January 2014 - Call Compliance News

In this issue:

• Discover has settled a TCPA class action brought against it for $8.7 million. Steinfeld v. Discover. The plaintiffs alleged that they received prerecorded and ATDS calls on their cell phones after obtaining Discover credit cards despite never providing those cell numbers to Discover.
• A Washington judge has partially dismissed a TCPA case brought by a consumer against a taxi company when the taxi company texted him that the taxi cab was dispatched pursuant to his request. Gragg v. Orange Cab Company. The judge ruled that the plaintiff did not specifically plead the defendant used an ATDS, triggering the TCPA’s text message restrictions.
• A court has upheld the FCC’s standard of “express consent” for calls received on a plasma donor’s cell phone from the plasma bank. Murphy v. DCI Biologicals Orlando, LLC.

Federal Trade Commission
The United States District Court has issued a restraining order against a telemarketing company which allegedly targeted Hispanic customers with fraudulent home-based business offers. The telemarketer then threatened to arrest purchasers who refused to pay. In re: Oro Marketing, Inc., et al.

A healthcare company has settled charges that it implemented inadequate data security measures to protect sensitive consumer information. In re: Accretive Health, Inc. An employee’s laptop computer containing 20 million pieces of information was stolen from the employee’s car and the Commission alleged that the company engaged in unnecessary risk by transporting laptops in such a way, leaving them vulnerable to theft.

Comment: The FTC uses its general unfair trade practices power to punish entities which have breaches of sensitive information. Many state laws have a more detailed restriction. Please contact me if you would like details regarding the FCC’s enforcement efforts or state privacy restrictions.

A court has denied a motion to certify a class under the TCPA of persons who allegedly received illegal automated calls to their cell phone numbers. The calls were placed to wrong numbers owned by persons other than whom the caller intended to call. Haight v. Bluestem Brand. The court ruled that a plaintiff could not move to certify a class prior to serving the complaint on the defendant.

Discover has settled a TCPA class action brought against it for $8.7 million.Steinfeld v. Discover. The plaintiffs alleged that they received prerecorded and ATDS calls on their cell phones after obtaining Discover credit cards despite never providing those cell numbers to Discover.

Comment: While Discover could make non-telemarketing calls, including debt collection calls, to these consumers if the consumers provided their telephone numbers to Discover, even these non-telemarketing calls are allowed only with “prior express consent.” Based on the October rule change, telemarketing calls to cell phones would be allowed only with prior express written signed consent.

Twelve businesses have settled FTC charges that they falsely claimed to be complying with international EU Safe Harbor provisions. The NFL Tennessee Titans were among the settling companies.

Comment: The United States does not have a national privacy statute similar to that found in the EU. Many states have restrictions which I would be happy to share with you. Additionally, the FTC uses its general power to prevent unfair trade practices to prosecute companies which, as above for example, issue deceptive statements or have breaches of their self-imposed networks. The recent laptop theft stories and Target breach stories are examples of companies that I expect will soon enter into FTC settlements based on this unfair trade practice power.

Individuals and their companies in Florida have agreed to surrender assets and be banned from providing mortgage relief and debt relief services to consumers under a settlement entered with the FTC. FTC v. Prime Legal Plans, LLC. The defendants marketed their programs in English and Spanish via prerecorded calls and allegedly represented that they could help consumers because 80% of mortgages contain some fraud. They also placed calls to persons on the national “do-not-call” registry.

Comment: Although the fraud allegations above are the most serious, placing prerecorded calls to persons on the national “do-not-call” list will generate complaints which the FTC will investigate. If your business receives a proposal to place prerecorded calls, you should review it closely for compliance purposes as most uses of such calls are illegal.

California
A California court has ruled that an auto dealer could compel arbitration in a purported TCPA class action. Sherman v. RMH, LLC. The dealer sent an anniversary prerecorded message to the consumer on the anniversary of his purchase. The court ruled that the arbitration agreement that he signed at the time of purchase prevented his suit under the TCPA.

A court has upheld the FCC’s standard of “express consent” for calls received on a plasma donor’s cell phone from the plasma bank. Murphy v. DCI Biologicals Orlando, LLC. The court ruled that it was required by the Hobbs Act to follow the FCC’s definition of express consent. Because the donor voluntarily provided his cell phone number to the defendants, he expressly consented to future text messages. The court also ruled that the text messages, offering to pay Murphy to donate plasma, did not constitute “telephone solicitations” as they sought to buy something from him, not sell something to him.

Comment: This case is important with regard to several types of messages offering to purchase something from a consumer, e.g. offer of employment, etc. While a few courts have ruled that such offers are not solicitations, there have not been a lot of decisions in the area and this 2013 case should be a valuable precedent.

Florida
A Florida court has refused to dismiss a case brought against a sender of text messages which allegedly continued to send text messages to a consumer (and a purported class), after the consumer unsubscribed by texting “STOP ALL” to the sender. Legg v. Voice Media Group, Inc.

Comment: It is well settled that a consumer can revoke consent to receive telephone calls or text messages.

Indiana
An Indiana court has denied a defendant’s motion to dismiss a TCPA class action. Markovic v. APPRISS, Inc. The plaintiff was in a car accident and later received a prerecorded voice message on his cell phone offering to provide a copy of the consumer’s crash report. He had not consented to receiving the message. The defendant argued that the plaintiff was not charged for the call and, therefore, the TCPA did not apply, but the court rejected this argument.

Virginia
A court has denied a motion to dismiss in a TCPA case brought by a husband and wife who received text messages. Downing v. Papa John’s USA. Although they provided their telephone number, the website also provided a question that specifically asked whether the customer consented to receive promotional texts. This amounted to “instructions to the contrary” negating any express consent given by providing the number.

Washington
A judge has partially dismissed a TCPA case brought by a consumer against a taxi company when the taxi company texted him that the taxi cab was dispatched pursuant to his request. Gragg v. Orange Cab Company. The judge ruled that the plaintiff did not specifically plead the defendant used an ATDS, triggering the TCPA’s text message restrictions.