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FTC, DOJ sue telemarketers of fake debt relief services
On February 16, the DOJ filed a complaint on behalf of the FTC against several corporate and individual defendants for alleged violations of the FTC Act and the Telemarketing Sales Rule (TSR) in connection with debt relief telemarketing campaigns that delivered millions of unwanted robocalls to consumers. (See also FTC press release here.) According to the complaint, filed in the U.S. District Court for the Southern District of California, the defendants are interconnected platform providers, lead generators, telemarketers, and debt relief service sellers. Alleged violations include: (i) making misrepresentations about their debt relief services; (ii) initiating telemarketing calls to numbers on the FTC’s Do Not Call Registry, as well as calls in which telemarketers failed to disclose the identity of the seller and services being offered; (iii) initiating illegal robocalls without first obtaining consent; (iv) failing to make oral disclosures required by the TSR, including clearly and truthfully identifying the seller of the debt relief services; (v) misrepresenting material aspects of their debt relief services; and (vi) requesting and receiving payments from customers before renegotiating or otherwise altering the terms of those customers’ debts. The complaint seeks permanent injunctive relief, civil penalties, and monetary damages. Two of the defendants (a debt relief lead generator and its owner) have agreed to a stipulated order that, if approved, would prohibit them from further violations and impose a monetary judgment of $3.38 million, partially suspended to $7,500 to go towards consumer redress due to their inability to pay.
FCC warns telecoms to stop carrying “mortgage scam” robocalls
On January 24, the FCC’s Enforcement Bureau announced it had ordered telecommunications companies to effectively mitigate robocall traffic originating from a Florida-based real estate brokerage firm selling mortgage scams. The FCC also sent a cease-and-desist letter to a voice service provider carrying the allegedly illegal robocall traffic. According to the FCC, several state attorneys general filed lawsuits late last year against the firm for allegedly using “misleading robocalls to ‘swindle’ and ‘scam’ residents into mortgaging their homes in exchange for small cash payments.” (See state AG press releases here, here, and here.) Additionally, last month, Senate Banking Committee Chairman Sherrod Brown (D-OH), along with Senators Tina Smith (D-MN) and Ron Wyden (D-OR) sent a letter to the FTC and the CFPB requesting a review of the firm’s use of exclusive 40-year listing agreements marketed as a “loan alternative.” (Covered by InfoBytes here.) In shutting down the robocalls, FCC Chairwoman Jessica Rosenworcel stressed that sending junk calls to financially-stressed homeowners in order to offer “deceptive products and services is unconscionable.” Enforcement Bureau Chief Loyaan A. Egal added that the voice service provider should have been applying “Know Your Customer” principles before allowing the traffic on its networks.
FCC chair asks Congress to act on robocalls
In December, FCC Chair Jessica Rosenworcel sent a letter to twelve senators in response to their June 2022 letter inquiring about combating robocalls. In the letter, Rosenworcel highlighted the FCC’s efforts to combat robocalls by discussing the agency’s “important” proposed rules, adopted in May, to ensure gateway providers that channel international call traffic comply with STIR/SHAKEN caller ID authentication protocols and validate the identity of the providers whose traffic they are routing to help weed out robocalls (covered by InfoBytes here). She also highlighted the FCC’s enforcement efforts, such as a December action where the FCC announced a nearly $300 million fine against an auto warranty scam robocall campaign for TCPA and Truth in Caller ID Act violations—“largest robocall operation the FCC has ever investigated” (covered by InfoBytes here).
Rosenworcel requested additional authority from Congress to combat robocalls and robotexts more effectively. Specifically, Rosenworcel asked the senators to “fix the definition of autodialer” – since robotexts are neither prerecorded nor artificial voice calls, the TCPA only provides consumers protection from robotexts if they are sent from autodialers. She further noted that the Supreme Court's decision in Facebook v. Duguid (covered by a Buckley Special Alert) narrowed the definition of autodialer under the TCPA, resulting in the law only covering equipment that generates numbers randomly and sequentially. She wrote that as a result, “equipment that simply uses lists to generate robotexts means that fewer robotexts may be subject to TCPA protections, and as a result, this decision may be responsible for the rise in robotexts.” Among other things, she also requested that Congress update the TCPA to permit for administrative subpoenas for all types of non-content customer records, and for Congress to grant the FCC the authority and resources to increase court enforcement of fines.
FCC proposes $300 million fine against auto warranty scam robocaller
On December 21, the FCC announced a nearly $300 million fine against an auto warranty scam robocall campaign for TCPA and Truth in Caller ID Act violations, “which is the largest robocall operation the FCC has ever investigated.” According to the announcement, the two individuals in charge of the operation ran a complex robocall sales lead generation scheme, which was designed to sell vehicle service contracts that were deceptively marketed as car warranties. This “scheme made more than 5 billion robocalls to more than half a billion phone numbers during a three-month span in 2021, using pre-recorded voice calls to press consumers to speak to a ‘warranty specialist’ about extending or reinstating their car’s warranty.” As previously covered by InfoBytes, in July, the FCC took initial action by ordering “phone companies to stop carrying traffic regarding a known robocall scam marketing auto warranties.” The FCC noted that the operation is also the target of an ongoing investigation by the FCC’s Enforcement Bureau and a lawsuit by the Ohio attorney general. The Ohio AG filed a complaint against multiple companies for participating in an alleged unwanted car warranty call operation (covered by InfoBytes here). The complaint, filed in the U.S. District Court for the Southern District of Ohio, alleged that the 22 named defendants “participated in an unlawful robocall operation that bombarded American consumers with billions of robocalls.” In addition to the fine, among other things, the individuals who allegedly ran the operations are prohibited from making telemarketing calls pursuant to FCC actions.
FCC affirms three-call limit but permits oral consent
On December 21, the FCC issued an order on reconsideration and declaratory ruling under the TCPA, affirming a three-call limit and opt-out requirements for exempted residential calls. According to the FCC, the ruling is in response to requests from industry trade groups related to a 2020 order implementing portions of the Pallone-Thune Telephone Robocall Abuse Criminal Enforcement and Deterrence Act (TRACED Act). The ruling upheld the three-call-limit for exempt calls made using automated telephone dialing systems to residential lines but revised the 2020 order’s requirement for “prior express written consent” to allow callers to obtain consent orally or in writing if they wish to make more calls than allowed. The FCC also granted a request to confirm that “prior express consent” for calls made by utility companies to wireless phones applies equally to residential landlines. The FCC noted that “limiting the number of calls that can be made to a particular residential line to three artificial or prerecorded voice calls within any consecutive thirty-day period strikes the appropriate balance between these callers reaching consumers with valuable information and reducing the number of unexpected and unwanted calls consumers currently receive.”
FCC orders companies to block student loan scam calls
On December 8, the FCC’s Enforcement Bureau ordered voice service providers to cease carrying robocalls related to known student loan scams and specifically designated a service believed to account for more than 40 percent of student loan robocalls in October. The FCC’s order provides written notice to all voice service providers regarding suspected illegal robocalls that have been made in violation of the TCPA, the Truth In Caller ID Act of 2009, or the TRACED Act. Specifically, the order “directs all U.S.-based voice service providers to take immediate steps to mitigate suspected illegal student loan-related robocall traffic.” The order further noted that if a provider fails to “take all necessary steps” to avoid carrying suspected illegal robocall traffic, the provider may be “deemed to have knowingly and willfully engaged in transmitting unlawful robocalls.” According to FCC Chairwoman Jessica Rosenworcel, the Commission is “cutting these scammers off so they can't use efforts to provide student loan debt relief as cover for fraud.”
FCC says consent is required for ringless voicemails
On November 21, the FCC issued a declaratory ruling that entities using ringless voicemail products must first obtain a consumer's consent prior to using the product to leave voicemails. According to the FCC, it receives “dozens of consumer complaints annually related to ringless voicemail.” The unanimous ruling establishes that ringless voicemails are “calls” that require consumers’ prior express consent, and further clarifies that a ringless voicemail is a form of a robocall, and therefore subject to the TCPA robocall prohibition, which prohibits making any non-emergency call with an automatic telephone dialing system or an artificial or prerecorded voice to a wireless telephone number without the prior express consent of the called party.
The FCC’s declaratory ruling denied a 2017 petition filed by a company that distributes technology that permits voicemail messages to be delivered directly to consumers’ voicemail services. The petitioner argued that ringless messages, and the process by which the ringless voicemail is deposited on a carrier’s platform, is neither a call made to a mobile telephone number nor a call for which a consumer is charged and, therefore, is a service that is not regulated. The FCC rejected the petitioner’s argument that ringless voicemail is not a TCPA call because it does not pass through a consumer’s phone line and that the TCPA protects only calls made directly to a wireless handset, and does not result in a charge to the consumer for the delivery of the voicemail message. The ruling noted that “consumers cannot block these messages and consumers experience an intrusion on their time and their privacy by being forced to spend time reviewing unwanted messages in order to delete them.” The ruling also noted that a “consumer’s phone may signal that there is a voicemail message and may ring once before the message is delivered, which is another means of intrusion. Consumers must also contend with their voicemail box filling with unwanted messages, which may prevent other callers from leaving important wanted messages.” According to a statement by FCC Chairwoman Jessica Rosenworcel, the rule makes it “crystal clear" that ringless voicemails are subject to the TCPA and that the Commission's rules "prohibit[] callers from sending this kind of junk without consumers first giving their permission to be contacted this way.”
Pennsylvania sues lead generator for facilitating telemarketers’ robocalls
On November 3, the Pennsylvania attorney general announced a lawsuit against a New York-based lead generation company that connects advertisers to potential new customers through the consumers’ personal data for allegedly causing hundreds of thousands of robocalls to be placed to consumers in the Commonwealth. The defendant, along with several of its subsidiaries, allegedly collected personal information, including phone numbers and personal information of consumers on Pennsylvania’s Do Not Call List, that was then sold to telemarketing companies. According to the complaint, the defendants allegedly engaged in deceptive and misleading business practices in connection with their lead-generation practices, by obtaining consumers’ information through various promotional opportunities without clearly disclosing that by providing their contact information, consumers were consenting to receiving telemarketing calls from hundreds of potential sellers. The complaint alleges that from 2018 to 2021, over 4.2 million Pennsylvania consumers registered their information on one of the defendants’ websites. “Under the [Telemarketing Sales Rule (TSR)], a consumer’s express agreement to accept calls delivering a prerecorded message may not be obtained by a lead generator, who is not a seller or a telemarketer. The express agreement must be obtained directly by the seller or telemarketer from the consumer,” the complaint said. Moreover, even if the defendants were not directly making the telemarketing calls themselves, assisting and facilitating the calls is itself a violation of the rules, the complaint noted.
The defendants are charged with violating several federal and state telemarketing laws, including the TSR, and Pennsylvania’s Telemarketer Registration Act (TRA) and Pennsylvania’s Unfair Trade Practices and Consumer Protection Law. The AG’s office seeks a declaration permanently enjoining the defendants from violating the telemarketing and consumer protection laws, along with civil penalties of $1,000 per violation and $3,000 per violation involving a victim age 60 or older. The suit also seeks disgorgement, costs, and a permanent bar on selling consumer data collected in violation of the TSR and TRA.
District Court grants preliminary approval of class action in robocall suit
On September 28, the U.S. District Court for the District of Utah granted preliminary approval of a TCPA class action settlement with a digital finance company. According to the plaintiff’s unopposed motion for preliminary approval, the plaintiff alleged that the defendant sent unwanted phone calls to approximately 64,845 unique cellular telephone numbers. The plaintiff’s motion noted that the district court granted, in part, the plaintiff’s motion for class certification and appointment of class counsel, and certified that the class consists of: “[a]ll persons throughout the U.S. (1) to whom [defendant] placed, or caused to be placed, a call, (2) directed to a number assigned to a cellular telephone service, but not assigned to a current or former [defendant] accountholder, (3) in connection with which [defendant] used an artificial or prerecorded voice, (4) from September 1, 2019 through September 21, 2021.” The Tenth Circuit Court of Appeals denied the defendant’s petition for permission to appeal the court’s order certifying the class. After that, the district court approved Plaintiff’s Rule 23(c)(2) class notice plan. After more than two years of “vigorously contested litigation, and as a result of extensive arm’s-length negotiations” the parties agreed to resolve this matter on behalf of a settlement class. The order further noted that the parties’ agreement “calls for the creation of a non-reversionary, all-cash common fund in the amount of $5 million, from which participating settlement class members will receive substantial payments.”
FCC signs robocall enforcement MOU with Canada
Recently, the FCC announced that it entered into a memorandum of understanding (MOU) with the Canadian Radio-television and Telecommunications Commission (CRTC) to develop a global and coordinated approach for addressing unlawful automated telephone calls. According to the MOU, the FCC and CRTC understand that it is in their common public interest to, among other things: (i) “cooperate with respect to the enforcement against Covered Violations, including sharing complaints and other relevant information and providing investigative assistance”; (ii) “facilitate research and education related to unlawful robocalls and caller ID spoofing”; (iii) “facilitate mutual exchange of knowledge and expertise through training programs and staff exchanges”: (iv) encourage awareness of economic and legal conditions and theories related to the enforcement of applicable laws as identified in Annex 1 to the MOU; and (v) update each other regarding developments related to the MOU in their respective countries in a timely manner. In a related statement, FCC acting Chairwoman Rosenworcel noted that robocall scamming is an “international problem,” and that it is “critical that we work closely with partners like our colleagues in Canada who share our commitment to fighting robocall scams and unmasking the bad actors behind them.”