Skip to main content
Menu Icon Menu Icon

InfoBytes Blog

Financial Services Law Insights and Observations


Subscribe to our InfoBytes Blog weekly newsletter and other publications for news affecting the financial services industry.

  • FTC obtains injunction and monetary judgment against telemarketing company

    Federal Issues

    On January 31, the U.S. District Court for the Northern District of Illinois finalized, in actions brought by the FTC, a permanent injunction and monetary judgment against a telemarketing company and certain individuals for violating the FTC Act, 15 U.S.C. § 45, and the Telemarketing and Consumer Fraud and Abuse Prevention Act, specifically the Telemarketing Sales Rule (“TSR”). The FTC’s motion for summary judgment was granted by the court, whereby the defendants were ordered to pay a monetary judgment for a civil penalty of $28,681,863.88 in favor of the FTC, and the defendants were permanently banned from participating in telemarketing or assisting and facilitating others engaged in telemarketing to consumers. The court found that the defendants violated the TSR by “initiating or causing the initiation of outbound telephone calls to consumers whose telephone numbers were on the National Do Not Call Registry… and by assisting and facilitating their inbound transfer partners’ violations of the TSR.”  This final action comes after the FTC was granted its initial order for permanent injunction and other relief in November 2023.

    Federal Issues FTC FTC Act Telemarketing TCPA Do Not Call Registry Telemarketing and Consumer Fraud and Abuse Prevention Act

  • FTC sues for-profit university for deceptive and illegal practices

    Agency Rule-Making & Guidance

    On December 27, 2023, the FTC filed a suit in the U.S. District Court of Arizona against a for-profit university for allegedly deceiving students, misrepresenting the university as a nonprofit entity, and committing telemarking abuses. The FTC sued under the FTC Act and Telemarketing Sales Rule (TSR). The complaint alleges that the university in question is a for-profit institution operating as a publicly traded entity, but nonetheless marketed itself as a “nonprofit” university. The complaint further alleges that the university misled students about the cost of its “accelerated” doctoral programs and used abusive telemarketing calls to try to boost enrollment. According to the FTC, the university called those who requested not to be called by the university, as well as consumers on the National Do Not Call Registry. The FTC asserts five claims against the university. The first two counts allege violations of Section 5(a) of the FTC Act for deceptive representations about its non-profit status and for falsely advertising its doctoral programs. The last three counts allege violations of the TSR predicated on deceptive telemarketing acts or practices, contacting those who have requested to not be contacted, and calling people on the National Do Not Call Registry.

    Agency Rule-Making & Guidance FTC FTC Act For-Profit College TSR Telemarketing Telemarketing Sales Rule Do Not Call Registry Fraud

  • FCC regulations target scam robotexts

    Agency Rule-Making & Guidance

    On March 16, the FCC adopted its first regulations specifically targeting scam text messages sent to consumers. Recognizing that robotexts are generally covered under the TCPA’s limits against unwanted calls to mobile phones, the FCC stated that the new regulations will require mobile service providers to block certain robotexts that appear to be coming from phone numbers that are unlikely to transmit text messages, including invalid, unallocated, or unused numbers, as well as “numbers that the subscriber to the number has self-identified as never sending text messages, and numbers that government agencies and other well-known entities identify as not used for texting.” Mobile service providers will also be required “to establish a point of contact for text senders, or have providers require their aggregator partners or blocking contractors to establish such a point of contact, which senders can use to inquire about blocked texts.”

    The FCC’s report and order also include a further notice of proposed rulemaking, which seeks to implement additional protections to further prevent illegal text messages. The proposal would “require terminating providers to block texts from a sender after they are on notice from the Commission that the sender is sending illegal texts, to extend the National Do-Not-Call Registry’s protections to text messages, and to ban the practice of marketers purporting to have written consent for numerous parties to contact a consumer, based on one consent.”

    Comments are due 30 days after publication in the Federal Register.

    Agency Rule-Making & Guidance Federal Issues FCC Text Messages TCPA Consumer Protection Do Not Call Registry Robotext

  • States receive $245 million judgment against robocall operation

    State Issues

    On March 6, the U.S. District Court for the Southern District of Texas entered stipulated orders and permanent injunctions against two individuals who, along with their companies (also named as defendants in the litigation), allegedly operated a massive robocall campaign to sell extended car warranties and health care services. (See orders here and here.)  Eight states attorneys general alleged violations of the TCPA and the Telemarketing Sales Rule, as well as various state consumer protection laws, claiming that the defendants initiated millions of robocalls to individuals nationwide without their prior express consent, spoofed caller ID numbers to mislead recipients, and called people whose numbers were on the Do Not Call Registry. Under the terms of the orders, the individual defendants (who neither admitted nor denied the allegations) are permanently banned from initiating or facilitating (or causing others to initiate or facilitate) any robocalls, working in or with companies that make robocalls, or engaging in any telemarketing. The court also ordered each individual defendant to pay a $122.3 million monetary judgment; however, these payments are mostly suspended in favor of the more permanent bans due to their inability to pay. The states noted that they are continuing their cases in the same action against others who allegedly worked with the individual defendants to facilitate the robocalls.

    State Issues State Attorney General Robocalls TCPA Telemarketing Sales Rule Do Not Call Registry Enforcement

  • District Court preliminarily approves $2.75 million autodialer TCPA settlement


    On January 31, the U.S. District Court for the District of Maryland preliminarily approved a class action settlement in which a cloud computing technology company agreed to pay $2.75 million to resolve alleged violations of the TCPA and the Maryland Telephone Consumer Protection Act. According to the plaintiff, the defendant violated the TCPA by, among other things, placing unsolicited telemarketing calls using an automated dialing system to class members on residential and cell phone numbers. Under the terms of the proposed settlement agreement, the defendant must establish a non-reversionary fund of $2.75 million to go to class members to whom the defendant (or a third party acting on its behalf) made (i) one or more phone calls to their cell phones; (ii) two or more calls while their numbers were on the National Do Not Call Registry; or (iii) one or more calls after the recipients asked the defendant or the third party to stop calling. “Plaintiff has also shown that a class action litigation is superior to other available methods for adjudicating this controversy,” the court wrote. “Plaintiff's counsel estimate that the average settlement payment to each Class Member would be approximately $30.00 to $60.00. Given this, the individual claims of each Class Member would be too small to justify individual lawsuits.” The court also approved proposed attorneys’ fees (not to exceed a third of the total settlement fund), as well as up to $60,000 for plaintiff’s out-of-pocket expenses and a $10,000 service fee award.

    Courts TCPA Autodialer Class Action State Issues Maryland Do Not Call Registry

  • Pennsylvania sues lead generator for facilitating telemarketers’ robocalls

    State Issues

    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.

    State Issues State Attorney General Pennsylvania Telemarketing Robocalls Lead Generation Do Not Call Registry Telemarketing Sales Rule Enforcement

  • Class certification granted in TCPA suit against satellite provider


    On August 1, the U.S. District Court for the Northern District of West Virginia granted a plaintiff’s motion for class certification in an action against a satellite TV company (defendant) for allegedly placing unwanted telemarketing robocalls. According to the order, the plaintiffs alleged that the defendant retained a communications company to sell the defendant’s services and that the communications company purchased a list of leads and phone numbers from a third party to make telemarketing calls. According to the plaintiffs, the communications company failed to scrub the list for numbers on the national do-not-call list and called those numbers in violation of the TCPA. The district court noted that “[t]here are two overriding questions in this case: (1) whether [the communications company] contacted class members listed on the do-not-call registry; and (2) whether [the defendant] is liable for [the communication company’s] actions.” The district court further noted that “[a]ny individual issues or defenses are limited and easily resolved with aggregate data from defendant []." In agreeing with the “plaintiffs’ contention that this is a ‘model case for the application of the class action mechanism,’” the district court certified a nationwide class of nearly 114,000 individuals whose telephone numbers were listed on the do-not-call list and who received more than one telemarketing call within any 12-month period at any time from the communications company to promote the defendant.

    Courts TCPA Class Action Robocalls Do Not Call Registry

  • District Court preliminarily approves TCPA class action settlement


    On October 28, the U.S. District Court for the Northern District of California granted final approval to a $14.1 million settlement in a class action against an affiliate of a real estate services company for allegedly violating the TCPA by soliciting calls to consumers. According to the plaintiff’s motion for preliminary approval, the plaintiff alleged that he received unwanted telephone solicitations on behalf of the defendant to his residential telephone lines that he had previously registered on the “Do Not Call” registry, in addition to alleging that he received repeated unwanted telemarketing calls even after he had requested that the defendant and/or its agents not call him back. Each member of the settlement class, which consists of individuals in the U.S. who received two or more calls since September 13, 2014 on their residential telephone number from the defendant’s affiliate that promoted the purchase of the defendant’s goods and services, will receive $350.00. The final settlement also includes $2.77 million in attorney fees and costs.

    Courts TCPA Class Action Real Estate Do Not Call Registry Settlement

  • District Court: Callers cannot rely on prior cell phone user’s consent to place prerecorded calls


    On March 9, the U.S. District Court for the Western District of North Carolina granted in part and denied in part a defendant university’s motion for summary judgment on claims that it unlawfully placed prerecorded calls to reassigned phone numbers based on the previous user’s consent. The plaintiff alleged that the defendant violated the TCPA by calling cellphones without first obtaining the current phone number owner’s prior express consent and making a “telephone solicitation” to individuals listed on the National Do-Not-Call-Registry. The plaintiff also contended that the defendant failed to provide a method for opting-out of receiving future calls. The defendant countered that it could not be held liable for the allegedly unlawful prerecorded calls because it had reasonably relied on the consent of the previous phone number’s user and was unaware that the number had been reassigned.

    In partially denying the defendant’s motion for summary judgment, the court ruled that there was “no basis” in the text of the TCPA to conclude that callers who contact a phone number whose previous user provided consent but whose current owner did not could use “a reasonable reliance or good faith defense” to avoid liability. “Congress passed the TCPA to protect individuals from receiving invasive and unsolicited calls,” the court wrote. “Thus, adopting a good faith or reasonable reliance defense not only would have no basis in the text but also would contravene the stated purpose of the TCPA.” The court also declined to adopt the defendant’s “intended party” argument, finding that “[n]either the language nor the concept of an ‘intended’ party appears” in the TCPA, and that every circuit court that has opined on this issue “has concluded that the term ‘called party’ refers to the individual that actually receives the calls, as opposed to the ‘intended party’ of those calls.”

    However, the court determined that the plaintiff’s allegation that the defendant violated the TCPA’s prohibitions on contacting numbers on the National Do-Not-Call-Registry cannot proceed “because, as a tax-exempt, non-profit organization, [the defendant] is not subject to the provisions regarding the National Do-Not-Call Registry.”

    Courts TCPA Consumer Protection Class Action Do Not Call Registry

  • District Court grants summary judgment for defendant in TCPA case


    On January 18, the U.S. District Court for the Western District of Washington granted a motion for summary judgment in favor of an insurance company (defendant) with respect to a plaintiff’s TCPA allegations. The plaintiff alleged that the defendant, among other things, violated the TCPA by placing telephone calls to him and the putative class members whose telephone numbers are on the National Do Not Call (DNC) Registry. The defendant countered that the plaintiff spoke with the defendant during a 26-minute phone call and provided his personal information and consent to be called by the defendant. The plaintiff alleged that he had not submitted any information, and suggested that hackers may have been involved, and that he had engaged in a lengthy and detailed conversation with the defendant because he was “investigating” the identity of the caller and the motive for calling. However, the court noted that “the personal information [the plaintiff] disclosed during the call supports the contention that he in fact was interested in obtaining a quote and otherwise submitted an internet request,” and that no evidence supported the plaintiff having “investigative” motives. 

    According to the opinion, a “reasonable jury” would find that the defendant had permission to call the plaintiff and that, even if there were questions about whether the plaintiff had requested or consented to the disputed call, the procedures that the defendant had put in place to comply with the law brought it under the purview of the TCPA's safe harbor provision. The court also found that the defendant “produced significant evidence that as part of its routine business practice, it complies with the standards required by the safe harbor provision and had substantially complied with the purpose of the TCPA, ‘to protect consumers from the unwanted intrusion and nuisance of unsolicited telemarketing phone calls and fax advertisements,’ by only calling those who have requested a life insurance quote and consented to be called.”

    Courts Class Action Do Not Call Registry Consumer Protection TCPA


Upcoming Events