A Monthly Review of Issues Affecting Commercial Telemarketing by Copilevitz & Canter, LLC, Attorneys at Law

December, 2004

FCC
Florida Debt Consolidation has withdrawn its petition asking the Federal Communications Commission to preempt Florida's “No-Call” law. The company reached a settlement with Florida regarding application of Florida's “do-not-call” list to interstate calls. Hopefully another organization will make the same petition to the FCC.

A banking trade group has petitioned the FCC to preempt Indiana's telemarketing rules with regard to application to interstate telephone calls. A similar request to preempt Florida's “do-not-call” list was withdrawn recently, but this request should give the agency an opportunity to address the application of state “do-not-call” lists to interstate calls.

Several states have filed comments with the FCC opposing preemption of their state law as applied to interstate telephone calls. North Dakota, for example, has argued that its laws' application is protected by the Doctrine of Sovereign Immunity and that the Telephone Consumer Protection Act contains no expression of Congress's intent to preempt state law. This is despite the fact that the legislative history to the TCPA states that “. . . state law is preempted.” It will be very interesting to see how the FCC handles this issue - a uniform scheme is obviously best for consumers and businesses, but many states have an investment in enforcement of their state laws, even though these state regulators are still entitled to enforce federal laws.

Nearly 8,000,000 mobile phone users have switched carriers since number portability went into effect one year ago. Nearly 750,000 moved a land line number to a cell phone, as well. These numbers could cause your business problems with the TCPA's regulations on calling cell phone numbers if you do not access the ported numbers database.

FTC
The Federal Trade Commission has alleged that two mortgage companies failed to protect customers' personal information in compliance with Gramm-Leach-Bliley. That law requires reasonable protections for customer sensitive, personal and financial information. The FTC alleged that a Virginia based mortgage broker failed to protect its customers' names, social security numbers, credit histories, bank account numbers and other sensitive information. Additionally, a subsidiary of a publicly-traded company has also agreed to settle similar FTC charges.

The FTC has charged a group of defendants operating in the United States, Canada and India with operating an advance fee credit card scheme. The complaint alleges that the defendants charged an advance fee while guaranteeing consumers a nonsecured credit card with a low interest rate and high credit limit. The defendants then allegedly debited consumers' accounts and failed to provide the promised credit card. The FTC is increasingly active with regard to cross-border telemarketing and in no way does an international call avoid jurisdiction for fraud or other types of legal violations.

The Federal Trade Commission has charged a company that claimed to be a debt negotiation organization with fraud. The entity allegedly failed to contact creditors and charged monthly administrative fees without providing services to enrolled consumers.

The FTC has announced that it intends to allow telemarketers to use prerecorded messages to call consumers with whom they have an established business relationship and not consider these calls to be “abandoned.” The Commission has announced that it will not attempt to prosecute entities which deliver recorded messages to established customers during pendency of this amendment. The Commission has stated that it will require a prompt “opt out” message in each script and has asked for comments on the proposal which must be received by January 20, 2005.

The FTC has charged a New Jersey based telecommunications company with defrauding consumers regarding sale of telecommunications services.

GAMBLING INDUSTRY
A recent Wall Street Journal article highlighted new use of telemarketing by casino companies. The targeted calls tempt gamblers to casinos throughout the country using premiums and the gamblers' history with other casinos owned by the calling company.

CALIFORNIA
Beginning January 1, 2005, California's new customer privacy provisions go into effect. The law restricts how businesses disclose personal information to third-party marketers and requires that these businesses provide to customers, upon request and free of charge, the types of information disclosed to third-parties and the names and addresses of all third-parties that have received personal information from the business during the preceding calendar year. Web sites are also required to contain a link titled “Your Privacy Rights” containing a link to the businesses' privacy policy. The data involved include the consumer's name and address, electronic mail address, date of birth, names of children, number of children, height, weight, race, telephone number and multiple other types of information. Customers are entitled to seek civil penalties up to $3,000 for intentional violations of the law and $500 for other violations.

IDAHO
Fax.com has been permanently enjoined from doing business in Idaho after the Attorney General obtained a permanent injunction against the company. In addition, Fax.com agreed to pay a $5,000 civil penalty and $2,997 in attorney's fees and costs.

MARYLAND
An appellate court in Maryland has reversed a lower court which ruled that Maryland state courts could not hear private causes of action under the TCPA. The appellate court found that trial courts are authorized to maintain such a cause of action.

MISSOURI
A federal grand jury in Kansas City has indicted eight individuals on charges of telemarketing fraud. The charges alleged that a telemarketer would send the purchaser a credit card, but actually only send an application for a credit card as well as various merchandise. Advance fee credit cards programs are subject to the highest levels of scrutiny by state and federal authorities, and if your campaigns involve same, it is important that you pay careful attention to compliance .

OHIO
An Ohio court has ruled that a for-profit entity sending recorded messages did not prove that its messages were “on behalf of” a nonprofit debt counselor. You can expect additional scrutiny of this type of call both from private plaintiffs and state and federal regulators.