A
Monthly Review of Issues Affecting Commercial Telemarketing
by Copilevitz & Canter, LLC, Attorneys at Law
November, 2007
FEDERAL
FCC
The FCC has issued a Notice of Forfeiture in the amount of $13,500 against a roofer which
allegedly sent unsolicited telephone facsimile advertisements. The Notice of Forfeiture
follows a Citation. The FCC normally can not assess penalties without first citing the
offending entity. If you receive a FCC Citation, however, you should treat it seriously
and respond in a timely fashion with defenses against the FCC's allegations. Normally,
the FCC does not conduct independent fact finding prior to issuing a Citation when it
receives a consumer complaint regarding the TCPA. It is thus very important to review
the complaint underlying the Citation to determine if it is actually a valid violation
of the TCPA or its regulations. If it is not, you should immediately contact the FCC
to arrange a hearing and the Citation is time sensitive and becomes final if that
hearing is not scheduled (even if the underlying complaint is not valid).
FTC
A Texas based debt collection company will pay more than $1.3 million to settle FTC allegations
that it violated the Fair Debt Collection Practices Act. The debt collector allegedly
disclosed the existence of debts to family members and coworkers and harassed consumers using
abusive tactics including racial slurs and profanity. The settlement also requires defendants
to clearly and conspicuously disclose consumers' FDCPA rights in future collection activity.
The FDCPA can be enforced by private plaintiffs and government regulators and is often used
in class action litigation against debt collectors.
The FTC has created a consumer hotline for consumers who purchased debt reduction services from
five entities which allegedly falsely claimed that they would negotiate with creditors and begin
paying creditors on behalf of consumers. The FTC has shut down all five companies through court
action. Services which represent an ability to improve a consumer's credit rating, or reduce
debt to credit card companies, have been an area of high FTC enforcement over the past 4 years.
The FTC has published its Consumer Fraud Survey. The top ten frauds in the past year included
fraudulent weight loss products, foreign lottery scams, and prize promotions. Telemarketing
was the least frequently used medium for these alleged frauds (print advertising and the internet
were the most commonly used media).
The FTC won a final judgment against a Canadian telemarketer involving a penalty of more than $10
million. The defendants allegedly falsely offered major credit cards to people who agreed to
have their bank accounts debited an advance fee. The Telemarketing Sales Rule contains specific
restrictions against advance fee credit cards as well as general prohibitions on misrepresentations
and deception. There is no exemption in the Telemarketing Sales Rule for international calls.
The FTC approved a final rule on affiliate marketing that will provide consumers with an opportunity
to "opt out" before a person or company uses information provided by an affiliated company to market
products or services to the consumer. The final rule will become effective January 1, 2008 and
covered entities must comply with the rule no later than October 1, 2008. Please contact me if you
would like additional information about the new affiliate marketing rules.
FTC Press Conference
The FTC has announced six settlements related to national "do-not-call" list violations imposing
nearly $7.7 million in penalties along with consent orders.
STATE
California
A California appellate court has ruled that a plaintiff could not prove the defendant in a TCPA
case actually sent the facsimiles to him. Although the fax pages advertised products offered by
the defendant, plaintiff could produce no evidence that the defendant actually sent the faxes to
him. Similar questions often arise with regard to independent marketers who sell a given business's
products. This case may be an important weapon to prevent "vicarious liability" for the business
which may have done nothing wrong.
Connecticut
A Connecticut bill (SB 157) has been proposed which would regulate prerecorded calls on behalf
of political candidates and apply other restrictions to prerecorded calls sent by other entities,
but would allow prerecorded calls to consumers who have a current business relationship with the
caller. There is legislation before the U.S. Congress in the same area, but with different
provisions. I think you can expect the U.S. Congress to act with regard to prerecorded political
calls this legislative session.
Illinois
An Illinois court has ruled that a debt collector which advertised its services via unsolicited
faxes was liable and the plaintiffs could pursue successor organizations to the entity which
originally sent the faxes.
An Illinois appellate court has ruled that business owners who received allegedly illegal faxes
could not be certified as a class in their suit against the sender. The trial court had ruled
that a recipient consent to receive the fax transmission was not a "common issue" to the class
and also that, in the trial court's opinion, Congress had enacted the TCPA for individual actions,
not private class actions with potential recoveries in the millions of dollars.
Missouri
The State of Missouri, through its attorney general, has sued an entity alleging violations of
the TCPA. The TCPA normally is enforced by individual plaintiffs or the FCC, but states are
entitled to enforce its terms if the attorney general has reason to believe that an entity has
violated the law or its regulations.
New York
A federal court in New York has ruled that a doctor could not bring a class action under the
TCPA in the state of New York based on state rules which prohibit class actions involving
statutes with set monetary penalties.
Pennsylvania
A Pennsylvania bill has been introduced in the Senate (SB 1116) which would eliminate the five
year expiration period for a consumer "do-not-call" request. Telephone numbers would remain on
the list until no longer valid for that residential or wireless telephone subscriber. This same
issue is being debated at the federal level.
Virginia
A Virginia court has ruled in favor of an insurance company which denied coverage to a bank for
TCPA class action liability. Because the policy expressly excluded liability for invasions of
privacy, and the TCPA is based on protection of consumer privacy, the court ruled that the insurer
had no duty to defend the bank. Court decisions regarding insurance coverage for TCPA actions
have ruled both ways, likely dependent on the language of each insurance policy.
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