June/July 2011

In this issue:

  • The FTC has announced that it will revise its guidance to business concerning disclosures in online advertising.  It is likely that the new guidance will cover mobile marketing, as well.  
  • The Seventh Circuit has reversed a trial court which certified a class action under the Telephone Consumer Protection Act which had alleged that a plaintiff had received two unsolicited faxes from the defendant.  CE Design Limited v. King Architectural Metals, Inc. 
  • A federal court has ruled that the ban on prerecorded calls in the TCPA does not prohibit or apply to prerecorded debt collection calls.

FTC

The FTC has warned consumers about charity and home repair scams which may appear in the wake of flooding along the Mississippi River.

The FTC has announced that it will revise its guidance to business concerning disclosures in online advertising.  It is likely that the new guidance will cover mobile marketing, as well.  Comments are due before July 11, 2011.  Topics which the FTC has requested comment on include multi-party selling arrangements including lead generation as well as what advice in the previous document “dot com disclosures” is outdated.

http://business.ftc.gov/documents/bus41-dot-com-disclosures-information-about-online-advertising.pdf.

The FTC has entered into settlements permanently banning a telemarketer and its principals from selling debt relief services.  The FTC alleged that the defendants delivered prerecorded calls with messages urging consumers to “press one” to speak with someone regarding lowering consumer credit card interest rates.  The FTC alleged that instead of altering payment terms, the defendant sent consumers instructions to pay down credit card debts early to avoid paying additional interest.  The defendants surrendered virtually all their assets including luxury cars and other machinery.

The FTC has settled charges against operators of 20 online “virtual worlds” after alleging that the operators violated the Children’s Online Privacy Protection Act (COPPA) by disclosing personal information of children without their parents’ prior consent.  The settlement is the largest civil penalty for violations of the FTC’s COPPA rule.

In May, the FTC conducted a workshop regarding “cramming,” that is, unauthorized third party charges on phone or other utility bills.  There has been increased scrutiny at the state and federal level regarding LEC billing and other forms of third party billing and you should carefully review your practices in this area if you use this form of billing.

The FTC and the Department of Justice have filed suit against three Utah based companies and their owner alleging violations of the Telemarketing Sales Rule.  United States of America v. Future Films for Families, Inc., et al.  The Complaint states that in 2008 and 2009 the companies conducted a nationwide calling campaign but did not disclose that consumers receiving three DVD’s would later be required to purchase movies.  The Complaint also alleges violation of the national “do-not-call” list and improper caller ID as well as violation of the Telemarketing Sales Rule’s scripting rules.

The FTC has settled allegations with two firms that they allegedly failed to protect consumers’ personal data.  Both companies agreed to settlement orders requiring comprehensive information security programs and independent security audits every other year for 20 years.

Seventh Circuit Court of Appeals

The Seventh Circuit has reversed a trial court which certified a class action under the Telephone Consumer Protection Act which had alleged that a plaintiff had received two unsolicited faxes from the defendant.  The court referred to the plaintiff as a “professional class action plaintiff” and ruled that he was not typical of the other class members and that he had serious credibility problems.  CE Design Limited v. King Architectural Metals, Inc.  The plaintiff had published his fax number in a “blue book” in the construction industry and, therefore, may have given consent to receive advertisements from the defendant.

Indiana
As of July 1st cell phone users will be able to include their names on the state “do-not-call” list.

Maine
A bill has been proposed in the Maine House (HB 1109) which would prohibit misrepresentations made with regard to service contracts for motor vehicles including, but not limited to, the provider of the extended warranties affiliation with a particular manufacturer, expiration of the consumer’s current warranty, or the warranty company’s possession of information regarding the consumer’s current motor vehicle warranty.  The bill would also require registration for sellers of automotive service contracts.

Michigan
A federal court has ruled that the ban on prerecorded calls in the TCPA does not prohibit or apply to prerecorded debt collection calls.  Daniel v. West Asset Management, Inc.

Comment: This suit did not involve the ATDS provision of the TCPA which would apply to debt collection calls. The FCC has been very clear that debt collection calls are exempt from the TCPA’s prerecorded call ban to residential lines. Attempts to challenge the FCC’s authority to make this ruling have failed.

Mississippi
The Mississippi Public Service Commission has fined several companies for violations of state “do-not-call” law. Three companies were fined for a total of $95,000.

Comment: Jeff Jernigan is the Assistant Attorney General assigned to enforcement of the Mississippi “do-not-call” list. He has been very active in the past year.

Nevada
Nevada has passed a law regulating mortgage lending (AB 308) which requires that entities engaged in counseling or assistance to home owners in foreclosure perform random recording and testing of their sales and customer service representatives to ensure compliance with applicable law.  The Act will become effective on July 1, 2011.

Comment: Very rarely do laws require recording of calls. I have never had a client hurt by such recording (so long as they comply with state and federal wiretapping laws) as the recording usually shows that the consumer misremembered what happened during the call.

Wyoming
A federal court in Wyoming has refused to certify an alleged class of recipients of calls to their wireless numbers.  The court ruled that the TCPA claims would require extensive TCPA fax inquiries into whether each individual gave “express consent” by providing their wireless number to the creditor during a transaction that resulted in the debt owed.  This process would require an individual review of loan documents and, therefore, was not appropriate for class action resolution.  Versteeg v. Bennett Deloney Noyes.

Comment:Certification of classes in these cases is extremely important. This case is a victory, and should be an important tool in future battles over “express consent” and the TCPA’s automatic dialer restriction.