to find a business owner personally liable for TCPA violations.  The case revolved around an incorporated business that was contacted by a marketing company about Read more

Noncommercial Calls may Still Result in TCPA liability


A new addition to the tidal wave of Telephone Consumer Protection Act (TCPA) litigation that has swamped commerce over the course of the past few years will likely have a further chilling effect on those who attempt to comply Read more

Is it Truly Made in the USA?


Apart from such notable exceptions as firearms, medical marijuana, and class action lawsuits, Americans are hard pressed these days to find any product touted as wholly "made in the USA."  This fact is frustrating to millions of consumers, many Read more

Disclaimer Danger


The Federal Trade Commission’s (FTC) recent revision of the Dot-com Disclosure guidance document introduced some important changes concerning the prominence and clarity of disclaimers and hyperlinks, and also directed that qualifying information should appear in the text of the ad itself Read more

Does the TCPA Prohibit Recorded Calls That Don’t Include a Sales Pitch?

Posted on by Seth Heyman in Marketing & Advertising Law, Telemarketing Leave a comment

As detailed in innumerable posts on this blog, the Telephone Consumer Protection Act of 1991 (TCPA) prohibits “any telephone call to any residential telephone line using an artificial or prerecorded voice to deliver a message without the prior express consent of the called party.”  There are several exceptions to this general prohibition, and one of the more significant ones covers calls that do not include a solicitation to purchase goods or services, unless the consumer has provided prior express consent.    This exception is reflected in the FTC’s Telemarketing Sales Rule, as well as the FCC’s exemption for calls that do not adversely affect the consumer’s privacy rights and do not include any “unsolicited advertisement.”  The TCPA defines an “unsolicited advertisement” as “any material advertising the commercial availability or quality of any property, goods, or services which is transmitted to any person without that person’s prior express invitation or permission.”

These apparently clear exceptions might lead you to conclude that sending a recorded call to your own customer that includes an important reminder and no sales pitch would be perfectly legal, especially if the customer has given his or her consent to receive such a call.   Well, guess again.

In the recent case of Chesbro v. Best Buy Stores, LP- yet another class action spawned by the TCPA revolved around calls associated with Best Buy’s Reward Zone program, which rewards customers with rebate certificates that expire after a set period of time.  The plaintiff enrolled in the Reward Zone program (RZP), and in doing so agreed to accept recorded messages from Best Buy.  He then sued Best Buy after receiving several recorded calls from the company regarding the RZP program.  At least one message reminded him to use his certificates before they expired, and another informed him about changes to the RZP.   The plaintiff claimed that he requested to be placed on Best Buy’s internal Do-Not-Call list, but nevertheless continued to receive calls.

Best Buy argued that the calls did not constitute unsolicited advertisements because they: (1) they were informational in nature; (2) they did not include a sales pitch or reference any good, product, or service; and (3) the plaintiff consented to receive them.  The Court disagreed, and held that recorded calls need not explicitly mention a good, product, or service to violate the TCPA if they encourage the listener to make future purchases.  The Court noted that an informational call that includes a marketing component is still a prohibited “dual purpose” call.   Finally, the Court rejected the consent argument, as he “repeatedly and expressly asked not to be contacted.”

This ruling leaves companies in a quandary.  Apparently, a call violates the TCPA if it somehow encourages a customer to make a future purchase, but what does that mean exactly?  What about a dentist calling his customer to let him know that she missed her teeth whitening appointment and to contact the dentist to reschedule.  Presumably, the dentist is going to charge for his services, so is he not then encouraging his customer to make a future purchase?  What if the customer consents, but then argues that he changed his mind somewhere along the line?

However this plays out, it sends a chilling message to any company that wants to maintain contact with its customer.  The fictional dentist in the preceding example might want to consider using the following script:  “This is not a sales call. The purpose of this call is to remind you that you missed your appointment.   This call is not to be interpreted as a solicitation to make any purchase whatsoever.  In fact, do not purchase anything from us, ever again.  Because you have received this call, your business is no longer welcome.  If you no longer want to receive recorded messages from us, press the number 1 key now.  Have a nice day.”

 

 

 

 

 


New FCC Rules Create Emergency DNC List

Posted on by Seth Heyman in Marketing & Advertising Law, New Regulations, Telemarketing Leave a comment

On October 17th, the Federal Communications Commission (“FCC”) announced an additional obligation on all entities that use auto-dialed robocalls for their business that may be directed to public safety phone lines.  Although robocalls to public safety phone lines are already prohibited under the 1991 Telephone Consumer Protection Act (“TCPA”), Congress once again addressed the issue through legislation tacked to the Middle Class Tax Relief and Job Creation Act of 2012.

The Tax Relief Act requires the FCC to: (1) create a separate Do-Not-Call Registry for numbers associated with emergency and other public safety lines (the “Emergency DNC”);  (2) prohibit the use of automatic dialing devices to contact those 911 numbers for non-emergency purposes; and (3) impose monetary penalties on any entity that discloses numbers listed on the Emergency DNC, or otherwise direct non-emergency robocalls to the Emergency DNC.

Those new monetary penalties are stiff indeed.   Anyone disclosing or disseminating Emergency DNC numbers face fines of between $100,000 and $1 million per incident, and those who use an automated dialing device to call those numbers will be subject to a monetary penalty between $10,000 and $100,000 per call. The amount of the penalty to be imposed depends on factors such as negligence, gross negligence, recklessness, willfulness, and whether the violation is a first or subsequent offense.

The new rules strictly prohibit anyone, including schools and charities, to make calls or send texts to Emergency DNC numbers.  Anyone seeking to access the list will need to certify that it will rent, sell, or disclose (other than for their intended purpose) the numbers on the Registry, and entities that use auto-dialers must access the list no more than 31 days prior to initiating any auto-dialing campaign.  Emergency service providers will have a great deal of discretion on the numbers they choose to list on the registry, so it will likely change from month to month.

The FCC will soon release a Public Notice containing more details on how the Emergency DNC  will operate, and the date on which the FCC’s new rules will become effective.  In its announcement, the FCC stressed its intention to issue significant penalties for violations of the new rules.  Needless to say, anyone who uses robocalls for any purpose should plan on accessing the Emergency DNC.

 


The FTC Robocall Challenge: Innovative, but Ultimately Ineffective

Posted on by Seth Heyman in Business Law, Marketing & Advertising Law, Telemarketing Leave a comment

On Thursday, October 18th, the Federal Trade Commission (FTC) held a “Robocall Summit” to address the issue of illegal robocalls.  The summit consisted of several panel discussions that discussed the history and legal framework of automated voice messages, and the technical challenges of combatting their illegal use.  The summit was attended by telecommunications professionals, attorneys, government officials, industry stakeholders, and consumers.

Of particular interest was a panel consisting of the Indiana Attorney General, and attorneys representing the FTC and the FTC.  Those worthies discussed their efforts to enforce state and federal laws limiting the use of robocalls, most notably the Telephone Consumer Protection Act and the government’s enforcement efforts.  The FTC representative focused on his agency’s recent enforcement actions, stressing the fact that they resulted in the imposition of over $60 million in fines and penalties.

At the conclusion of the summit, David Vladeck, Director of the FTC’s Bureau of Consumer Protection announced an agency first: the FTC Robocall Challenge- a contest offering a $50,000 cash prize for the best technical solution to the robocall problem.  The Robocall Challenge is to be hosted on Challenge.gov, an online initiative that empowers the U.S. government and the public to bring the best ideas and top talent to bear on our nation’s most pressing issues.

While Director Vladek’s announcement was unprecedented, after the day-long discussion on the pernicious nature of robocalls; how easily they can be spoofed, and how difficult it is to identify the perpetrators, the Robocall Challenge seemed more like an act of desperation than a search for innovative solutions. 

Regardless of how one interprets the Robocall Challenge, any industry insider will tell you that it will ultimately prove fruitless.  If current telecom technology could solve the problem, someone would have doubtless offered one before now, and even if the Robocall Challenge results in an effective technological solution, the Gangster Dialers would find a way to circumvent it by the time it is implemented.  And when many perpetrators are located overseas and hidden beneath a bewildering web of dummy corporations, effective enforcement requires an extraordinarily high level of international cooperation and coordination.  One glance at the meager results of the 25 year long war on drugs illustrates the difficulty of such efforts. 

Like the war on drugs, the true answer to the robocall problem is for the government to focus its efforts on eliminating the demand for the product.  As detailed in an earlier post, telemarketing in general, and robocalling in particular, is a difficult business that depends entirely on a reaching a threshold level of consumer responses in order to make campaigns profitable.  The lower the response, the higher the cost of the leads.  Lower responses by 20%, and the per lead cost rises by  20%.  Lower response rates 50%, and the leads will cost more than those generated through the Internet and even television marketing campaigns.

How to lower response rates?  The answer is simple: a national marketing campaign, targeted to those most likely to respond to an illegal robocall: people over the age of 55.  Convince that segment to hang up on any robocaller who hasn’t been granted permission to call, and response rates would drop by as much as 50% overnight.   After a month or two of such a targeted campaign, robocalling operations would drop like flies as their client base seeks other methods to peddle their wares. 

How best to target this vulnerable segment cheaply and effectively?  The answer is both innovative and satisfyingly ironic: a robocall campaign.


Good News (finally) for Outbound Telemarketers

Posted on by Seth Heyman in Blog, Marketing & Advertising Law, Marketing Litigation, Telemarketing Leave a comment

In three separate cases filed under the Telephone Consumer Protection Act (TCPA), one federal appeals court and two district courts recently held that companies that use autodialing equipment to contact consumers who reach someone other than the intended recipient of the call can nevertheless rely on the TCPA’s statutory exemptions to the general prohibition against the use of autodialers that depend on the relationship between the company and the person it is attempting to call.

This is great news for telemarketing companies that may not always be in a position to know when someone’s phone number is incorrect or has been reassigned, particularly when automated calls are placed to cell phones, where the federal prohibitions against such practices are the narrowest.

In other words, if a company is relying on a particular exemption against autodialed calls (i.e., express written consent), and in good faith attempts to reach the person who provided that consent, it will not necessarily be held liable for dialing the wrong number.   While these are TCPA cases, the three decisions involved debt collection calls, and not sales solicitations.

The cases are Anderson v. AFNI, Inc., decided by a district court in Pennsylvania, Meadows v. Franklin Collection Service, Inc., filed in the Eleventh Circuit, and Santino v. NCO Financial Systems, Inc., which was decided by a district court in New York.  All three decisions were made in the context of debt collection calls, rather than telemarketing calls intended to sell goods or services.  They were also decided under the FCC’s interpretation of the prohibition against autodialers, rather than that implemented by the FTC (the FCC still permits autodialed calls under the Existing Business Relationship exemption, and the FTC requires express consent of the person called).

However, because authority was initially split on the question of whether the intent of the caller should be considered a factor in imposing liability, the precedent set by these three cases should extend to non-debt-collection calls that fall within exemptions to the autodialer prohibition.

What does all this mean? This line of cases gives telemarketers a strong defense against state and federal agency enforcement when they accidentally place a call to the wrong recipient, and an even stronger defense against consumer plaintiffs who rely upon the private right of action and statutory damages provisions of the TCPA to extract nuisance settlements.