Representatives from the Federal Trade Commission, Federal Communications Commission, the US Senate, and various industry attorneys and private brands converged in Washington D.C. last week to learn from each other about compliance hurdles and solutions surrounding multi-channel marketing in a highly regulated environment. Topics included the TCPA, TSR and other privacy-related laws and regulations. Among other topics important to CCC and its clients, panels addressed TCPA lawsuits and the pending PACE/ACA appeal in the DC Federal Circuit Court, scheduled to undergo oral arguments in a few short weeks. A representative for the FTC stated, when asked, that she was very concerned with certain new technology, including both avatar ("soundboard") and ringless voicemail messaging, and that we can expect new action regarding avatar technology in the very near future.
On September 22, members of the U.S. House of Representatives (Communications & Technology Subcommittee of the Energy & Commerce Committee) convened a meeting to discuss desperately needed, common sense TCPA reform. The tide of TCPA lawsuits and class actions appeared to be the primary concern. Committee members agreed that common-sense solutions were needed both to protect businesses and consumers. Whether the TCPA will actually be amended any time soon is yet to be seen, but the fact that our national Congress is discussing the issue is encouraging.
Members of the class eligible to receive settlements will include US residents to whom Gannett, or anyone acting on Gannett’s behalf, placed or caused to be placed a call to such person’s telephone number when it was assigned to a cellular telephone service - using any automatic telephone dialing system or an artificial or prerecorded voice - without prior express consent of the called party, between January 2, 2010 and August 4, 2016. Gannett is a large media and marketing company with a portfolio of 82 newspapers. Plaintiffs allege Gannett made numerous autodialed calls to consumer cell phones without first obtaining prior express written consent from the called parties. Gannett denies the calls were illegal, but opted to resolve the case by settlement anyway. Apart from the $13.8 million monetary component, Gannett has also agreed to revamp its internal compliance systems and provide new training to key personnel.
On August 11, 2016, the FCC released long awaited behavioral rules and definitions clarifying Congress' newly passed exemption for calls relating to government-backed debts. As part of Congress' 2015 Bipartisan Budget Act, they wrote themselves (the government) a TCPA exemption from a number of the autodialer and consent rules, including the rule requiring express consent for the calling of cell phones on an autodialer. As part of that exemption, Congress ordered the FCC to write behavioral rules to further define and flesh out the new statutory exemption. Congress gave the FCC a deadline of 9 months from the passing of the legislation containing the exemption. Earlier this month, the FCC released a 66-page Order containing the new rules. The FCC has a mandate to create administrative regulations and orders to interpret and clarify the TCPA. Among other things, the August 11 Order: defines the meaning of "covered calls;" defines "solely to collect a debt;" provides limits on the volume of exempt calls; provides time of day ("curfew") rules; clarified that the calls may be made by the creditor or its contractor; and provides opt-out rights and affirmative disclosure requirements. Government contractors who call on delinquent government-backed debt, such as certain student loans and mortgages, for example, should carefully review this Order to determine if they are affected. Covered contractors may safely take advantage of this exemption so long as the follow the new behavioral rules. Interestingly however, some of the Order's provisions are contradictory to a recent FCC Declaratory Ruling exempting the government and its authorized agents from the TCPA in an even broader way. The July, 2016 Broadnet ruling appears to have provided greater rights for government callers generally and it is not yet certain how the two FCC actions may be reconciled.
On August 4, 2016, the FCC issued a declaratory ruling in response to petitions from Blackboard, Inc., as well as a joint petition by Edison Electric Institute and the American Gas Association. Both petitions sought clarifications on the already existing "emergency purposes" exemption in the TCPA. The FCC's order clarifies that schools may lawfully make robocalls and send texts to student family wireless phones pursuant to an “emergency purpose” exception or with prior express consent without violating the TCPA. They also clarified that utilities may make robocalls and send texts to customers about matters closely related to the utility service, such as a service outage or warning about potential service interruptions due to severe weather conditions, because their customers provided consent to receive these calls and texts when they gave their phone numbers to the utility company.
On July 5, the FCC released a 23 page Declaratory Ruling further interpreting the new government TCPA exemption passed by congress as part of their recent bipartisan budget act. The FCC clarified that the TCPA, including its wireless and autodialer prohibitions, does not apply to calls made by or on behalf of the federal government in the conduct of official government business, except when a call made by a private contractor does not comply with the government's instructions. This means that authorized contractors may invoke the government's exemption unless they act beyond their authorization. The TCPA will continue to apply to activities that are not truly governmental, such as political campaigning, for example. The declaratory ruling was made in response to the petitions of 3 entities: the National Employment Network Association, Broadnet Teleservices and RTI International. All 3 petitions requested clarifications regarding the government exemption and all were granted in part.
The FTC, in order to adjust for inflation over the last several years, has raised the civil penalty for certain law violations from the previously large $16,000 amount, to a staggering $40,000. This is a per violation penalty, and adds up quickly when a company has even a minor error spread across a large volume of calls. Among other violations, it appears the $40,000 applies to violations of the FTC's Telemarketing Sales Rule or TSR (including Do-Not-Call violations). Part of the penalty increase applies to violations of Section 5(m)(1)(a) of the FTC Act, which covers violations of the TSR. Prior to February of 2009, the penalty was $11,000. Since February of 2009, the fine had been $16,000. Effective August 1, 2016, the penalty for violating the TSR, including DNC violations, will be a harsh $40,000 per call/violation.
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The parties in a large wireless autodialer case (Markos v. Well Fargo Bank, N.A.) are asking a Georgia federal court to approve a class action settlement under which Wells Fargo will pay roughly $16,319,000 to settle claims that the bank used an automatic telephone dialing system to call cell phones for marketing purposes without proper written consent. Individual call recipients will likely receive between $25-$75 each and the plaintiff's counsel is sure to take a hefty fee from this hard fought case. The case alleges that Wells Fargo used an autodialer to make solicitations regarding loans to about 3,296,755 consumers, without their consent. The case acts as a reminder that even large brands can make costly compliance mistakes. Here, had the bank accurately identified cell phones and removed them from their campaign (or called manually), they would not be parting with over 16 million dollars for their (alleged) mistake. Approval of the proposed settlement is pending with the Court at this time.
The TSR changes regarding certain types of payment methods, which were announced in November of 2015, have now taken effect. The new FTC rules are aimed at stopping telemarketers from dipping directly into consumer bank accounts by using certain kinds of checks and “payment orders” that have been remotely created by the caller. The FTC believes these two payment mechanisms make it easy for fraudulent telemarketers to debit bank accounts without the consumer's permission, and can make it difficult to reverse the transactions. The amendment also bars telemarketers from receiving payments through traditional “cash-to-cash” money transfers – provided by companies like MoneyGram, Western Union, and RIA. "Cash reload" mechanisms are also now prohibited (think MoneyPack, vanilla Reload and Reloadit). Per the FTC, "scammers rely on cash transfers as a quick, anonymous, and irretrievable method to extract money from consumer victims – once it is picked up by the recipient, the money is gone." Those marketers who collect payments over the phone should review such rules carefully to ensure compliant payment methods are employed. The FTC can fine companies up to $16,000 per individual violation; that ads up fast!
Last week, the FTC filed comments regarding the FCC's recent June 6 Notice of Proposed Rulemaking. Recall that as part of the Congressional Bipartisan Budget Act, Congress exempted certain collections calls from the TCPA. Congress also directed the FCC to make behavioral rules for such newly exempted calls. These calls would include, for example, calls to collect on tax debts and government-backed student loans and mortgages. On May 6, the FCC proposed a number of rules about the frequency and duration of such calls, and other restrictions. In its comments, the FTC expressed concern because they field numerous complaints about collections robocalls. Among other restrictions, the FTC recommended that the new TCPA exemption only apply once a consumer is in "Default." The FTC also recommended that the exemption only cover calls to the individual debtor, rather than others. The FTC also urged the FCC to create rules about the security of any data collected during the exempted calls. On the same date, the CFPB also filed comments about the NPRM.