June 2014

In this issue:

  • An online mortgage lead creator will pay a $225,000 civil penalty to the FTC settling charges that it deceived consumers regarding terms of mortgages. FTC v. GoLoansOnline.com. The FTC charged that the company advertised low interest fixed rate mortgages that were, in fact, adjustable rate mortgages.
  • A court has granted summary judgment to a plaintiff who received a text after sending “STOP” to the defendant. Legg v. Voice Media Group. The court denied class certification but ruled that the defining characteristic of an ATDS is the capacity to dial numbers without human intervention.
  • A Kansas court has ruled that “capacity” to act as an ATDS is an issue currently under consideration by the FCC and, therefore, stayed the case brought by a consumer against a debt collector alleging illegal calls to her cell phone. Higgenbothan v. Diversified Consultants, Inc.

Federal Communications Commission
Sprint has been fined $7.5 million for failure to honor internal “do-not-call” requests from consumers for phone and text message campaigns. The company already paid a $400,000 fine to the FCC in 2011.

Comment:  Telecom and other entities regulated by the FCC are usually subject to FCC enforcement while other companies are subject to FTC enforcement. Both regulators enforce the same national “do-not-call” list.

Federal Trade Commission
The FTC has entered a settlement with a debt collector and its principles resolving allegations of violation of the Fair Debt Collection Practices Act. FTC v. Asset & Capital Management Group, et al. The company will forfeit more than $4 million in assets to the Commission.

The FTC has obtained an order holding marketers of a $10,000 credit line in contempt of court and ordering them to pay $3.7 million in penalties. FTC v. EDebitPay, LLC, et al. The FTC had originally sued the company in California in 2007 and settled, requiring the defendants to clearly and conspicuously disclose fees for their services in future marketing.

Comment:  Any company that enters into a settlement with a regulator should carefully monitor compliance with its agreement as settlements often contain enhanced penalties for future noncompliance.

An online mortgage lead creator will pay a $225,000 civil penalty to the FTC settling charges that it deceived consumers regarding terms of mortgages. FTC v. GoLoansOnline.com. The FTC charged that the company advertised low interest fixed rate mortgages that were, in fact, adjustable rate mortgages.

The FTC has mailed more than 4,800 refund checks to customers of National Card Monitor, LLC, a telemarketer which represented that its services would lower consumers’ credit card interest rates for an advance fee. The defendants allegedly violated the Telemarketing Sales Rule by making deceptive claims regarding their services as well as charging advanced fees in violation of the rule.

A company that sent prerecorded telephone calls has entered into a settlement agreeing to permanently cease sending prerecorded calls. United States v. Sonkei Communications, Inc. The FTC had initially charged Sonkei and its owner of providing substantial assistance or support to telemarketers which sold credit card services and home security systems to consumers in violation of the Telemarketing Sales Rule and the national “do-not-call” registry. The FTC also alleged that the defendants sent false caller identification information. The settlement offer also imposed a $395,000 civil penalty.

California
A California court has ruled that California’s call monitoring statute, Cal. Pen. Code § 632.7, applies regardless of whether a call is confidential or not, i.e. that section requires consent before monitoring or recording of any telephone call to or from a cell phone in California. Lofton v. Verizon Wireless.

Connecticut
The Connecticut Senate is considering a bill which would require the Public Utilities Regulatory Authority to promulgate regulations concerning telemarketing of electric services to residential consumers.

Florida
A bill has been introduced in the Florida House (HB 7051) which would require that telemarketing bonds be payable to the Department of Agriculture and Consumer Services for the use of injured consumers and would ban the use of “novelty payments” for goods or services sold through telemarketing. The term “novelty payments” includes remotely created checks, payment orders, cash-to-cash money transfers, or any other payment method that does not provide systematic monitoring to detect and deter fraud.

A court has granted summary judgment to a plaintiff who received a text after sending “STOP” to the defendant. Legg v. Voice Media Group. The court denied class certification but ruled that the defining characteristic of an ATDS is the capacity to dial numbers without human intervention.

Indiana
A resolution has been introduced in the Indiana Senate (SCR 16) which urges the Federal Communications Commission to make enforcement of the national “do-not-call” registry a priority.

Kansas
Kansas has amended its “do-not-call” law to require that companies honor internal “do-not-call” requests for a period of five years from the request. It also modified its established business relationship exemption to reduce that exemption to a purchase in the past 18 months (from 36 months).

Comment:  The Kansas established business relationship purchase exemption now matches the federal definition. Calls in response to an inquiry are still not included in the Kansas exemption.

A Kansas court has ruled that “capacity” to act as an ATDS is an issue currently under consideration by the FCC and, therefore, stayed the case brought by a consumer against a debt collector alleging illegal calls to her cell phone.Higgenbothan v. Diversified Consultants, Inc.

New York
A bill has been introduced in the New York Senate (SB 7288) which would ban “cramming,” i.e. the inclusion of unauthorized charges on a consumer’s telephone bill.

Washington
A Washington court has refused to stay the progress of a case filed by two consumers alleging that a debt collector called their cell phones illegally. Meyer v. Receivable Performance Management. The court ruled that it is “one thing to hope the FCC will issue new rules that favor debt collectors like RPM. It is another to hope the FCC will impose those rules retroactively.”