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A group of law firms who previously represented numerous TCPA "professional plaintiffs" is getting a taste of their own medicine as they are now the defendants in a class action lawsuit. Jeffrey Winters and his company, Collection Solutions Inc., is the named plaintiff in the case Winters v. Jones, filed on December 5, 2016. Click here to view a copy of the civil complaint. Defendants include, among others, Laura Mann and Yitchak Zelman, counsel for numerous plaintiff TCPA cases.
The defendants have allegedly been engaging in what is essentially a "racketeering" operation since early 2013. The lawsuit alleges this involved the filing of numerous, baseless TCPA and similar consumer protection lawsuits by the defendants against debt collection and other companies. The defendants would demand settlements in the range of $10,000 to $100,000, assuming that most of their target companies would take advantage of the less expensive settlement instead of investing even more money and time in a drawn-out litigation.
The Canadian Radio-Television and Telecommunications Commission (CRTC), an organization similar to the Federal Communications Commission and Federal Trade Commission in the United States, has issued a $50,000 penalty to Blackstone Learning Corporation. This is the firstenforcement decisionon Canada's anti-spam law that was passed over two years ago.
Blackstone sent over 385,000 unsolicited emails to the email addresses of government employees that were gathered through various websites. These marketing emails promoted the company's technical writing, grammar, and stress-management programs. Blackstone argued that because the email addresses were published for the public on the internet, there was implied consent. The CRTC countered this argument because the law only allows for unsolicited messages to "conspicuously published" addresses where the content of the message is relevant to the recipients official position.
The penalty was originally set at $640,000, but after some deliberation the CRTC eventually determined that Blackstone would be unable to pay that much. The $50,000 penalty was determined to be more appropriate.
For marketers in the US, this serves as a good reminder to understand both Canada's Anti-Spam Law and the CAN-SPAM act.
Friends and clients, just hours ago the FTC published its finalized new staff opinion letter regarding avatar or "soundboard" technology. The letter is signed by the FTC's Lois Greisman, Associate Director, Division of Marketing Practices. The letter can be foundhereand should be immediately reviewed by any company who uses or offers avatar calling solutions.
The letter clarifies that FTC regulators will no longer treat avatar differently than other prerecorded robocalls. The new policy will become effective six months from now, on May 12, 2017.
Avatar calling occurs when a contact center agent plays pre-recorded snippets instead of using her/his own natural voice. The phone agent can normally still interject with live voice as needed, but can also handle multiple calls simultaneously. While not the official position of the Commission, the letter reflects the opinion of the FTC regulators who currently enforce the Telemarketing Sales Rule.
Two facts are encouraging. First, the letter has no direct effect on the FTC or the TCPA, which remain silent about soundboard technology. Second, the letter emphasizes that not all uses of avatar are illegal. For example, the technology may still be used within certain limitations for inbound, non-marketing and certain non-profit calls.
We had hoped the FTC would punt the avatar issue until after the new president takes over in January of 2017. The extent to which the new administration might seek to scale back relevant regulation and enforcement remains unclear. The year 2017 should prove to be very interesting, on the soundboard front and many other regulatory issues facing our industry.
On November 1, 2016, the FTC announced a new settlement with a group of companies known by the brand, "Consumer Education Group" operating primarily from Colorado and California. Most of the 2.34 million dollar fine was suspended due to the defendants' inability to pay, although they were required to come up with $100,000 as a civil penalty.
The defendants used lead generation websites and landing pages to collect numerous consumer phone numbers and, they argued, consent to make future marketing calls. The FTC took issue, however, because the companies who would call did not use any name that the consumer would have recognized as one to which they had given permission. Federal agencies certainly allow for "written" consent to be obtained online, if done properly, but this case emphasizes the risk in not identifying on the consent form the specific names of the companies who will call. The defendants called to market various products, including solar, reverse-mortgage and walk-in tubs, for example. While the nature of some of these products was explained on the consent forms, the specific brands who would call were not. The defendants called over 2 million numbers on the national DNC list; many of the calls were autodialed calls, the FTC alleged. The defendants gauged interest and qualified the leads and then sold such "opt in" leads to a variety of third parties who made subsequent sales calls based on the earlier (allegedly illegal) qualification calls.
Many marketers today use online lead generation techniques, or purchase consent leads collected from online lead generators. Marketers should ensure that the calling party (or parties) are listed by name in such web consent forms. Otherwise, agencies like the FTC will likely not treat such consent as proper written consent for the subsequent marketing calls. Written consent must be marketer/seller specific.
A number of our clients have recently asked us about state call recording laws and best practices. Just last week, Wyndham Hotels and Resorts agreed to pay $7.3 million to settle a California call recording class action filed by plaintiff Joyce Roberts. The lawsuit alleges that in 2012, Wyndham routed certain reservations calls to an outside call center, Aegis, who failed to disclose calls would be recorded. A number of other defendants were part of the suit because they also used Aegis - Travelodge, Ramada, Knights Inn, Days Inn and Super 8, to name a few. Valid claimants will receive at least $150, according to the settlement documents; the plaintiff's lawyers are to receive $1.8 million. The case is Joyce Roberts, et al. v. Wyndham Hotels and Resorts LLC, et al., Case No. 5:12-cv-05083, in the U.S. District Court for the Northern District of California. The case is a stern reminder to ensure that your vendors are properly disclosing that calls may be recorded. On an inbound call, you can use an automated disclosure if you have the functionality. If not, ensure your live agents orally inform the consumer the call is recorded at the beginning of the conversation. Courts have routinely held that if you disclose the call recording at the beginning, and if they remain on the line without objection, they have consented ("Hi, this is Joey Agent on a recorded line calling about...").
Effective August 1, 2016, the FTC raised its civil penalty from $16,000 to a staggering $40,000. This is a per violation penalty, and adds up quickly. Among other violations, the new fine applies to any violation of its Telemarketing Sales Rule, or any other act which it defines as an "unfair or deceptive act or practice." Therefore, the new fine may be applied to online, email and other marketers - not just telemarketers. Prior to February of 2009, the penalty was $11,000. Since February of 2009, the fine had been $16,000. Violations that can trigger the new $40,000 fine include, for example:
The FCC announced that effective October 1, 2016, its fees for accessing the national Do-Not-Call database will be increased to $61 per area code, or $16,714 for the entire nation. The fee for accessing an additional area code for a half year will remain at just $30. Remember that sellers must obtain a subscription account number ("SAN") and purchase all area codes into which they will call, unless they have an exemption such as well-documented written consent or an established business relationship. Non-telemarketing calls are not subject to the consumer DNC list, but use caution because "telemarketing" is defined broadly.
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