A
Monthly Review of Issues Affecting Commercial Telemarketing
by Copilevitz & Canter, LLC, Attorneys at Law
October, 2007
FEDERAL
FTC
The FTC has issued an advisory opinion ruling that the Fair Debt Collection Practices Act
allows a debt collector to notify a consumer that has ceased trying to collect a debt. The
FDCPA is one of the most consumer friendly laws out there, and if your calling involves
"slow pay" or reminder calls for payments, you should carefully examine, in advance, your
compliance with this law.
The FTC has participated in a major "sting" involving brokers' sales of lists of consumer
credit card numbers to agents posing as telemarketers. The FTC has brought an action
against a company which allegedly assisted telemarketers who violated the Telemarketing
Sales Rule with regard to marketing of "guaranteed" credit cards. Selling lists with
unencrypted credit card and banking information violates the Telemarketing Sales Rule.
The FTC has repeatedly brought actions against those brokers even though they are not
involved in the actual telephone calls themselves. The standard for "accomplice
liability" is set in the TSR, but the FTC has been aggressive in its interpretation of
this standard. If your business involves sales of services to telemarketers, you should
establish procedures and record-keeping which protect you under the "accomplice liability"
rules of the Telemarketing Sales Rule.
The FTC has announced a crack down on fraudulent schemes targeting Spanish speakers,
including two actions against "work-at-home" schemes.
The FTC has brought an action against four companies and their principals alleging
deceptive marketing of debt reduction services. Three defendants allegedly misrepresented
their ability to reduce consumer debt. Debt reduction and credit repair have been areas
of high interest for the FTC for the last two years. The Telemarketing Sales Rule has
special rules if a product is represented to potentially improve a consumer's credit
score, so you should make sure your scripts comply with these and other provisions before
starting a campaign.
Two telemarketers will pay more than $500,000 to settle FTC charges that they defrauded
U.S. businesses by paying for directories and listings that were never ordered. The
terms of this settlement include prohibition on misrepresenting that consumers have a
preexisting business relationship with a caller when they do not. The United States
Postal Service participated in the investigation.
The Federal Trade Commission has again issued guidance to consumers regarding cell
phone numbers and the national "do-not-call" list. Contrary to e-mails, cell phone numbers
are not being released to telemarketers and consumers will not soon be getting telemarketing
calls on cell phones. The Federal Communications Commissions prohibits telemarketers from
using predictive dialers to call cell phone numbers and thus it is unlikely that cell phone
numbers will receive a deluge of calls without the consent of the consumer. There is no
separate "do-not-call" registry for cell phones. Consumers can add their cell phone number
to the national "do-not-call" registry.
TCPA
A professional plaintiff has obtained rights to the telephone number 999-9999 which is
often used as a "place holder" in lists of telephone numbers. If a predictive dialer or
prerecorded voice call is placed to that number, the plaintiff then claims damages of
$1,500 per call under the TCPA. You should avoid placing prerecorded or predictive dialed
calls to "place holder" numbers in any area code.
STATE
California
A California state court has ruled that the proper statute of limitations for TCPA cases
is four years, not a three year period provided for by state law.
District of Columbia
D.C. has announced settlement with two persons regarding a fraudulent business opportunity
campaign. More than $8.5 million of assets were seized, and one of the principals is
permanently banned from engaging in telemarketing.
Florida
A Florida court has ruled that an insurance company was not required to provide coverage
for an entity accused of illegally sending faxes in violation of the TCPA. Most state
courts which have considered this question have ruled that insurers do have a duty to
defend and pay for an insured's damages in TCPA fax cases but the question depends on
the language of specific insurance policies. Given that liability for TCPA class actions
can extend into the millions of dollars, expect more cases in this area.
New York
A bill has been introduced to the New York General Assembly (AB 9437) which would amend
the state's "do-not-call" list to include text messaging advertisements within the
activities covered by the list. Most unsolicited text messages, however, are already
illegal under federal law, thus this bill would have little practical effect. Text
messages are currently regulated both by the Telephone Consumer Protection Act and
CAN-SPAM.
The New York federal court had dismissed a TCPA suit filed alleging illegal faxes.
The court ruled that the TCPA action must be filed in state court. The TCPA, although
a federal law, generally requires plaintiffs to file actions in state court.
Ohio
An Ohio appellate court has affirmed that a fax sent by one member of a chamber of
commerce to another did not violate the TCPA. The trial court found that the document
was "informational and descriptive" and was not an "advertisement". Generally, claims
that faxes for commercial purposes are "informational" are not successful.
Texas
The Texas Board of Chiropractic Examiners has adopted an amendment to its regulations
providing standards with regard to telemarketing by chiropractors to prospective
patients. Misrepresentations are prohibited and telemarketing can not include a
promise of successful chiropractic treatment.
Wisconsin
The administrators of the Wisconsin "do-not-call" list have adopted a position
that the Wisconsin "do-not-call" list applies to instances of "upselling" in outbound
or inbound telephone calls to or from Wisconsin residents. There are serious
constitutional implications from this position, and I will seek a formal legal
opinion on this issue prior to assuming that this is actually the position that
Wisconsin will take on this issue. Wisconsin still exempts transactions with
"existing customers" so many upsells would be exempt because, by definition, the
offer is made to a customer. In my opinion, it is highly unlikely that Wisconsin
will be able to enforce this rule for outbound calls by Wisconsin consumers to
businesses in other states.
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