July 2014

FCC

The FCC is expected to rule on several petitions with regard to TCPA restrictions on calls to cell phones in the coming months.  Sources say the rulings could be pro-business (and anti-class action).

Comment: A pro-business ruling is not anti-consumer in this situation, but rather could put brakes on the scores of class actions recently filed under the TCPA.

The FCC has fined Optic Internet Protocol, Inc., a Georgia telephone company, $7.62 million for allegedly switching consumers’ long distance telephone services without permission (slamming), adding additional charges to customers’ bills (cramming), and falsifying evidence submitted to the FCC regarding these charges.

On July 9th, the FCC asked for comments regarding a request for declaratory ruling asking the FCC to clarify whether certain equipment constituted an automatic telephone dialing system (“ATDS”) as defined by the TCPA.  C.G. Docket No. 02-278, DA 14-977.  The parties requesting the opinion argued that their equipment did not have the capacity to store or produce numbers and dial those numbers at random or in sequential order.  Therefore, they argued that they were not using an ATDS.

The FCC has also requested comments regarding when a person may be vicariously or contributorily liable for actions of a telemarketer in violation of the TCPA.  C.G. Docket No. 02-278, DA 14-976.  In that document, the petitioner asked the Commission to rule that a third party can only be liable for the actions of another if it knows, or consciously avoids knowing the illegal acts of its partner.

The FCC has requested clarification regarding whether marketing messages sent to a provided telephone number, but received by a new subscriber (i.e. after the number had been disconnected and reassigned), violates the TCPA.  Stage Stores requested the clarification.

The recipient of a prerecorded call requesting him to listen to a radio show has petitioned the Supreme Court to review the FCC’s holding that such messages are not telemarketing.  Leyse v. Clear Channel Broadcasting, Inc.  The FCC has filed a “friend of the court” brief asking the court to not hear the case.

The FCC has fined a political company nearly $3 million for allegedly making illegal prerecorded calls to mobile phones on behalf of political campaigns or candidates.  In re: Dialing Services, LLC.

FTC

The FTC filed a complaint today charging mobile service provider T-Mobile with charging hundreds of millions of dollars of “cramming” on consumers’ mobile phone bills.  The FTC alleges that T-Mobile continued to bill its customers for these services years after it learned the charges were fraudulent.

The FTC filed a complaint against a Houston debt collection company, RTB Enterprises, and its president alleging the use of false and deceptive methods to collect debt from consumers. All but $100,000 of the penalty was suspended based on inability to pay.

 A company has settled charges brought by the FTC that it sent millions of unsolicited text messages to consumers promising free gift cards from major retailers.  In re: Verma Holdings, LLC.

 The FTC has announced another contest offering $17,000 in cash prices to stop a prerecorded calling campaign which claims it is from “Rachel, at Cardholder Services.”

 Comment: It is because of deceptive marketers like this that legitimate companies bear the burden of some of the more onerous TSR restrictions (like the almost total ban on prerecorded calls).

 California

A California court has approved a class brought by individuals who received prerecorded calls from Schwan’s Home Service, even though they had never provided consent to Schwan’s and obtained the list from NutriSystem.  The settlement involved payment of $1.2 million in cash and up to $1.2 million in merchandise vouchers.

 A California court has granted a company’s motion for summary judgment in a case alleging it violated California’s call monitoring statute.  Anagnostellis v. Pitney Bowes, Inc.  The court ruled that plaintiff’s claim was barred by a one year statute of limitations.

 Judge Manuel L. Real ruled Young v. Hilton Worldwide, Inc., et al., that Hilton’s monitoring of customer inbound telephone calls, for quality control purposes, did not violate California’s wiretapping statute. Plaintiffs have used California’s statute in past years to allege actions with $5,000 damages per call even when the purpose of the monitoring was solely quality control and security. Judge Real ruled that such monitoring was not “wiretapping” as banned by California’s state law.

 Comment: While this case may end the cottage industry of California lawyers suing businesses and demanding multimillion dollar judgments, and in some cases entrapping, some of those plaintiffs’ lawyers have not given up yet, vowing to appeal the decision.

 Florida

A Florida court has ruled that a motion to certify a class of recipients of phone calls was premature.  In that case, the plaintiff’s filed a motion for class certification immediately after filing suit in an effort to prohibit the defendant from making an offer of judgment against the plaintiff.

 New Jersey

A bill has been introduced in the New Jersey Assembly (AB 3515) that would change New Jersey’s prerecorded call statute and require consent before playing recorded messages unless there is a current or prior business relationship between the caller and the subscriber.

Comment: Even if passed, this law would be less restrictive than federal law and would have no practical effect.

 New York

A New York court has rejected a cruise company’s argument that its “survey” was not intended to advertise goods or services.  Bank v. Caribbean Cruise Line, Inc.  The court reviewed the message and found that it was a “dual purpose” call and subject to restrictions on commercial prerecorded calls, not political surveys.  The court also ruled that plaintiff pressing a button to speak to a live representative at the end of the prerecorded call was not consent to receive the prerecorded call.

 South Carolina

A federal judge in South Carolina ruled that South Carolina’s ADAD statute (S.C. Code Ann. § 16-17-446) was unconstitutional.  Cahaly v. LaRosa. The judge reviewed the statute and an Attorney General opinion which ruled that calls to answering machines were permitted, as well as calls to live persons conducting surveys but not calls advocating for a particular political candidate.  The judge ruled that the exemptions to the statute, created by the Attorney General and the legislature, made the law content-based and, therefore, subject to strict scrutiny.  Because the statute could not meet strict scrutiny, she found the statute to be unconstitutional in violation of the First Amendment and permanently enjoined its future enforcement.

 Wyoming

Wyoming has rejected a telemarketing registration application for what I believe to be the first time.  As you may know, Wyoming requires a one page, one time, no fee registration, but now may accept or deny that application based on its evaluation of compliance with “do-not-call” rules.

 Comment: If you file this registration, as with any registration, you should ensure compliance with applicable law.  Scripts submitted with a registration, for example, should comply with the state’s disclosure requirements, etc.