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Financial Services Law Insights and Observations


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  • FTC halts deceptive student loan debt relief operation and freezes assets

    Federal Issues

    On June 28, the FTC announced an enforcement action against a student loan debt relief operation that allegedly took over $20.3 million from consumers by falsely claiming affiliation with the Department of Education and falsely promising loan forgiveness. The FTC claims the operation charged consumers illegal upfront fees for debt relief services that were never provided in many instances. The FTC also stated that the operation used telemarketers to make misrepresentations to borrowers and falsely told consumers that they would purchase the consumers’ loans from their federal servicer.

    The FTC alleges the operation violated the Impersonation Rule, which became effective in April, which prohibits the impersonation of government agencies and businesses. The FTC alleges the operation also violated the FTC Act, the Telemarketing Sales Rule, and the Gramm-Leach-Bliley Act. The FTC's complaint resulted in a federal court permanently enjoining future violations, granting preliminary injunctive relief, freezing the operation’s assets, and awarding monetary and other relief for consumers. A temporary restraining order was also issued by the U.S. District Court for the Central District of California.

    Federal Issues FTC Enforcement Student Lending Consumer Finance Gramm-Leach-Bliley Telemarketing FTC Act

  • District Court says defendant violated TCPA written consent requirement


    On June 6, the U.S. District Court for the District of Maryland held that the prerecorded telemarking calls placed by a health insurance provider and its affiliated marketing company required prior written consent from consumers. Plaintiffs brought a class action against defendants for their marketing practices related to dental savings plans, alleging defendants’ practices violated the Telephone Consumer Protection Act (TCPA). The defendants placed numerous, prerecorded “winback” calls to plaintiffs encouraging them to renew a dental plan expired previously. While the lead plaintiff provided verbal consent to receive text messages and prerecorded phone calls while enrolled in the plan, plaintiff alleged that the automated calls received after the plan ended were not authorized.

    The court denied the defendants’ motion for summary judgment and granted the plaintiff’s motion for class certification. The court found that the “winback” calls qualified as telemarketing advertisements under 47 C.F.R. § 64.1200(f)(13) and, as such, were subject to the heightened requirement for “prior express written consent” under the TCPA. The court discussed the “complex tapestry” comprising the definition for prior express written consent, and concluded that such consent will be satisfied if it is in writing and the following three elements are met, at a minimum: “(1) an agreement; (2) a signature (that the signatory intended to function as a signature); and (3) “clear and conspicuous” disclosures about the content of the agreement and that the consumer need not sign the agreement.” Additionally, the court held that the “consumer disclosure” section of the E-SIGN Act applied in this case, further requiring written disclosures to obtain consumer consent under the TCPA.

    The court also found that the class action waiver and arbitration clauses on the defendants’ website did not apply to members of the class because: (1) the class members signed up by phone; and (2) similar to the TCPA analysis, telemarketing phone calls to former customers after their plans ended and they were no longer customers did not fall under the "sites and services" governed by the terms of use.

    Courts TCPA E-SIGN Act Telemarketing Consent Disclosures

  • Georgia amends provisions for telemarketing provisions for defendants

    State Issues

    On May 6, Georgia enacted SB 73 (the “Act”), which amends, among other things,  Georgia’s telemarketing laws. The Act clarifies that no person or entity can make or cause any telephone solicitation violations, now on behalf of another person or entity, and sets forth that there is a private right of action against violators. The Act also amends the damages to be the actual monetary loss for each violation or a violation up to $1,000 in damages, whichever is greater.  However, if a class action lawsuit is brought under the Act, the $1,000 in statutory damages would not apply. The Act further provides that ignorance would not be a valid defense if a defendant did not make or was not aware how a telephone solicitation violated applicable laws. However, it is defensible if the defendant had established policies and procedures to prevent violations, and enforced such procedures, or if a phone number was provided in error so long as the defendant did not have any knowledge of the mistake.

    State Issues Georgia Telemarketing State Legislation

  • Pennsylvania Attorney General settles with data collection company for failing to disclose data use


    On February 22, the Attorney General for the State of Pennsylvania, Michelle A. Henry, announced a settlement with a company for selling consumers’ data information without clearly notifying those consumers pursuant to the Unfair Trade Practices and Consumer Protection Law and the Telemarketer Registration Act (TRA) and required the defendant pay $25,000 in monetary relief. The defendant operated various websites that collected consumers’ personal information with offers of free samples or payments for online surveys. The Pennsylvania AG alleged the defendant failed to properly disclose to consumers that the purpose of collecting their data was for lead generation, made misrepresentations regarding free samples and brand affiliations, and failed to obtain necessary consumer requests and agreements.

    As part of the settlement, the Pennsylvania AG required the defendant to provide certain disclosures, including the collection of consumer data is for lead generation, consumer information may be sold to third parties, and defendant functions as an aggregator of promotional offerings. The settlement further enjoined the defendant from making certain misrepresentations to consumers. There were also orders related to telemarketing practices and consumer usage data, including a requirement that defendant not “use, sell, transfer or share any [c]onsumer [d]ata obtained from Pennsylvania consumers[.]”

    Courts Pennsylvania State Attorney General Data Collection / Aggregation Telemarketing

  • 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

  • 26 State Attorneys General opine on FCC’s Notice of Inquiry regarding AI telemarketing

    Federal Issues

    On January 17, the State Attorneys General from 26 states submitted reply comments to the FCC’s Notice of Inquiry (the Notice) on how artificial intelligence (AI) technologies are impacting consumers. The information gleaned in response to the Notice is intended to help the FCC better protect consumers from AI-generated telemarketing in violation of the TCPA. The State AGs urged that any AI-generated voice should be considered an “artificial voice” under the TCPA to avoid “opening the door to potential, future rulemaking proceedings” that allow telemarketing agencies to use AI-assisted technologies in outbound calls without the prior written consent of a consumer. 

    Federal Issues State Attorney General FCC Artificial Intelligence Telemarketing TCPA

  • FTC settles with lead generator for deceiving consumers

    Agency Rule-Making & Guidance

    On January 2, the FTC filed a complaint against a California-based lead generator (the “Company”), alleging that the Company operated as a “consent farm” that deceived consumers into providing their consent to be contacted for telemarketing purposes, then selling those consents to telemarketers, sellers, or intermediaries. Relying on the Company’s purported consent from consumers, those parties then inundated consumers with telemarketing calls. These calls included robocalls and calls made to telephone numbers on the National Do Not Call Registry. Since 2019, the defendants are alleged to have operated over 50 websites focused on lead generation.

    The FTC charged the Company with violating the FTC Act for misrepresenting the collection of consumers’ personal information, and for violating the Telemarketing Sales Rule for assisting and facilitating telemarketers in breaking the Rule.

    On the same day the complaint was filed, the FTC announced a proposed settlement in which the Company was ordered to pay $7 million for its alleged use of deception and dark patterns to trick consumers into providing personal information. Additionally, the proposed stipulated order banned the Company from initiating or helping anyone make telemarketing robocalls, calling phone numbers on the National Do Not Call Registry, and selling consumer information connected with lead generation. The stipulated order must first be approved by the court before it comes into effect. The Company neither admits nor denies any of the allegations

    Agency Rule-Making & Guidance FTC FTC Act Consent Order Fraud Telemarketing Telemarketing Sales Rule

  • 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

  • FTC announces settlement of charges against operators of alleged telemarketing training scheme

    Agency Rule-Making & Guidance

    On December 11, the FTC issued a press release announcing proposed orders against the CEO and other related individuals and businesses of an income telemarketing training scheme. In connection with the settlement, the FTC filed a complaint in the U.S. District Court of the Middle District of Tennessee alleging violations of the FTC Act and the Telemarking and Consumer Fraud and Abuse Prevention Act. The FTC alleged that the defendants, a Tennessee-based group of companies, practiced deceptive and unlawful advertising, marketing, promotion, distribution, and selling of money-making and investment opportunities in offering a sales mentor program. The complaint alleges defendants performed these acts through several business entities via a telemarketing sales training and coaching program and through marketing practices on social media platforms. Since 2019, consumers paid more than $29 million to defendants for access to this sales training program.

    The FTC filed two stipulated judgments for “permanent injunction, monetary judgment, and other reliefs.” The orders contain a total monetary judgment of $16.4 million. The stipulated orders also prohibit the defendants from: (i) making misleading earnings claims, so if the defendants make earnings claim in the future, they have to have a reasonable basis for those claims; and (ii) misrepresenting any sales of goods or services, including the description of the good or service, any past performance, any testimonials, any future predictions of profit earnings, among others.  The defendants will also be required to turn over a total of $1 million to be used to refund harmed consumers, with one CEO ordered to pay $600,000 and the other defendants ordered to pay $400,000. All defendants neither admit nor deny any of the allegations in the complaint.

    Agency Rule-Making & Guidance FTC Telemarketing Telemarketing and Consumer Fraud and Abuse Prevention Act FTC Act Fraud

  • Feds, states launch “Operation Stop Scam Calls”

    Federal Issues

    On July 18, the FTC, along with over 100 federal and state law enforcement partners nationwide, including the DOJ, FCC, and attorneys general from all 50 states and the District of Columbia, announced a new initiative to combat illegal telemarketing calls, including robocalls. The joint initiative, “Operation Stop Scam Calls,” targets telemarketers and the companies that hire them, lead generators that provide consumers’ telephone numbers to robocallers and others who falsely represent that consumers consented to receive the calls. The initiative also targets Voice over Internet Protocol (VoIP) service providers that facilitate illegal robocalls, many of which originate overseas.

    In connection with Operation Stop Scam Calls, the FTC has initiated five new cases against companies and individuals allegedly responsible for distributing or assisting in the distribution of illegal telemarketing calls to consumers across the country. According to the announcement, the actions reiterate the FTC’s position “that third-party lead generation for robocalls is illegal under the Telemarketing Sales Rule (TSR) and that the FTC and its partners are committed to stopping illegal calls by targeting anyone in the telemarketing ecosystem that assists and facilitates these calls, including VoIP service providers.” The announcement also states that more than 180 enforcement actions and other initiatives have been taken by 48 federal and 54 state agencies as part of Operation Stop Scam Calls.

    Among the new actions announced a part of Operation Stop Scam Calls is a complaint filed against a “consent farm” lead generator, which allegedly uses “dark patterns” to collect consumers’ broad agreement to provide their personal information and receive robocalls and other marketing solicitations through a single click of a button or checkbox via its websites. Under the terms of the proposed order, the defendant would be required to pay a $2.5 million civil penalty and would be banned from engaging in, assisting, or facilitating robocalls. The defendant would also be required to implement measures to limit its lead generation practices, establish systems for monitoring its own advertising and that of its affiliates, comply with comprehensive disclosure requirements concerning the collection of consumers’ consent to the sale of their information, and delete all previously collected consumer information.

    Other actions were taken against a California-based telemarketing lead generator, a telemarketing company that provides soundboard calling services to clients who use robocalls to sell a range of products and services, a New Jersey-based telemarketing outfit that placed tens of millions of calls to consumers whose numbers are listed on the National Do Not Call Registry, and Florida-based defendants accused of assisting and facilitating the transmission of roughly 37.8 million illegal robocalls by providing VoIP services to over 11 foreign telemarketers.

    Federal Issues State Issues Courts FTC Enforcement Robocalls Consumer Protection State Attorney General TSR Telemarketing Lead Generation DOJ FCC


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