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.
All the more reason to have your compliance and scrubbing in place! Contact us for a free compliance evaluation today!
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.
On June 8, 2016, US District Judge Carlos Mendoza of Florida entered a temporary restraining order against Life Management Services and a number or related entities and individuals. The case was brought by the FTC and the State of Florida working together. The primary allegations in the government's lawsuit involve illegal robocalls, prohibited up-front fees, and sales misrepresentations. This latest case marks the 39th action taken since January 2015 as part of a coordinated multinational enforcement effort to halt robocall operations. According to the FTC, the Orlando-based defendants "bombarded consumers with illegal robocalls in an attempt to sell bogus credit card rate reduction services." Defendants also are alleged to have violated the caller ID rules, as they pushed out phrases such as "Bank Card Services" instead of their real business names. The lesson of the day is a reminder that you need prior written consent to deliver marketing robocalls, and you must transmit accurate caller ID information. Comply or lose your business!
As a refresher, Robins' lawsuit alleges that Spokeo violated his FCRA statutory rights in the manner in which Spokeo collected and stored information about him. Like the TCPA, the FCRA gives consumers certain statutory rights and allows consumers to sue companies directly for statutory damages in the event of violations. Spokeo argues that Robins lacks the required standing to sue under Article III of the US Constitution because he suffered no actual injury. Many TCPA defendants feel the same about TCPA plaintiffs - that they suffer no real injury and so should not be able to sue. On May 16, 2016, the U.S. Supreme Court ruled in Spokeo, Inc. v. Thomas Robins, that the Ninth Circuit Federal Court of Appeals had not properly addressed a key issues in the case. That issue is whether Robins' alleged injury was "concrete." It was not enough that the Ninth Circuit had found there to be a "particularized" injury because an actual injury is one that is concrete and particularized.
The Supreme Court therefore refused to address the other issues of the appeal and has remanded (returned) the case back to the Ninth Circuit so the issue of whether Robins had properly alleged a "concrete" injury in his FCRA lawsuit could be analyzed. At least one helpful comment exists in the decision, which some defendants may take advantage of in their pending cases: "Robins cannot satisfy the demands of Article III by alleging a bare procedural violation." Many TCPA defendants would argue that the plaintiff is really only arguing a procedural violation, and has not suffered any real injury. The lesson for this week is that it is not always clear whether a consumer has suffered a real, concrete injury. Even the Ninth Circuit didn't properly address this problem, according to the Supreme Court.
We would encourage callers to fully comply with the law (scrubbing, record-retention, etc.) and thereby avoid TCPA fights like this altogether!
Two different plaintiffs filed separate TCPA nationwide class actions in federal court for the Northern District of Illinois against Donald J. Trump for President, Inc. Both plaintiffs allege that the Trump Campaign sent them a text message with the following message: “Reply YES to subscribe to Donald J. Trump for President. Your subscription will help Make America Great Again! Msg&data rates may apply.” Both plaintiffs claim that they did not provide Trump with their express written consent to be contacted.
The class in each of the lawsuits is defined slightly different, such as the length of time to be included in the class as well to whom the class members provided their phone numbers to. The second suit, Roberts v. Donald J. Trump For President, Inc., No. 16-4676 (N.D. Ill. Apr. 26, 2016), states that plaintiff was required to provide his phone number to Event Brite to attend a Trump rally and the class is limited to those that have attended Trump rallies. Both cases have been assigned to the same judge and there is a chance that the suits will be combined.
Had the Trump Campaign obtained the express written consent of individuals, it would not be faced with defending these suits which may take a lot of time and money to resolve.
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