February 2012

In this issue:

  • The FCC has announced that it will consider what constitutes “prior express consent” under the TCPA at its February open meeting.
  • Online shoe merchant, Zappos’ database was hacked last month exposing approximately 24 million customer records including names, email addresses, billing and shipping addresses, phone numbers and last four digits of credit card numbers.
  • The FTC announced settlements with two entities which placed prerecorded telephone calls to consumers. United States of America v. Voice Marketing, Inc., et al. and United States of America v. VoiceBlaze.com, et al. ... Each set of defendants will pay a $10,000 fine, reduced from judgments of more than one million dollars.

Federal Trade Commission
The FTC has obtained an order halting business and freezing the assets of a company which allegedly sold fraudulent credit cards and took money from consumer bank accounts without consent.  FTC v. Apogee One Enterprises, LLC.  The company offered credit cards to consumers but falsely claimed the cards could be used anywhere that accepted Mastercard or American Express, when in actuality it could only be used at the defendant’s on-line store.

The FTC has obtained a settlement banning Michael Bruce Moneymaker and his companies from marketing negative option programs and obtaining a $9.9 million settlement.  The settlement alleged sales were made without disclosing all material terms and charging consumers without their express consent.

The FTC has settled a case which involved allegations that the defendants sold fraudulent debt relief services using prerecorded voice messages.  FTC v. Direct Financial Management, et al.  The settlement bans the defendants from delivering prerecorded messages selling debt relief services, as well as making misrepresentations about any goods or services they may sell in the future.  Although the judgment was more than $13.1 million, the settlement is suspended except for a payment of $159,000.

The FTC announced settlements with two entities which placed prerecorded telephone calls to consumers.  United States of America v. Voice Marketing, Inc., et al. and United States of America v. VoiceBlaze.com, et al.  The complaints involved allegations of violations of the national “do-not-call” registry and projecting false caller identification information.  Each set of defendants will pay a $10,000 fine reduced from judgments of more than one million dollars.

The FTC has obtained a restraining order halting operations of a company which allegedly attempted to collect debts for payday loans that consumers did not own.  Federal Trade Commission v. American Credit Crunchers, et al.  The defendants allegedly falsely threatened to arrest and jail consumers if they did not agree to make a payment.  If true, these allegations would violate the FDCPA, the FTC’s general unfair business practices rules, and civil and criminal fraud statutes.

Federal Judiciary
The New York Times recently reviewed court decisions concerning the standard practice of including a “no finding of wrongdoing” clause in settlements between companies and government regulators.  A judge in New Jersey ordered the Federal Trade Commission and a company to explain why she should approve a multi million dollar settlement which contained such language when it left her no facts upon which to base her determination that the deal was fair, adequate, and in the public’s interest.

Comment:  Frankly, no business would rightfully enter into a settlement admitting wrongdoing because of the huge potential for private liability including class actions.  Courts’ rejecting such a tool would create an explosion in litigated court cases that would bog down the agencies’ enforcement activities and the court’s for years.

California
A federal court in California has delayed resolving a case which alleged a defendant sent illegal unsolicited texts to the plaintiff until the FCC provides guidance regarding what constitutes “prior express consent” for texts.  Glauser v. Twilio.

Comment: View the attorney’s comments on this posting.

Florida
A Florida court has granted a debt collector summary judgment with regard to an allegation that it violated the TCPA by calling a consumer’s cell phone number without express consent. Cavero v. Franklin Collection Services.  The court ruled that a consumer provided AT&T his cell phone number and that the debt collector acting for AT&T therefore had his express consent to contact the number.

Louisiana
A bill has been proposed in the Louisiana House (HB 151) which would ban political prerecorded calls.  It would also subject political calls to the state “do-not-call” list.

Comment:  Any time political calls (i.e. fully-protected speech) are lumped together with restrictions applicable to commercial speech, the Constitution likely is violated.

Mississippi
A bill has been introduced in the Mississippi House (HB 1434) which would amend Mississippi’s Telephone Solicitation Act to apply its restrictions to text and fax messages.  It would also add wireless telephone lines to those lines allowed to be added to the state “do-not-call” list.  The bill would also create a “do-not-fax” database.

Comment:  Federal law on unsolicited faxes is very restrictive and the class action bar is very active with regard to enforcement of the TCPA’s fax rules, so the state “do-not-fax” list likely duplicates existing federal restrictions.

North Carolina
North Carolina House Bill 611 would add political prerecorded calls to calls banned by state “do-not-call” law and subject to the federal “do-not-call” list in North Carolina.

Ohio
An Ohio court has certified a class of fax recipients whose alleged violation of the TCPA is based on unsolicited faxes advertising solutions for thinning hair.  Siding and Insulation Co. v. Beachwood Hair Clinic.  A fax broadcaster allegedly sent 37,000 faxes on behalf of the defendant.

Pennsylvania
The Pennsylvania Public Utility Commission has proposed rules and regulations for marketing in the retail residential energy market.  The rules include bans on misrepresentation and guidelines for sales including telemarketing.

Privacy Breach
Online shoe merchant, Zappos’ database was hacked last month exposing approximately 24 million customer records including names, email addresses, billing and shipping addresses, phone numbers and last four digits of credit card numbers.

Comment: View the attorney’s comments on this posting.

West Virginia
The West Virginia Supreme Court has ruled that a caller responding to a classified advertisement is not making a “telephone solicitation” in violation of the TCPA.  Diana May v. Pep Boys.  This decision affirms a previous order.

Commentary

Requiring Notification of a Privacy Breach

Express Consent & Text Messages - Glauser v. Twilio