September 2009 - Call Compliance News

Federal

FTC

On July 29, 2009, the Federal Trade Commission announced another three month delay in enforcement of the new Red Flag Rules.  The new enforcement date is November 1, 2009.

The FTC has announced new restrictive revisions to the Telemarketing Sales Rule with regard to the sale of debt relief services.  The announcement can be found at: http://www.ftc.gov/opa/2009/07/tsr.shtm and comments are due with the agency before October 9, 2009.

The FTC’s new restrictions on prerecorded solicitation calls went into effect on September 1, 2009.  Prerecorded solicitation calls can now only be sent with the prior written express signed consent of the recipient.  Some calls are exempt from the FTC’s jurisdiction, notably, calls by banks, common carriers, or the business of insurance.  Please contact me if you would like additional information regarding the restrictions or exemptions.

The FTC has entered into a settlement agreement with an auto warranty company which sent millions of prerecorded calls earlier this year.  The company and its owner will be permanently banned from making any prerecorded calls and misrepresenting affiliation with a manufacturer dealer of the consumer’s automobile.  Judgment was entered against the Defendants in the amount of $24,000,000, but that judgment could be reduced if the total assets of the company are less than that amount.

Effective October 1, 2009, the annual subscription rate for the national “do-not-call” list will be $55.00 per area code or a maximum amount of $15,058.  In 2007, Congress passed a law mandating that the fee can only increase based on the consumer price index.

State

Arizona
A lawsuit has been filed by a bank against a security auditor after the bank was subject to security breach.  The case will test what liability an auditor has when it certifies a company’s security or other procedures.

District of Columbia
In 2003, I contacted the Business & Professional Licensing Administration of the District of Columbia with regard to the District’s telemarketing registration rules.  Forms had not been promulgated thus registration was impossible even though the District of Columbia had a statute on its books on this topic.  A recent search of the licensing forms on the Administration’s website showed that the District still has not published these forms.

Illinois
In an Illinois TCPA class action (G.M. Sign, Inc. v. Finish Thompson, Inc.), the plaintiff hired Dr. Robert Biggerstaff as an expert witness.  Dr. Biggerstaff has previously been involved in several TCPA claims as a plaintiff.  In the case, the defense’s motion to dismiss the class was denied.

A United States’ District Court considered a TCPA claim involving a fax advertising an upcoming trade show (CE Design Limited v. Prism Business Media, Inc.).  The plaintiff had an established business relationship with the defendant but argued that the FCC exceeded its rulemaking authority in allowing established business relationship calls.  The Court rejected plaintiff’s claim and found for the defendant.

New Jersey
A judge has dismissed a purported class action for unsolicited facsimile advertisements allegedly in violation of the TCPA.  Goodrich Management Corp. v. AFGO Mechanical Services, Inc.  The court ruled that the plaintiff could not demonstrate that its TCPA claim was typical of the claims of other purported fax recipients.  The court noted that there were too many crucial factual determinations to be made with regard to each claim and defenses would vary from party to party.  Therefore, the court dismissed the class action.

New York
A New York appeals court has ruled that faxes entitled “Attorney Malpractice Report” were “informational messages” and not unsolicited advertisements within the meaning of the TCPA.  Stern v. Bluestone.  The plaintiff had received 14 faxes from another attorney who specialized in attorney malpractice actions.  The FCC has stated that “a trade organization’s newsletter sent via facsimile would not constitute an unsolicited advertisement, so long as the newsletter’s primary purpose is informational, rather than to promote commercial products.”  The court agreed that these reports were informational and any advertisement purpose to the faxes was “incidental” and “does not convert the entire communication into an advertisement.”  I would be extremely hesitant to rely on this decision in other states as generally any advertising content to a message makes the entire message subject to rules for advertising material.

A U.S. Court in New York has reversed an earlier ruling and held that it did not have jurisdiction to invalidate the FCC’s interpretation allowing established business relationship faxes.  Gottlieb v. Carnival Corporation. 

North Carolina
North Carolina has amended its law regulating prerecorded calls to limit the exemption for calls regarding existing debts or contracts for which payment or performance has not been completed to calls which do not include telephone solicitations and which clearly identify the caller’s name and contact information and the nature of the telephone call.  North Carolina already had a very restrictive state law regarding prerecorded calls. General Assembly of North Carolina, Session Law 2009-364.  Health insurance calls, also previously exempt, are also subject to new restrictions.

Ohio
A notorious private plaintiff has lost in court again (Charvat v. Echostar Satellite).  The court held that he could not recover damages for more than one violation per telephone call under the TCPA.  Some parts of plaintiff’s claim were allowed to proceed based on alleged receipt of more than 20 prerecorded telephone calls.

Oklahoma
The Supreme Court of Oklahoma has reviewed a TCPA claim (MLC Mortgage v. Sun America Mortgage Co.).  At the trial level, the plaintiff was granted summary judgment because Oklahoma law did not provide for a private cause of action in state court under the TCPA.  The Supreme Court ruled that Oklahoma’s courts can hear TCPA claims without affirmative action by the Oklahoma legislature.  Most other state courts which have addressed this issue have ruled in a similar fashion, or, if they ruled that TCPA claims could not be heard, were quickly corrected by their state legislature(s).

Virginia
Virginia has modified its law regarding prerecorded telephone calls to allow calls to established customers or with the express consent of the recipient. Virginia Code § 59.1-518.2.