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!
Pioneer Day is a holiday celebrated in the state of Utah. While the official holiday is July 24th, this year, it will be observed on Monday, July 25th. Call restrictions will be in place on Monday July 25th. Keeping up with state holidays can be a challenge sometimes!
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!
On May 25, after an 8-day trial in the US District Court for the District of Utah, the jury reached its verdict in a significant DNC case. The Jury found defendant Feature Films for Families, along with its owner and related entities, liable for making roughly 100 million calls to numbers on the national Do-Not-Call list. The jury also found defendants liable for other violations, including certain misrepresentations, for example. While the Court has not yet determined the specific amount of damages, the exposure for this verdict is - drum roll - over 1 trillion dollars. The case was originally filed by the Federal Trade Commission in Florida, but the case was transferred to Utah prior to trial because most of the key witnesses were located in Utah. Defendants were alleged to have violated the DNC by calling numbers on the registry to solicit donations and sell family friendly movies. An appeal by the defendants is very likely.