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Court Finds Company Vicariously Liable For Lead Seller’s TCPA Violations

Wed, 08/14/2019 - 16:11

Court Finds Company Vicariously Liable For Lead Seller’s TCPA Violations

A recent judgment in a class action suit provides an example of the dangers of vicarious liability for TCPA violations when purchasing leads. In the July 15th, 2019 summary judgment for Braver v. NorthStar Alarm Systems, LLC, the Western District of Oklahoma court found NorthStar Alarm Systems vicariously liable for violations of the Telephone Consumer Protection Act (TCPA) committed by a source from whom NorthStar had purchased leads.

NorthStar Alarm Systems, a security company, purchased leads from Yodel Technologies, whose TCPA violations in the case are not in dispute. Yodel cold-called lists of telephone numbers using a soundboard system and transferred the leads to NorthStar, either as warm transfers or by giving NorthStar the information to call the numbers later. NorthStar did not make any of the calls that produced the violations but the court found that NorthStar is liable for the violations under all of the three possible theories under which a non-caller may be held vicariously liable for TCPA violations: actual/classical agency, apparent authority, and ratification.

The court’s determination was based on a number of aspects of coordination between NorthStar and Yodel, including that: NorthStar reviewed a sample script and Yodel proceeded with the understanding that they would use that script; the script accurately described NorthStar’s security system; NorthStar was aware that Yodel was using soundboard technology; NorthStar directed Yodel to make calls to phone numbers in zip codes where NorthStar did business, thus playing a part in deterring which phone numbers were called; Yodel uploaded consumer lead data directly into NorthStar’s telemarketing software; NorthStar updated Yodel about its sales based on Yodel’s leads; and NorthStar received complaints about Yodel and had a policy for responding to these complaints. Of note, none of these aspects of coordination seem particularly out of the ordinary for a relationship between a lead purchaser and seller.

This class action judgment potentially leaves NorthStar with between $126,000,000 and $379,000,000 of exposure for 252,765 calls at issue made by Yodel over a nine-month time span. Apparently, NorthStar only acquired 150 customers from these calls. But even if the strategy had been more successful in generating positive leads, this case still highlights the importance of having a rigorous TCPA compliance strategy which regards to purchasing leads.