Subscribe to our InfoBytes Blog weekly newsletter and other publications for news affecting the financial services industry.
On May 20, the FTC and the FCC sent letters to three more Voice over Internet Protocol (VoIP) service providers, warning the companies to stop routing and transmitting robocall campaigns promoting Covid-19 related scams. According to the FTC, two of the companies are routing coronavirus-related fraud robocalls originating overseas. In April, the agencies sent an initial round of letters to three VoIP service providers for similar issues (covered by InfoBytes here). As in April, the letters warn the companies that they have been identified as “routing and transmitting illegal robocalls, including Coronavirus-related scam calls” and must cease the behavior or they will be subject to enforcement action. Additionally, the agencies sent a separate letter to a telecommunications trade association thanking the group for its assistance in identifying the campaigns and relaying a warning that the FCC will authorize U.S. providers to begin blocking calls from the three companies if they do not comply with the agencies’ request within 48 hours after the release of the letter.
On May 1, the FCC issued an order announcing the Commission will no longer send entities outside its jurisdiction warnings prior to commencing an enforcement action related to TCPA robocall violations. Specifically, the order, as mandated under Section 3 of the TRACED Act (covered by InfoBytes here), (i) removes provisions that previously required the FCC to issue a warning prior to imposing penalties for making robocalls; (ii) increases the maximum fine that the FCC can assess for robocall violations to $10,000 per intentional unlawful call, in addition to a forfeiture penalty amount; and (iii) extends the statute of limitations to four years for the FCC to investigate and take enforcement action against an entity that violates the TCPA. The order takes effect 30 days after publication in the Federal Register.
On May 4, the National Association of Attorneys General published a letter to US Telecom, an industry group of telecommunications providers, and the Industry Traceback Group, an industry group dedicated to assist with the tracing of illegal robocalls. The letter noted that state attorneys general intend to intensify enforcement efforts against illegal robocallers, and urged US Telecom and the Industry Traceback Group to expand capabilities related to tracebacks in anticipation of growth in the need for data analysis and the number of civil investigative demands and subpoenas that will be issued directly to the Industry Traceback Group. The need for action has been tied to an increase in Covid-19 related robocalls.
On April 17, the U.S. District Court for the Northern District of California issued an order granting in part and denying in part several motions pertaining to a class action lawsuit, which accused a debt collection agency (defendant) of violating the TCPA, FDCPA, and the California Rosenthal Fair Debt Collection Practices Act by using repeated robocalls and pre-recorded voices messages to collect debt. As previously covered by InfoBytes, last September the court entered a $267 million final judgment against the defendant, consistent with a jury’s verdict that found the defendant liable for violating the TCPA by making more than 500,000 unsolicited robocalls using autodialers. Under the terms of the judgment each class member was awarded $500 per call. The defendant argued that the award was unconstitutionally excessive and violated due process, and requested that the court reduce the per violation amount. The court was unpersuaded and upheld the judgment, stating that the defendant failed to identify (and the court could not find) any “Ninth Circuit authority on how a district court should reduce damages that are found to be unconstitutionally excessive.” While acknowledging that the award was “significant,” the court stated that it also “evidences the fervor with which the United States Congress was attempting to regulate the use of autodialers for non-consensual calls” and that “the unilateral slashing of an award does not only ignore the plain words of the statute, the task is devoid of objectivity.” Among other actions, the court granted the defendant’s request to amend the final judgment to reflect that allegations concerning “willful and/or knowing violations of the TCPA” were dismissed with prejudice and that the defendant succeeded at summary judgment on the FDCPA and state law claims. However, the court denied the defendant’s request to release any surplus or residue amounts not distributed to a class member back to the company. The court also approved the class counsel’s motion for more than $89 million in attorneys’ fees and non-taxable costs of $277,416.28, and awarded the named plaintiff a $25,000 service award.
On April 3, the FTC and the FCC sent letters to three Voice over Internet Protocol (VoIP) service providers, warning the companies to stop sending spam robocall campaigns promoting Covid-19 related scams. According to the agencies, “routing and transmitting illegal robocalls, including Coronavirus-related scam calls, is illegal and may lead to federal law enforcement.” The agencies sent a separate letter to a telecommunications trade association thanking the group for its assistance in identifying the campaigns and relaying a warning that the FCC will authorize U.S. providers to begin blocking calls from the three companies if they do not comply with the agencies’ request within 48 hours after the release of the letter.
On March 31, the FCC adopted new rules that will require phone companies in the U.S. to deploy STIR/SHAKEN caller ID authentication framework by June 30, 2021. 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.” FCC Chairman Ajit Pai endorsed the value of widespread implementation, stating the framework will “reduce the effectiveness of illegal spoofing, allow law enforcement to identify bad actors more easily, and help phone companies identify—and even block—calls with illegal spoofed caller ID information before those calls reach their subscribers.” The new rules also contain a further notice of proposed rulemaking, which seeks comments on additional efforts to promote caller ID authentication and implement certain sections of the TRACED Act. Among other things, the TRACED Act—signed into law last December (covered by InfoBytes here)—mandated compliance with STIR/SHAKEN for all voice service providers.
On March 20, the FCC issued a declaratory ruling which “confirm[s] that the [Covid-19] pandemic constitutes an ‘emergency’ under the…[(TCPA)].” Accordingly, “hospitals, health care providers, state and local health officials, and other government officials may lawfully communicate information about [Covid-19] as well as mitigation measures without violating federal law.” The “emergency purposes” exception to the TCPA means that these callers “may lawfully make automated calls and send automated text messages to wireless telephone numbers” in order to effectively communicate with the public regarding the “imminent health risk” caused by Covid-19. The content of the communications “must be solely informational, made necessary because of the [Covid-19] outbreak, and directly related to the imminent health or safety risk arising” from the pandemic. Excluded from this emergency exception to the TCPA are debt collection calls, advertising calls, and automated telemarketing calls, which continue to require the prior express consent of the called party.
On March 13, the U.S. District Court for the District of New Jersey granted a large bank’s (defendant) motion for summary judgment in a proposed class action alleging that the plaintiff received an unsolicited telemarketing call. The plaintiff—who was himself a TCPA investigator for an attorney—was a long-time customer of the defendant when he answered a robocall from the defendant in March 2005. The plaintiff filed suit against the defendant alleging that the robocall from the defendant violated the TCPA. In response, the defendant filed a motion for summary judgment which put forth three arguments: (i) plaintiff did not have Article III standing to sue because he was not injured by the call; (ii) the plaintiff had an existing business relationship with the defendant as a long-time customer; and (iii) the content of the call did not violate the law at the time of the call.
Here, the court determined that the plaintiff lacked Article III standing to sue the defendant because he did not show an injury-in-fact as a result of the robocall. The court added, “notably, [p]laintiff does not assert, nor has he put forward any evidence to show, that he suffered nuisance, annoyance, inconvenience, wasted time, invasion of privacy, or any other such injury.” Moreover, the court pointed to the plaintiff’s position and asserted that as a TCPA investigator, “he welcomed such calls.” The court additionally held that the plaintiff lacked statutory standing for similar reasons. As a customer of the defendant, the court stated that plaintiff’s claims were subject to the TCPA’s “established business relationship” exemption in effect at the time of the call. The court agreed with the defendant’s argument that the call did not violate the TCPA prohibitions in effect at the time of the call. Further, the court found that the call’s content did not violate FCC regulations at the time for “abandoned telemarketing calls and dual-purpose calls.” As a result, the court dismissed as moot the plaintiff’s motion for class certification and his motion to file a second amended complaint.
On January 27, the U.S. District Court for the District of Minnesota, granted final approval of a $7.05 million class action settlement between consumers and a large national retailer for allegedly making robocalls. The lead plaintiff filed a proposed class action suit in 2016 against the retailer claiming that it used an automated dialing system to place collection calls to his cell phone in violation of the TCPA. The suit additionally asserted that some plaintiffs were charged by their cellphone service providers for these collection calls.
According to the settlement approval order, the settlement class includes individuals who received debt collection calls on their cell phones from the retailer between March of 2012 and May of 2018. Additionally, the court determined that, among other things, (i) the notice plan is the best plan practicable and provides sufficient notice to class members; (ii) the settlement is “fair, reasonable, and adequate”; and (iii) the class was adequately represented in the settlement negotiations. The court approved attorneys’ fees and costs of nearly $2 million, and an incentive award of $10,000 to the lead plaintiff, both to be paid out of the funds of the settlement.
On January 10, the FTC announced that it entered into two settlement agreements: one with a call center and two individuals, and one with an additional individual (together, “the settling defendants”) that it claims made illegal robocalls to consumers as part of a cruise line’s telemarketing operation allegedly aimed at marketing free cruise packages to consumers. According to the two settlements (see here and here), the settling defendants “participated in unfair acts or practices in violation of . . . the FTC Act, and the FTC’s Telemarketing Sales Rule [(TSR)]” by “(a) placing telemarketing calls to consumers that delivered prerecorded messages; (b) placing telemarketing calls to consumers whose telephone numbers were on the National Do Not Call Registry; and (c) transmitting inaccurate caller ID numbers and names with their telemarketing calls.” The defendants are permanently banned from making telemarketing robocalls, and have been levied judgments totaling $7.8 million, all but $2,500 of which has been suspended due to the defendants’ inability to pay.
Also on January 10, the FTC filed a complaint in the U.S. District Court for the Middle District of Florida against the remaining six defendants allegedly involved in the telemarketing operation, for violations of the FTC Act and TSR based on the same actions alleged against the settling defendants.
- Jonice Gray Tucker to discuss “Be Your Compliance Best in 2022” at the California Mortgage Bankers Association webinar
- 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
- 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