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On January 5, the FTC issued its National Do Not Call (DNC) Registry biennial report to Congress. According to the report, more than 244 million consumers have now placed their telephone numbers on the DNC Registry over the past two years. The report also highlighted that in FY 2021, the Commission received more than five million DNC complaints, the majority of which reported robocalls violations as opposed to live telemarketing. The FTC reported that the increased number of illegal telemarketing calls correlates with advancements in technology that make it easier for telemarketers to “spoof” the caller ID information accompanying a call. “[M]any telemarketers use automated dialing technology to make calls that deliver prerecorded messages (commonly referred to as ‘robocalls’), which allow violators to make very high volumes of illegal calls without significant expense,” the FTC said. Imposters posing as government representatives or legitimate business entities topped the complaint list, followed by calls related to warranties and protection plans, debt-reduction offers, and medical and prescription issues. Last month, in response to the consistently high level of impersonator scam complaints, the FTC issued an advanced notice of proposed rulemaking seeking comments on a wide-range of questions related to government and business impersonation fraud (covered by InfoBytes here). The FTC noted that these scammers are looking for information that can be used to commit identity theft or seek monetary payment and often request that funds be paid through wire transfer, gift cards, or cryptocurrency. Additionally, the FTC stated that since the beginning of the Covid-19 pandemic, it has received more than 18,000 Covid-related DNC complaints.
On December 1, Ohio’s governor signed into law SB 54, which, under most circumstances, prohibits companies from knowingly transmitting Caller ID information that is either misleading or inaccurate through a telecommunication service or voiceover Internet protocol service. Among other things, the bill creates additional penalties for inaccurate caller ID, provides the Ohio attorney general the authority to file civil actions in state or federal court, provides state criminal penalties in certain instances, and requires entities that use a telephone number that is identified as “unknown” or “blocked” to leave voicemail messages and include the person's identity. The law is effective March 2, 2022.
On November 23, the FTC released the National Do Not Call Registry Data Book for Fiscal Year 2021. The Data Book provides the most recent fiscal year information available on telemarketing sales calls and robocall complaints, including the types of calls reported to the FTC and a state-by-state analysis. In FY 2021, the Commission received 3.4 million robocall complaints—an increase from the 2.8 million robocall complaints received in FY 2020 but consistent with the higher number of complaints received in prior years. Imposters posing as government representatives or legitimate business entities topped the complaint list, followed by warranties and protection plans and supposed debt-reduction offers. Other common complaints included calls related to medical and prescription issues as well as computers and technical support. The Data Book contains aggregate data about phone numbers on the Do Not Call Registry, telemarketers and sellers that access the registry, as well as DNC complaints by topic and type.
On November 8, the U.S. District Court for the Eastern District of New York granted preliminary approval for a $38.5 million settlement in a class action against a national gas service company and other gas companies (collectively, defendants) for allegedly violating the TCPA by soliciting calls to cellular telephones. The plaintiff’s memorandum of law requested preliminary approval of the class action settlement. The proposed settlement sought to establish a settlement class of all U.S. residents who “from March 9, 2011 until October 29, 2021, received a telephone call on a cellular telephone using a prerecorded message or artificial voice” regarding several topics including: (i) the payment or status of bills; (ii) an “important matter” regarding current or past bills and other related issues; and (iii) a disconnect notice concerning a current or past utility account. Under the terms of the preliminarily approved settlement, the defendants will provide monetary relief to claiming class members in an estimated amount between $50 and $150. The settlement would additionally require the companies to implement new training programs and procedures to prevent any future TCPA violations. The settlement permits counsel for the proposed class to seek up to 33 percent of the settlement fund to cover attorney fees and expenses.
On November 8, the New York governor signed measures to help prevent robocalls and increase consumer protections. The measures build upon federal actions to combat robocalls and “will enable telecom companies to prevent these calls from coming in in the first place, as well as empower our state government to ensure that voice service providers are validating who is making these calls so enforcement action can be taken against bad actors,” Governor Kathy Hochul stated.
S.6267a requires telecommunication companies to block certain calls, including those from (i) numbers that are not valid North American numbering plan numbers; (ii) numbers that are not allocated to a provider by the North American numbering plan administrator or the pooling administrator; and (iii) unused numbers that are allocated to a provider. According to the governor’s press release, the act codifies into state law the provisions of an FCC 2017 rule that took effect in June 2021 and allows telecommunications companies to proactively block calls from certain numbers. (Covered by InfoBytes here.) These types of numbers, the release states, “are indicative of ‘spoofing’ schemes in which the true caller identity is masked behind a fake, invalid number.” The act takes effect immediately.
The second act, S.4281a, requires voice services providers to authenticate calls using the STIR/SHAKEN call authentication framework. As previously covered by InfoBytes, in 2020, the FCC, pursuant to the TRACED Act, adopted new rules requiring providers to implement the STIR/SHAKEN framework by June 2021. Under New York’s new measure, providers have up to 12 months to implement this framework or an “alternative technology that provides comparable or superior capability to verify and authenticate caller identification in the internet protocol networks of voice service providers.” Violators face a fine of up to $100,000 for each offense per day that the framework is not in place. This act is also effective immediately.
On October 28, the FTC announced a new enforcement policy statement warning companies against using illegal dark patterns that could “trick or trap consumers into subscription services” which are sometimes used by sellers in automatic renewal subscriptions, continuity plans, free-to-pay or free-to-pay conversions, and pre-notification plans. According to the FTC, the agency is enhancing its enforcement due to increasing complaints about the financial harms caused by deceptive sign-up tactics, including unauthorized charges or continuous billing that is impossible to cancel. The policy statement, among other things, “puts companies on notice that they will face legal action if their sign-up process fails to provide clear, up-front information, obtain consumers’ informed consent, and make cancellation easy.” According to the enforcement policy statement, businesses are required to follow three requirements, or be subject to law enforcement action: (i) disclose clearly and conspicuously all material terms of the product or service; (ii) receive the consumer’s express informed consent prior to charging them for a product or service; and (iii) provide easy and simple cancellation to the consumer.
On October 21, the U.S. District Court for the Middle District of Florida issued an order approving a permanent injunction and $6.4 million civil money penalty against the remaining participants in a cruise line telemarketing operation allegedly aimed at marketing free cruise packages to consumers. In January, the FTC filed a complaint against the defendants (two individuals and five companies they controlled, including the cruise line) for their alleged involvement in the telemarketing operation. As previously covered by InfoBytes, the complaint asserted violations of the FTC Act and the Telemarketing Sales Rule. The same day the complaint was filed, the FTC announced that it had entered into two settlement agreements—one with a call center and two individuals, and one with an additional individual—for their roles in the telemarketing operation. The court’s October order follows a recent FTC announcement (covered by InfoBytes here), indicating it had reached an agreement with the defendants who neither admitted nor denied the allegations. The court’s order requires the individual defendants to cooperate with any future FTC investigations and to disclose “the contents of their auto-dialed, telemarketing, or pre-recorded telephone communications and records or other information pertaining to [the] autodialed, telemarketing, or pre-recorded telephone communications.” The order also suspends the $6.4 million civil money penalty after the two individual defendants each pay $50,000 to the Treasury Department.
On October 1, the FCC released a notice of proposed rulemaking (NPRM) to impose obligations on gateway providers to prevent illegal robocalls originating abroad from reaching U.S. consumers and businesses. Among other things, the NPRM seeks to require domestic gateway providers “to apply STIR/SHAKEN caller ID authentication to, and perform robocall mitigation on, foreign-originated calls with U.S. numbers.” As previously covered by InfoBytes, the STIR/SHAKEN framework addresses “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.” According to the FCC, the STIR/SHAKEN framework decreases illegal spoofing, provides assistance to law enforcement, and strengthens voice service providers’ blocking of robocalls using illegally spoofed caller ID information. The notice also proposes ensuring that gateway providers are engaged in the fight against illegal robocalls by requiring them to timely respond to traceback requests, which are utilized to block illegal robocalls and inform FCC enforcement investigations. Additionally, the NPRM seeks to require that both the gateway provider and the network accepting questionable traffic from the gateway provider actively block such calls. In a statement, acting Chairwoman Jessica Rosenworcel stated that such measures “will help [the FCC] tackle the growing number of international robocalls.” Comments on the proposed rules are due 30 days after the date of publication in the Federal Register.
On September 9, the U.S. Court of Appeals for the Sixth Circuit determined that the U.S. Supreme Court’s decision in Barr v. American Association of Political Consultants Inc. (AAPC) (covered by InfoBytes here, which held that the government-debt exception in Section 227(b)(1)(A)(iii) of the TCPA is an unconstitutional content-based speech restriction and severed the provision from the statute) does not invalidate a plaintiff’s TCPA claims concerning robocalls he received prior to the Court issuing its decision. In the current matter, the plaintiff filed a proposed class action alleging violations of the TCPA’s robocall restriction after he received two robocalls from the defendant in late 2019 and early 2020 advertising its electricity services. Following the Court’s decision in AAPC, the district court granted the defendant’s motion to dismiss, ruling that because severance of the exception in AAPC only operates prospectively, “the robocall restriction was unconstitutional and therefore ‘void’ for the period the exception was on the books.” As such, the district court concluded that because the robocall restriction was void, it could not provide a basis for federal-question jurisdiction for alleged TCPA robocall violations arising before the Court severed the exception.
On appeal, the 6th Circuit conducted a severability analysis, holding that the district court erred in concluding that the court, in AAPC, offered “‘a remedy in the form of eliminating the content-based restriction' from the TCPA.” Rather, the appellate court pointed out that “the Court recognized only that the Constitution had ‘automatically displace[d]’ the government-debt-collector exception from the start, then interpreted what the statute has always meant in its absence,” adding that the legal determination in AAPC applied retroactively and did not render the entire TCPA robocall restriction void until the exception was severed by the court. A First Amendment defense presented by the defendant premised on the argument that “government-debt collectors have a due-process defense to liability because they did not have fair notice of their actions’ unlawfulness” for robocalls placed before AAPC was also rejected. The 6th Circuit opinion emphasized that “[w]hether a debt collector had fair notice that it faced punishment for making robocalls turns on whether it reasonably believed that the statute expressly permitted its conduct. That, in turn, will likely depend in part on whether the debt collector used robocalls to collect government debt or non-government debt. But applying the speech-neutral fair-notice defense in the speech context does not transform it into a speech restriction.”
On September 20, the FTC announced a proposed settlement order resolving charges against the remaining participants in a cruise line telemarketing operation allegedly aimed at marketing free cruise packages to consumers. The FTC alleged the defendants participated in unfair acts or practices in violation of the FTC Act and the Telemarketing Sales Rule (TSR) by, among other things, placing illegal telemarketing robocalls, calling phone numbers on the FTC’s Do No Call Registry, calling consumers who asked not to be called, and transmitting false caller ID information. Under the proposed order, the defendants are permanently banned from engaging in or making telemarketing robocalls, and are also banned from engaging in abusive telemarketing, calling numbers on the Do Not Call Registry (unless express consent is given or other conditions are met), blocking or misrepresenting caller ID information, and violating the TSR. The order also imposes a $6.4 million civil money penalty against the defendants, which will be partially waived once the two individual defendants who controlled four of the corporations involved in the operation each pay a $50,000 civil money penalty. Two other settlement agreements were reached in 2020 with the other defendants (covered by InfoBytes here).
- Buckley Webcast: Privacy and cybersecurity outlook for 2022
- Jonice Gray Tucker to discuss “Be Your Compliance Best in 2022” at the California Mortgage Bankers Association webinar
- Hank Asbill to discuss white collar ethics issues at the Stetson Law Review Symposium
- Lauren R. Randell to discuss “Significant legal developments in the Northeast” at the 37th Annual National Institute on White Collar Crime
- Jonice Gray Tucker to discuss “Small business & regulation: How fair lending has evolved & where it is heading?” at the Consumer Bankers Association Live program
- Jonice Gray Tucker to discuss “Regulators always ring twice: Responding to a government request” at ALM Legalweek
- Max Bonici to discuss “Fintech-bank partnerships and potential enforcement” at the 2022 ABA Spring Meetings
- Jonice Gray Tucker and Kari Hall to discuss “Equity, equality, regulation and enforcement – The evolving regulatory landscape of fair lending, redlining, and UDAAP” at the ABA Business Law Committee Hybrid Spring Meeting