Judge triples reward for plaintiffs in Dish Network TCPA class action

Federal Judge Catherine C. Eagles ruled that the award for members of the Do Not Call Registry who allegedly received telemarketing calls from Dish Network should be increased to $1,200 per call. In January of this year, a jury determined that the amount should be just $400. This means that the potential payout of the class action lawsuit went up from $20 million to $60 million.

The plaintiffs in the case allege that Dish made over 50,000 calls to numbers on the national DNC list in 2010 and 2011. Dish argued that the violations were not willful, as they had instructed their third-party marketers to scrub their call data against the national DNC list. Unfortunately there was evidence that Dish was aware of the violations being committed by their contracted marketers and failed to act on them.

Judge Eagles found that, "...Dish Network willfully and knowingly violated the TCPA and that treble damages are appropriate to deter Dish and to give suitable weight to the seriousness and scope of the violations Dish committed. The Court will treble the jury’s damage award under 47 U.S.C. 227(c)(5) and increase the damages from $400 per call to $1,200 per call."

Read the full order here.

Learn more about Do Not Call compliance, third party telemarketing liability, and telemarketing fines.

Alabama bill would expand telemarketing exemptions for newspaper and magazine sellers

A bill in Alabama has been introduced that would expand the state's telemarketing regulation exemption for businesses that primarily sell newspapers and magazines. "This bill would specify that the inclusion of a gift package or the offering of a magazine as a part of a membership does not preclude the solicitation from being exempt under the law and would further specify that a solicitation on behalf of a magazine would be exempt under the law if the magazine was approved as a magazine for the purpose of accruing income under the Internal Revenue Code." Read the full text of the bill here.
 

New Mexico Data Breach Notification Act

New Mexico has become the 48th state to require businesses to inform their customers when there is reason to believe that their data has been compromised. Businesses that fail to do so could be subject to a fine of up to $150,000. Read the full text of the bill here. Alabama and South Dakota are currently the only states without security breach notification laws.

 

FCC seeking comments on new proposed robocalling rules

The FCC has released a Notice of Proposed Rule Making regarding robocalls. "The Commission proposes...that providers may block calls when the subscriber to a particular telephone number requests that calls originating from that number be blocked; permit providers to block calls originating from invalid numbers; permit providers to block calls originating from valid numbers that are not allocated to a voice service provider; and permit providers to block calls originating from valid numbers that are allocated but not assigned to a subscriber. In addition, the Commission seeks comment on the possibility of permitting providers to block calls in other situations where the calls to be blocked are reasonably likely to be illegal based upon objective criteria." Comments are due on or before July 3, 2017 and reply comments are due on or before July 31, 2017.

FTC's 2016 Advisory Opinion Letter regarding Soundboard Technology to take effect May 19

After being stayed (postponed) only one week by a federal judge, the FTC's November 10, 2016 avatar/soundboard technology letter will take effect on Friday this week.  The policy had originally been scheduled to take effect last week on May 12, but judge Amit Mehta postponed the date by a week to determine if an even longer stay was warranted.  Mehta has ruled against the Soundboard Association's lawsuit challenging the classification of soundboard technology as robocall.  As of Friday, the FTC will not treat soundboard calls differently than more traditional prerecorded robocalls.  While this ruling is disappointing, we believe there are still many viable ways to use such innovative technology.


Recall that avatar or "soundboard" technology uses a combination of live agents and prerecorded snippets.  The live agent listens to one or more calls and plays short snippets prerecorded by American voice talents. This normally results in a live, dynamic conversation between the agent and the call recipient.  Soundboard calls are not illegal, just as other robocalls are not illegal - they are merely subject to certain behavioral rules.  For example, companies can still use soundboard technology to make marketing calls with consent, or non-marketing calls to landlines.  Non-profit entities, such as bona fide charities who are not subject to the TSR, may still use such technology to solicit donations and otherwise. Click the links to learn more about avatar telemarketing law, charitable telemarketing law or robocall law. Political calls are also generally exempt as long as the calls do not become "telemarketing."

Interesting findings from recent FTC case

A recent order out of the Ninth Circuit in an FTC telemarketing case provides some notable new case law. The case involves a magazine subscription seller who allegedly misled customers regarding pricing and other features. The Nevada trial court ruled in the FTC's favor, but only awarded $190,000. On appeal, the Ninth Circuit determined the lower court had not properly calculated the judgment and required the district court to redo the amount.  For the reasons explained below, the total award was then increased to $23 million.  Click here to read the FTC's perspective. Key findings:

Redress as a remedy

The defendant argued that the court lacked authority to order restitution to consumers, but the court held that District Courts have the authority under the FTC Act to "grant any ancillary relief necessary to accomplish complete justice."

Consumer reliance

The defendant also argued that for a court to order redress, there must be proof that each customer relied on the deceptive claims.  The Judge disagreed, finding that "The FTC is entitled to a 'presumption of actual reliance' once it is proven that the defendant made material misrepresentations, that they were widely disseminated, and that consumers purchased the defendant's product."

The legal effect of evidence that some consumers were satisfied

Defendants claimed that some customers were satisfied, and therefore the FTC's entitlement to a presumption of consumer reliance was rebutted. The court rejected that argument, stating, “the fact that some customers were ultimately satisfied with the magazines they purchased does not necessarily mean their original decision to purchase was free from the taint of the defendant's deceptive sales practices."

Calculation of the restitution amount

Although the trial court's original judgement was $190,000, it was based upon an erroneous "net revenue" standard.  On appeal it was held that a two-step burden-shifting framework would be more appropriate for calculating the restitution. This process first requires the FTC to prove the amount it seeks in restitution reasonably approximates the defendant's unjust gains. Then, the appropriate calculation becomes the amount that defendants collected from first-time orders. This two-step analysis ultimately increased the judgement to $24 million. The Ninth Circuit held that the district court applied an incorrect legal standard when it focused on the defendants’ gain rather than the loss to the consumers.

How to spot (and avoid) professional plaintiffs

Ever heard of TCPA plaintiff Melody Stoops?  What about Cunningham, Aronson, Abramson, Childress or Zelma?  Roughly one-third of all TCPA claims are filed by someone who filed one previously.  Serial TCPA litigators continue to pose a significant threat to businesses who strive to comply with the law.

Train your phone agents and lead generators to recognize professional litigators.  Red flags include odd questions, such as: "Can you send me your DNC policy?"; "In what state are you incorporated?"; "Who owns the company?"; "Which company gave you my number?"; "I assume you're recording this?"; and "What sort of dialer are you using?"  Other indicators include any reference by them to the TCPA or if the agent can tell the consumer is recording the call on their own.  Your agent should immediately and politely terminate the call when confronted with evidence that the recipient may be a professional litigator. The lead should be flagged and calls to that number should be paused while management reviews the lead and determines whether it should be transferred to your internal DNC.

What about avoiding professional plaintiffs in the first place?  A number of mitigation strategies exist for reducing the likelihood of calling someone who routinely sues telemarketers. These include only calling with well-documented written consent, performing a "litigator scrub" on your data to remove high risk numbers, performing reassigned number or "call verification" scrubbing to reduce wrong number calls, and resisting the urge to over-dial on you data.  If you never call any one number more than a few times, even if a serial litigator slips through the cracks, they can only come after you for those few calls, rather than hundreds.  Finally, audit or terminate lead generators who claim they are selling "opt ins" but yet who frequently generate complaints and demand letters by individuals who deny they consented.
 

5 States With More Restrictive Wireless Calling Laws

The FCC and TCPA specifically prohibit autodialed calls and texts to wireless phones without prior consent ("express" for non-marketing and "written" for marketing). Some courts have also treated VoIP lines similar to wireless lines under the TCPA and held marketers liable for autodialing VoIP Lines where the recipient was charged for the call.  Regardless whether the company uses an autodialer though, five states have more restrictive cell phone laws that prohibit telemarketing calls to wireless phones, even when calling manually.  These states include Arizona, Louisiana, New Jersey, Texas and Wyoming.

Title 44, Chapter 9, Article 6 of the Arizona Revised Statutes contains many elements of Arizona's regulation of the telemarketing industry. If we zero in on § 44-1278, we discover the following:

“It is an unlawful practice . . . for any seller or solicitor or anyone acting on their behalf who conducts a telephone solicitation in this state to do any of the following: . . . Intentionally make or cause to be made any unsolicited telephone sales call to any mobile or telephone paging device.”

Note that the restriction in the Arizona Statute specifically applies to an “unsolicited telephone sales call”, regardless of how the call is delivered. The question then is, if you have the appropriate “express written consent”, would it no longer be an unsolicited call? This of course, depends on how you obtained the consent, and what exactly the call recipient consented to.

Similarly, Title 56, Chapter 8 of the New Jersey Statutes covers "Frauds, etc. in Sales or Advertisements or Merchandise." § 56:8-130 of this chapter contains the following:

“No telemarketer shall make or cause to be made any telemarketing sales call to a commercial mobile service device of any customer . . .”

There does not appear to be any way around this prohibition, even for manual dialing, unless you are making a call that does not meet the definition of a “telemarketing sales call”.

Turning our attention now to Texas statutes, we find, in Title 10, Chapter 305, § 305.001, the following prohibition:

“A person may not make a telephone call or use an automatic dial announcing device to make a telephone call for the purpose of making a sale if: (1) the person making the call or using the device knows or should have known that the called number is a mobile telephone for which the called person will be charged for that specific call; and (2) the called person has not consented to the making of such a call to the person calling or using the device or to the business enterprise for which the person is calling or using the device.”

If you have obtained the necessary “express written consent” to call the individual using automated technology under the TCPA, you would most likely be exempt from this restriction. If you don’t have the appropriate consent, you should avoid calling Texas mobile telephone numbers, even if you are manually dialing.

Likewise, under Title 40, Chapter 12, Article 3, § 40-12-302 of the Wyoming Statutes, we find:

“No telephone solicitor or merchant shall willfully make or cause to be made any unsolicited telephonic sales call to any unpublished cellular telephone number.”

Here again, the restriction applies to an “unsolicited telephonic sales call”, and only prohibits calls to “unpublished cellular telephone numbers”. Wyoming defines both of these terms in § 40-12-301.

The Louisiana rule is a little more difficult to find, but it's there nonetheless, in the Louisiana Public Service Commission's Do Not Call Program General Order:

“No call will be placed to . . . any telephone number assigned to a paging service, cellular or mobile telephone service, specialized mobile radio service, or other radio common carrier service, or any service for which the called party is charged for the call, unless the call is made pursuant to the recipient's prior express consent.”

Louisiana does not define what prior express consent means, but “express written consent” under the TCPA would certainly qualify.

What's the simple solution to comply?  Marketers who want to call cell phones should either refrain from calling wireless phones in the above 5 states, or should ensure they always have prior written consent before calling (or at least an EBR in Wyoming).  Remember also that having such written consent will not only allow you to comply with these state laws, but would also allow you to use an autodial under the TCPA. Same is true for both cell and VoIP lines.  

Bottom line = consent is the key to both the state and federal wireless (and VoIP) rules.

D.C. Court Makes Important Decision in Fax Opt-Out Case

On Friday, the D.C. Circuit Court vacated part of an important 2006 FCC Order that required opt-out language on faxes sent even with the recipient's consent. The implication is that on faxes that are not "unsolicited" and which are sent with prior consent, special opt-out language will no longer be required.  This should make marketing somewhat easier for companies who market to their own customers and others who have opted in.  Prior to this ruling, there existed a notable amount of TCPA litigation against fax marketers for technical violations of the opt-out disclosure rules, even when the company had consent.  The decision is a good sign as the D.C. Circuit is also poised to rule any day on the pending ACA Int'l v FCC petition regarding what an autodialer is. Opt-out disclosures are still required on faxes sent without prior consent.
 

FCC Seeks Comments on Fax-Related FCC Petition

The Consumer and Governmental Affairs Bureau of the FCC is now seeking comments on a petition by M3 USA to clarify that research survey invitations sent by fax do not constitute "advertisements." Click here to read more about the petition and to find instructions for commenting. Comments are due on April 27, 2017.