Featured Article: The Latest from the FTC -- Lead Generation.
State Holiday Alerts: State DNC Restrictions for February and March.
Upcoming Webinar: March 4, 2009 2PM - 3:30PM
North Carolina Judge Issues Restraining Order Against Telemarketer.
Indiana May Include Business Numbers on the State's Do-Not-Call List.
Missouri Considers Adding Political Calls to its State Do-Not-Call List.

In November of 2007, the FTC settled a case against Ameriquest Mortgage Company alleging violations of the national registry as well as in-house Do Not Call rules. It cost Ameriquest one million dollars to resolve the case, but Ameriquest's loss was clearly the industry's gain. In the settlement, the FTC, for the first time, laid out some rules with regard to calls made to numbers identified and sold by lead generators. These rules (to the surprise of many) actually gave lead generators some leeway in terms of enabling their clients to make use of the inquiry exemption to the national registry rules.

The FTC permanently enjoined Ameriquest from initiating any outbound call to a number on the national registry received from a lead generator, unless Ameriquest could establish that the lead generator had:

-- informed the lead they would receive follow-up telephone calls if they responded to the lead generator;
-- let the lead know the maximum number of sellers that may make such follow-up calls; and
-- if possible, informed the lead the identity of the sellers who may make such follow-up calls.
-- accomplished all of the above within the 3 months immediately preceding the call.

As I noted at the time of this enforcement, the FTC was clearly setting out the rules with regard to lead generation and the use of the "inquiry" exemption to the national registry rules. Using this settlement as guidance, lead generators can now simply let consumers know that follow-up sales by as-yet unknown sellers will occur, as long as a maximum number of such sellers was provided. In other words, a lead generator could inform the consumer that by entering this contest, you understand that you may receive calls from up to 10 sellers. Thereafter, the lead generator could identify up to 10 sellers for sales of the leads. If it's not possible to identify these sellers at the time the lead slip is printed, then such identity does not have to be disclosed.

A key question, however, is what exactly has to be done to inform a reasonable consumer that follow-up calls may occur? The FTC appears to have fine-tuned these concepts in a recent decision involving Westgate Resorts, Central Florida Investments, and CFI Sales & Marketing, and their lead generator, Brandarama.com.

In this case, Brandarama.com offered free goods to consumers who filled out an online form, which requested their telephone number, other personal information, and required responses to travel-related questions. The defendants purchased the leads from Brandarama.com, and then made calls to them.

The FTC determined that the defendant's calls were violations of the national registry. The key elements the FTC analyzed in reaching this conclusion were:
-- The online form used by Brandarama.com did not identify the defendants -- such identification only occurred in the site privacy policy or its terms and conditions.
-- The online form contained a pre-checked box indicating that the consumers had agreed to the site's privacy policy and terms and conditions statement.
-- Consumers were not required to access these statements prior to submitting responses to the online form.

It is impossible to know whether each of the above factors alone made the lead generation problematic, or if all of them taken together constituted an issue for the FTC. In any event, the FTC determined that consumers responding to Brandarama.com's offer were not making an inquiry (for national registry exemption purposes) since the form would not lead a reasonable consumer to expect that the consumer would receive a prompt follow-up call from the defendants. The FTC further concluded that consumers did not provide express written agreement either since Brandarama.com did not advise consumers clearly and conspicuously that they were giving express permission to be contacted by defendants.

Sellers obtaining information from lead generators (as well as sellers directly obtaining such leads from consumers) must carefully review the Westgate settlement (as well as a related matter settled the same day involving All In One Vacation Club -- in fact, the actual form used by All In One is included in the settlement!) If after review, it is determined that the forms used to generate leads do not meet the standards outlined by the FTC for either inquiry or written permission exemption status -- all leads so generated should be treated as cold calls (i.e., scrubbing required). Bottom line? Sellers (and the lead generators they hire) may need to go back to the drawing board to generate new forms.

The following holiday restrictions have been verified for the months of February and March:

Outbound calling is prohibited in Alabama, Louisiana, Mississippi, Rhode Island and Utah
on Monday, February 16, 2008 in observance of George Washington's Birthday.

Outbound calling is prohibited in Alabama (Baldwin and Mobile Counties only) and Louisiana
on Tuesday, February 24, 2008 in observance of Mardi Gras Day.

There are no holiday restrictions for March.

North Carolina Judge Issues Restraining Order Against Telemarketer:
Automotive Protection of New Jersey, a telemarketer selling car warranties to senior citizens, has had a temporary restraining order issued against them by a North Carolina Judge. N.C. Attorney General, Roy Cooper, has accused the company of targeting older consumers 65 years on Do Not Call registry.

Indiana May Include Business Numbers on the State's Do-Not-Call List:
Indiana House Bill (HB 1192) was recently proposed in the Indiana legislature, and if passed would allow business numbers to be included on the state's Do-Not-Call list. This amendment may simply be deemed unconstitutional as the basis of Do-Not-Call laws is consumer privacy rights, and thus does not extend to businesses.

Missouri Considers Adding Political Calls to its State Do-Not-Call List:
A new bill under consideration in the Missouri Legislature (HB 319) would add Missouri to the list of states looking to include political calls to their state Do-Not-Call lists.