June 2016 - Call Compliance News

FCC

The FCC Consumer Advisory Committee issued a recommendation regarding how the Commission should implement exceptions to the TCPA’s ban on calls to cell phones if made solely to collect a debt owed to or guaranteed by the United States.  http://transition.fcc.gov/Daily_Releases/Daily_Business/2016/db0614/DOC-339816A1.pdf.  The Committee recommended that the TCPA ban only apply to texts or calls to cell phones if regarding delinquent or defaulted debt.  The Committee recommended a maximum of three calls per month and would not allow the exception to apply to debts that had been sold to independent third parties (e.g. after default).

FTC

The FTC and Florida’s Attorney General have sued a group of companies alleging violation of the TSR and Florida law based on illegal prerecorded telephone calls offering debt reduction services.  FTC v. Life Management Services of Orange County, LLC et al.  The defendants allegedly used generic names such as “Bank Card Services” and misrepresented an existing business relationship with recipients of the calls.

The FTC has settled claims against a telemarketer who allegedly stated that buying household products would benefit disabled people.  FTC v. American Handicapped, Inc. et al.

The FTC has obtained summary judgment against a debt collector barring it from engaging in debt collection activities and imposing a judgment of $980,000.  FTC v. The Primary Group, et al.  The FTC alleged the company falsely threatened consumers with arrest or lawsuits.

The FTC has submitted a comment to the FCC regarding the proposed exemption for calls concerning debts owed or guaranteed to the federal government from the FCC’s ATDS rules.  The comment can be reviewed at https://www.ftc.gov/system/files/documents/advocacy_documents/comment-staff-ftc-bureau-consumer-protection-federal-communications-commission-rules-regulations/160616robocallscomment.pdf. 

Comment: The TSR does not have an ATDS restriction similar to the FCC’s TCPA restriction.

The FTC has adjusted a maximum penalty for violations of the FTC Act, including the TSR from $16,000 to $40,000 per violation.  https://www.ftc.gov/news-events/press-releases/2016/06/ftc-raises-civil-penalty-maximums-adjust-inflation.  The rule is effective August 1, 2016.  The drastic increase is based on the Federal Civil Penalties Inflation Adjustment Act of 2015 which uses a formula to “catch up” penalties based on cost of living increases.

Comment: Because the FTC considers each telephone call to be a separate violation, this change has no real affect as any telemarketing campaign in violation of the rule would quickly result in potentially catastrophic damages.  However, the proper way to attack such a claim is that each call is not a separate “violation.”  The FTC often makes this claim, but there is little case law to support it.  This is similar to the TCPA which has statutory damages which plaintiff’s attorneys commonly use to calculate catastrophic damages for even “technical” violations of the TCPA.

First Circuit Court of Appeals

A judge has indicated in a TCPA action that she intends to rule that an individual plaintiff’s claim is made moot by payment to him for full relief.  Johansen v. Liberty Mutual.  The argument goes that if the plaintiff’s claim is fully satisfied, he can no longer act as a representative of a class, and the class must be dismissed.

Comment: The Supreme Court rejected most of this argument in a case decided last term known as Campbell-Ewald Co. v. Gomez.  The Court, however, left open the possibility that defendants could deposit money with the plaintiff directly or with the Court, and this judge is relying on that language.  If she rules in favor of the defense, this will create a split among the circuits and the issue will likely will go back to the Supreme Court.

Arizona

The Arizona Attorney General has filed suit against a windshield repair business alleging it ignored the national “do-not-call” list while making unsolicited phone calls to advertise its services.  Mark Brnovich v. AJ’s Auto Glass, LLC.

Comment: It seems impossible that any business making phone calls to consumers would be unaware of the national “do-not-call” list at this date.

Arizona enacted a law (SB 1375) which changes the definition of “telephone solicitation” to include offers to or from persons located in the state.

Comment: Companies located in Arizona which do not market to Arizona residents still must comply with the law and registration with the state (or qualify for an exemption).

Connecticut

A bill has been introduced in the Connecticut House (HB 5635) which would require telecommunications carriers to disclose call identification information to law enforcement officials investigating telephone fraud.

Massachusetts

Massachusetts General Assembly is considering a bill (AB 4334) which would require telephone solicitors that make sales or charitable solicitations to “use a valid telephone number” in those calls.  Solicitors must also disclose promptly the purpose of the call, the correct name of the telemarketing company making the call, and the correct name of the ultimate seller selling the goods or services.

Comment: Given that most business-to-consumer calls are not placed using individual telephone lines, this likely would require valid caller identification information be transmitted, but the statute is unclear regarding the exact meaning of the requirement.

Nebraska

The Nebraska Public Service Commission has discussed possible rule changes that require prerecorded calls to disclose to recipients who is paying for those calls.  A rule update might include both the identity of who is calling and who is paying for the call.

New York

A bill has been proposed in the New York Senate (SB 6809) which would prohibit transmission of knowingly misleading, inaccurate, or false caller identification information.  It passed in the Assembly and the Senate and will likely be signed by the governor.

A bill has been proposed in the New York Senate (SB 6553) which would raise potential penalties for violating New York’s telemarketing law to $20,000 per violation.

Comment: The current penalty is up to $11,000 per violation.