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On July 8, FCC Chairman Ajit Pai proposed rules supported by a bipartisan group of more than 40 state attorneys general that would extend prohibitions against robocalls to caller ID spoofing of text messages and international calls, implementing measures passed last year in the RAY BAUM’s Act. Previously, anti-spoofing prohibitions applied only to domestic robocalls. According to Pai, “Scammers often robocall us from overseas, and when they do, they typically spoof their numbers to try and trick consumers. . . . With these new rules, we’ll close the loopholes that hamstring law enforcement when they try to pursue international scammers and scammers using text messaging.” The FCC will vote on the proposed rules at its August 1 meeting.
As previously covered by InfoBytes, the FCC authorized voice service providers last month to automatically identify and block unwanted robocalls “based on reasonable call analytics, as long as their customers are informed and have the opportunity to opt out of the blocking.”
On June 25, the FTC announced a major crackdown on illegal robocalls named “Operation Call it Quits,” which includes 94 enforcement actions from around the country brought by the FTC and 25 other federal, state, and local agencies. In addition to actions targeting the actors, the operation also includes a consumer education initiative and promotion of the development of technology-based solutions to block robocalls and fight caller ID spoofing. In addition to the 87 other enforcement actions brought under the initiatives, the FTC announced four new actions, some of which were filed by the DOJ on the FTC’s behalf, and three new settlements targeting robocallers for violations of the FTC Act and the Telemarketing Sales Rule (TSR), among other things. The FTC alleges many of the actors used illegal robocalls to contact financially distressed consumers regarding interest rate reductions, sell fraudulent money-making opportunities, pitch free medical alert systems, or develop leads for solar energy companies. The affected consumers in these actions were often listed on the Do Not Call Registry. The FTC provided a complete list of the 94 actions brought under Operation Call it Quits.
State Attorneys General participating in the initiative are: Alabama, Arizona, Colorado, Florida, Illinois, Indiana, Michigan, Missouri, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Texas, and Virginia. Additionally, local agencies include: the Consumer Protection Divisions of the District Attorneys for the Counties of Los Angeles, San Diego, Riverside, and Santa Clara, California; the Florida Department of Agriculture and Consumer Services; and the Los Angeles City Attorney.
On June 6, the FCC approved a Declaratory Ruling and Notice of Proposed Rulemaking to address unwanted robocalls to consumers. The Declaratory Ruling affirms that voice service providers may block unwanted robocalls “based on reasonable call analytics, as long as their customers are informed and have the opportunity to opt out of the blocking.” Among other things, the Declaratory Ruling clarifies that voice providers (i) may offer call blocking tools to their customers as a default, as opposed to an opt-in basis; and (ii) may offer customers tools that would allow customers to block calls from any number that is not listed in the customer’s contact list or other “white lists.” The FCC notes that a “white list” could be based on a customer’s contact list and would be updated as customers add and remove contacts from their phone. According to reports, the FCC also adopted language that was added to the May proposal, which encourages voice providers to devise a system for addressing complaints made by legitimate companies whose calls to customers are being blocked. The final Declaratory Ruling is effective upon its publication on the FCC’s website.
The FCC also adopted a Notice of Proposed Rulemaking (NPRM) (available in the May proposal) requiring voice providers to implement the “SHAKEN/STIR” caller ID authentication framework—an “industry-developed system to authenticate Caller ID and address unlawful spoofing by confirming that a call actually comes from the number indicated in the Caller ID, or at least that the call entered the US network through a particular voice service provider or gateway.” The FCC asserts that once the “SHAKEN/STIR” is implemented, it would “reduce the effectiveness of illegal spoofing and allow bad actors to be identified more easily.” The deadline for comments in response to the NPRM will be established upon publication in the Federal Register.
On May 30, the U.S. Court of Appeals for the 4th Circuit held that a lower court correctly certified a class of individuals who claimed a satellite provider (defendant) violated the TCPA when its authorized sales representative routinely placed telemarketing calls to numbers on the national Do-Not-Call registry. The plaintiff-appellee alleged that because his number was on the registry, the calls were not only annoying but illegal. He therefore filed a lawsuit against the defendant for violations of the TCPA, and in 2018, the court issued a final judgment upholding a jury’s verdict as to both liability and damages for a class of 18,066 members, tripling the damages to more than $61 million. The defendant appealed the verdict asserting that the class definition was too broad in that included uninjured consumers. Specifically, the defendant argued that the definition should be limited to telephone subscribers or the person who actually received the calls. The defendant further asserted on appeal that it was not responsible for the sales representative’s actions.
On appeal, the 4th Circuit affirmed the lower court’s judgment, stating that it saw “no basis for imposing such a limit,” on the class definition given that “[t]he text of the TCPA notes that it was intended to protect ‘consumers,’ not simply ‘subscribers.’” Concerning the defendant’s argument that it was not responsible for the violations, the appellate court noted that the sales representative’s “entire business model was to make calls like these on behalf of television service providers,” like the defendant, which the defendant knew were being placed on its behalf.
On May 28, the California Attorney General announced approximately $1.5 million in judgments against a company and four individuals (defendants) charged with allegedly operating a telemarketing scheme that offered fake investment recovery services. According to the Attorney General’s office, the defendants allegedly made false and deceptive claims to investors, many of whom were elderly, that the company could recover money lost from previous investments for an up-front fee of several thousand dollars. The terms of the judgments include $930,800 in combined civil penalties and $567,774 in restitution, and permanently enjoin and restrain the defendants from, among other things, making false or misleading statements in connection with telemarketing transactions. The Attorney General’s announcement also disclosed the recovery of nearly $25,000 in victim restitution pursuant to a bond issued to the company under California’s Telephonic Sellers Law.
On April 4, the Arkansas governor signed SB 514, which establishes a process for state regulation of telecommunications service providers and third-party spoofing providers, and stiffens criminal penalties for persons who engage in illegal robocalling and spoofing practices. The act reclassifies “spoofing”—defined in the act as “displaying fictitious or misleading names or telephone numbers—and illegal robocalls as Class D felonies. Arkansas law previously classified these actions as misdemeanors. The act requires telecommunications providers to report, on an annual basis, to the Arkansas Public Service Commission, implemented measures for identifying and combating the illegal calls.
The Arkansas Attorney General issued a press release in which she noted that the legislation “reinforces how determined Arkansans are to stop these illegal calls and creates a path for enforcement to hold the bad actors accountable.” The act takes effect 90 days after adjournment of the legislature.
On March 22, the U.S. Court of Appeals for the 9th Circuit reversed a lower court’s decision to dismiss TCPA claims against a student loan administrator (defendant), finding that the administrator could be held vicariously liable for a contractor’s alleged debt collection attempts. The plaintiff claimed in her suit that the companies hired by the contracted student loan servicer violated the TCPA by using an autodialer when attempting to contact borrowers to collect payment. The plaintiff argued that the defendant was “vicariously liable” for the alleged TCPA violations of the companies that were hired to collect the plaintiff’s debts, and that the defendant was “similarly liable under the federal common law agency principles of ratification and implied actual authority.” The claims against the collectors and the servicer were dismissed for lack of personal jurisdiction, and the lower court ruled on summary judgment that a jury could not hold the defendant responsible for the actions of the servicer.
On appeal, the split three-judge panel held that a reasonable jury could find that the defendant knew of the alleged TCPA violations, and that because the defendant “ratified the debt collectors’ calling practices by remaining silent,” or alternatively, willfully ignored potential violations through its collections arrangement with the servicer, a jury could find a “principal-agent” relationship—even if one did not exist in the contract—and the court should hold it liable for the collectors’ TCPA violations. According to the panel, there was evidence in the record that the defendant “had actual knowledge” of the alleged violations through audit reports provided by the servicer and “did nothing” to ensure that the debt collectors complied with the law. However, the entire panel agreed that the defendant was not per se vicariously liable for the debt collectors’ alleged TCPA violations.
In dissent, Judge Bybee agreed with the panel that the defendant is not per se vicariously liable for the debt collectors’ practices, and noted in addition that there is not enough evidence to show that the defendant consented to practices that violate the TCPA or that it granted the debt collectors authority to violate the law. He wrote, “there is no evidence whatsoever that [the defendant] approved of such practices. In fact, the only evidence in the record is to the contrary: when [the defendant] learned of wrongful practices, it reported them to [the servicer] and asked [the servicer] to correct the problem.”
On March 26, the FTC announced settlements issued against four separate operations for allegedly placing billions of illegal robocalls to consumers selling auto warranties, debt-relief services, home security systems, veterans’ charities and Google search results services. The actions are part of the FTC’s ongoing efforts to combat illegal robocalls. According to the FTC, the companies—along with several of their affiliates and leaders—allegedly violated the FTC Act and the Telemarketing Sales Rule (TSR), including its Do Not Call provisions.
Proposed settlements issued against two related operations and their leaders—who, according to the FTC’s complaint, developed and enabled a software dialing platform that resulted in more than one billion robocalls—ban the defendants from engaging in telemarketing activities utilizing an autodialer, and imposes judgements ranging from $1 million to $2.7 million, of which two are fully suspended due to the defendants’ inability to pay. The FTC also reached a final settlement against defendants who allegedly placed robocalls to pitch fake debt-relief services promising lowered credit card interest rates and interest payment savings. The order permanently bans the defendants from engaging in telemarketing and debt-relief services, and imposes a $3.15 million judgment, which will be suspended following the turnover of available assets. Separately, the FTC reached a proposed settlement with a defendant who allegedly used robocalls promoting fake veterans’ charities to solicit donations, which he eventually sold for his own benefit. The proposed order bans the defendant from engaging in telemarketing services or soliciting charitable contributions, prohibits him from making future misrepresentations, and imposes a $541,032 monetary judgment, which will also be suspended following the turnover of available assets. Finally, the FTC announced proposed settlements against three defendants (see here, here, and here) whose Florida-based operations allegedly violated the TSR by falsely claiming to represent Google and making threats and promises to businesses concerning search results and page placements. The terms of the proposed settlements, among other things, ban the defendants from deceptive sales practices, and require the defendants to disclose their identities during telemarketing sales calls. Monetary judgements imposed against the defendants and their companies range from $1.72 million to $3.62 million, and will be partially suspended due to their inability to pay.
On March 5, Attorneys General from all 50 states, as well as from the District of Columbia, Guam, Puerto Rico, and the U.S. Virgin Islands, sent a letter to the Senate Committee on Commerce, Science, and Transportation supporting a recently introduced bipartisan bill to combat illegal robocalls. Among other things, S. 151, the Telephone Robocall Abuse Criminal Enforcement and Deterrence Act (TRACED Act), would: (i) grant the FCC three years to take action against robocall violations, instead of the current one-year window; (ii) authorize the agency to issue penalties of up to $10,000 per robocall; and (iii) require service providers to implement the FCC’s new call authentication framework. The AGs state that they “are encouraged that the TRACED Act prioritizes timely, industrywide implementation of call authentication protocols,” and note their support for an interagency working group that the bill would establish consisting of members from the DOJ, FCC, FTC, CFPB, other relevant federal agencies, state AGs, and non-federal stakeholders.
On February 14, the FCC released a notice of proposed rulemaking intended to strengthen its rules against caller ID spoofing and expand the agency’s enforcement efforts against illegal spoofed text messages and phone calls, including those from overseas. The proposed rules would enact requirements in the recently passed RAY BAUM’S Act of 2018, and expand Truth in Caller ID Act prohibitions against the transmittal of “misleading or inaccurate caller ID information (‘spoofing’) with the intent to defraud, cause harm, or wrongfully obtain anything of value” to text messages and calls to U.S. residents originating from outside the U.S.
The FCC seeks comments on the proposed rules—adopted unanimously at the agency’s February 14 meeting—on, among other things, what changes to the Truth in Caller ID rules can be made “to better prevent inaccurate or misleading caller ID information from harming consumers.” Comments will be due 60 days after publication in the Federal Register.
- Amanda R. Lawrence to discuss "Navigating the challenges of the latest data protection regulations and proven protocols for breach prevention and response" at the ACI National Forum on Consumer Finance Class Actions and Government Enforcement
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- Amanda R. Lawrence, Aaron C. Mahler, and Jonice Gray Tucker to discuss "Expanded role for the FTC ahead: Implications for bank and nonbank financial institutions" at an American Bar Association Banking Law Committee Webinar
- Buckley Webcast: Flirting with alternatives — Opportunities and challenges created by alternative data, modeling, and technology
- Daniel P. Stipano to discuss "Reporting requirements for credit unions: CTRs and SARs" at the National Association of Federally-Insured Credit Unions BSA Seminar
- Daniel P. Stipano and Moorari K. Shah to discuss "Vendor management: What is the NCUA looking for?" at the National Association of Federally-Insured Credit Unions BSA Seminar
- Sasha Leonhardt and John B. Williams to discuss "Privacy" at the National Association of Federally-Insured Credit Unions Summer Regulatory Compliance School
- Warren W. Traiger to discuss "CRA modernization" at the National Association of Industrial Bankers and the Utah Association of Financial Services Annual Convention
- Benjamin W. Hutten to discuss "Requirements for banking inherently high-risk relationships" at the Georgia Bankers Association BSA Experience Program
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