May 2012 : Rapid Fire Round: FTC and FCC Enforcement Reflections
by Joseph Sanscrainte, an attorney specializing in telemarketing law..
RAPID-FIRE ROUND PART I: FTC ENFORCEMENT REFLECTIONS
Understanding how to comply with FTC rules requires . . . well, understanding the rules. But the rules themselves only go so far - as many can attest, you can always find a few chinks and loopholes in the rules if you just try hard enough. This is why it's important to keep an eye on the FTC's enforcement actions - you not only get to see what activities the FTC considers important enough to go after, you get to see how the FTC chooses to enforce its rules in specific contexts. The FTC has not been slacking off in its efforts to protect consumers, and what follows is a brief overview of the most recent FTC enforcement actions:
Luebke Baker & Associates: If you're a bill collector, make sure that the people you're collecting from actually owe money in the first place. Specifically, if you've been hired to collect on unpaid bills owed to entities that sell magazine subscriptions, and you have reason to know that a good percentage of the alleged "debts" are not valid, then don't harass these good folks into repaying on the bogus debts.
Hold Billing Services: If you enter into a settlement with the FTC in 1999 for unauthorized billing and misrepresentations, don't get back into the same game 12 years later. The FTC is watching!
Green Millionaire LLC: As we've learned from numerous enforcement actions in the past, the FTC doesn't like negative option online marketing. Specifically, if you offer something for "free" or "no obligation," don't collect credit cards and then charge people for services they never ordered in the first place.
Broadway Global Master: Listen up people! Don't: 1) take advantage of people in financial distress (the FTC really hates that); 2) don't call people up to collect on loans they don't really owe; 3) don't pretend that you're law enforcement personnel whose job it is to collect on debts; and 4) don't, whatever you do, DON'T . . . threaten to take away a consumer's children if they fail to pay their debt! (Seriously, this was one of the allegations made by one of the complainants.)
Hope for Car Owners, LLC: Under the general heading of "the FTC doesn't like it when you take advantage of people in financial distress" let's add a sub-heading: don't collect up-front fees from consumers on bogus promises that you'll help them lower car payments and keep their cars from being repossessed.
AMG Services/Red Cedar Services: So, you offer small, short-term loans secured against a consumer's next pay check. You also make promises of "quick cash" and no credit checks, and hide information about the high-cost fees and interest rates in small-print loan terms. Last but not least, you claim that you're exempt from FTC enforcement because . . . (wait for it) . . . because . . . YOU'RE AFFILIATED WITH AN INDIAN TRIBE! (No, I'm not making this up). Bottom line? Expect the FTC to seek damages and consumer redress . . . and no, they won't be looking for payment in wampum!
RAPID-FIRE ROUND PART II: FCC ENFORCEMENT REFLECTIONS
Sure, the FTC is normally more active in enforcements against telemarketers, but that doesn't mean the FCC isn't doing its part. And, as with the FTC, it's very important to stay up to date on FCC enforcement actions - so here goes:
Case 1: Response Card Marketing; Case 2: National Employee Benefits Group; Case 3: Software Training Company; Case 4: National Capital Exchange; Case 5: Five Star Advertising: Think the FCC has forgotten that big section in the TCPA covering faxes? (You remember faxes, right? You put a piece of paper in a machine, and then another machine somewhere else spits it back out again. This is how people used to communicate!) Anyway . . . just in case you are sending out advertisement via fax machine, make sure you follow the FCC rules, most importantly including opt-out disclosures on the first page of the fax. The above-listed companies all found out the hard way that yes, Virginia, the FCC is still paying attention to fax complaints!
Travel Club Marketing Inc.: Just in case anyone was wondering, the FCC does in fact take its rules regarding pre-recorded telemarketing messages very seriously. Travel Club Marketing was found guilty of completing 144 unsolicited prerecorded telemarketing messages to 113 cell phone numbers; and 41 such calls to 29 residential lines. Grand total of 185 infractions - doesn't sound too bad, right? Well, the FCC proposed a forfeiture of $2.9 million related to these calls.
LDC Communications: So, the FCC contacts you and ever so nicely requests some information. This can come in the form of a Civil Investigative Demand, a subpoena, or (as LDC Communications discovered) via a Letter of Inquiry. Here's a good rule of thumb: if the FCC sends you a Letter of Inquiry, you should figure out a way to respond. If you DON'T respond to the first LOI, and the FCC sends you a SECOND notice informing you that, oh, by the way, you didn't respond to the first notice, but we (the FCC) will give you another two weeks to respond, then you REALLY need to respond! LDC Communications found out the hard way that you can't just cover your ears and go "la la la" and hope the FCC will just go away.Simple Network, Inc.:Simple Network sells prepaid calling cards. So far, so good - simple. Simple Network targets its marketing to immigrants with claims that, for a card costing just a few dollars, buyers can make hundreds of minutes of calls to their native countries. Sounds great, right? Still pretty simple. Simple Network's cards actually don't provide hundreds of minutes, they only provide a fraction of same, due to Simple Network's assessment of multiple fees and surcharges. Ruh roh - now things are getting complicated. Oh, but wait - Simple Network makes disclosures (see below) in teeny tiny print on the back of the card packet that provide some additional details regarding its claims regarding the "hundreds" of minutes available for calls:
In using this card you agree to: announced minutes are based on the first call using local access numbers. Toll-free access will be charged at a higher rate. Calls placed from payphones using toll-free access will incur a surcharge of $0.99 per call. Calls will be billed in 1 minute increments; partial minutes used are rounded up to the next full increment. Total charges for a call will be rounded up to the next full cent. Additional fees and/or surcharges will reduce minutes if all announced minutes are not used during the first call. A Maintenance fee of $0.20/0.79 will be deducted after the first call and each 2nd/7th day thereafter. A disconnect fee of $0.19-$1.49 may be charged per call depending on the destination dialed. Mobile rates within a country may vary. Rates, fees, and, surcharges are subject to change without notice ... card expires 30 days after first use.Go ahead, read that paragraph again, I'll wait. Still don't get it? Neither did the FCC. "Simple" Network? NOT SO SIMPLE! What WAS simple was the FCC's determination that Simple Network was apparently liable for a forfeiture in the amount of $5,000,000.00.