Marketing Law Group

Telemarketing Sales Rule: 101

2021-10-04T16:53:58Z

Those who run telemarketing businesses or use these businesses to help generate leads likely know that there are many different regulations that guide what is and is not acceptable. A failure to abide by these guidelines can result in hefty, sometimes astronomical, financial penalties. As a result, it is important for business leaders to have a basic understanding of the regulations that impact this industry. This post will focus on the Telemarketing Sales Rule (TSR).

The TSR: Defined.

The Federal Trade Commission (FTC) issued the TSR in 1995 to address public concerns about telemarketing fraud and consumer privacy protection. It basically applies to any telemarketing campaign. The TSR has a number of provisions, including:

Disclosure. The TSR requires the business making contact provide material information during the call. This can include the cost and quality of the product or service as well as any material limitations.
Authorization. The caller must get express authorization before accepting and placing a payment from the client.
Follow the Do Not Call (DNC) list. It is a violation to contact those who are listed in the DNC.

It is important to note that there are some exceptions to this rule. These exceptions can include contacts made by non-profit organizations and certain financial institutions.

The TSR: Exceptions.

This rule, like many within this marketplace, is often changing. The FTC has thus far amended the TSR in 2003, 2008, 2010 and 2015. As such, future updates are likely. This makes it even more important to conduct regular internal audits to make sure business practices are up to date with applicable regulations.

How can I make sure my telemarketing campaign is effective?

2021-09-30T19:25:05Z

Telemarketing, or the ability to get on the phone and reach a large number of potential clients, is often an effective part of a business’ marketing strategy. Like all things in the business world, technological advances have led to the development of many different tools to help business owners make the most of their telemarketing campaign. But what techniques and tools are the most useful? Some tips that can help to better ensure a successful campaign include:

Texting. There is now the ability to send out a mass text to your client base. This can provide information about new products or services and help to better ensure you are meeting your client’s needs in a timely manner.
Team support. The need to help make sure your team of marketers feels supported is arguably more important now than ever before. The pandemic led to a huge spike in remote work arrangements. You can help address this issue by putting together internal communication methods and platforms to encourage collaboration between teammates. These efforts will serve to better ensure they feel connected and supported while working your campaign.
Training. Make sure your callers know the product and service well enough to answer client questions. It is also helpful to prepare potential answers to client objections, giving your callers the power to navigate through a difficult conversation before it turns sour.

Of course, it is also important to make sure your campaign follows all applicable regulations. A failure to follow laws like the Telephone Consumer Protection Act (TCPA) can result in stiff financial penalties as a fee can be applied to each attempted contact. Business owners can reduce the risk of a violation by conducting an internal audit.

Does an electronic signature satisfy TCPA requirements?

2021-09-20T19:19:56Z

Electronic signatures provide protection for businesses and consumers. But when is an e-signature official? A fake or uninformed electronic signature can provide serious problems for business owners.

What kind of problems?

Serious ramifications can result when a business wrongly relies on an e-signature to satisfy federal regulations. If the signature does not meet federal, state, and/or local requirements, the business can face allegations of violating laws like the Telephone Consumer Protection Act (TCPA). This can come with serious financial penalties.

How can I make sure an electronic signature is official?

There are two laws that help to make sure electronic signatures serve as a valid tool for businesses. The Electronic Signatures in Global and National Commerce Act (ESIGN) allows the use of electronic signatures as a legal method of agreement. To qualify under this law, the signer must show intent to sign. Examples include using a mouse to sign or clicking a clearly labeled accept button. The Uniform Electronic Transactions Act (UETA) provides guidance on electronic signature use for each state. Illinois and New York have yet to adopt it, but instead use their own statutes. It essentially states that an electronic signature will suffice for any law that requires a written record — effectively extending it to cover laws like the TCPA. It helps to think of a valid electronic signature having three requirements: it must be authentic or tied to an actual customer, potentially by requiring customers to use a password or by using an IP address to link the signature to an individual. Next, the customer was sign with clear intent to sign, as discussed above under ESIGN. Finally, the signature must be associated with the document, issue, or record. It is important that businesses regularly review these requirements. The rules can change and when this happens your business may need to adjust to better ensure compliance.

FCC flexes its muscles, requests a $5 million penalty

2021-09-07T16:14:42Z

Not too long ago, the feds were able to update the Telephone Consumer Protection Act (TCPA) to allow the agency to move forward with a fine before it provided notification of a potential offense. They were able to achieve this change through the passage of the Telephone Robocall Abuse Criminal Enforcement and Deterrence (TRACED) Act. The FCC has decided to test these changes out — and it’s going big. It didn’t just decide to go for a few thousand or even hundred thousand in fines the first time using this amendment. Nope. It has asked for over $5 million. Millions of dollars in fines without the business getting any notification of a potential violation. Without the chance to make changes to better ensure compliance.

What case led to this alleged violation?

The case involved a lobbyist and political consultant group, J.M. Burman & Associates LLC. The feds claim the group called over 1,000 voters in September of 2020. The feds claim the business did not include their name or otherwise identify themselves within the call. The Federal Communications Commission (FCC) argues that the business did not have proper consent from the voters prior to making these calls. As a result, the group was allegedly in violation of the TCPA. The allegations have led to a harsh financial penalty. The FCC is asking for a penalty of $5,134,500.

What can my business learn from this case?

The FCC is cracking down on any allegations of a violation of the TCPA. Business leaders are wise to conduct an audit and make changes to better ensure compliance. If business leaders get notification of an investigation by the FCC or an impending lawsuit from a consumer that is alleging a violation, take it seriously. Prompt action to begin to build a defense can help to mitigate the penalties.

Business owners: 3 reasons to conduct a compliance audit

2021-08-17T15:18:07Z

Larger organizations often have in house counsel to help better ensure the business follows applicable regulations, but smaller and mid-size businesses may not have this luxury. As a result, it is important to conduct regular, proactive compliance audits to better ensure your business is not in violation of any federal, state, or local regulations.

How can I make sure my business has a strong compliance program?

As noted in a recent report by Thomson Reuters, business leaders will not have a successful compliance program if they approach it with a “one size fits all” mentality. Customization is the key to a successful compliance program.

Although customization is important, there are some commonalities for almost every business. Three specific areas of concern that apply to most types of business and are important to include in every compliance audit include:

Security. Cyber-security measures are important to protect sensitive information. Check to see that your business has needed protections and address any areas that may need increased support. Business leaders should also make sure paperwork and other forms of sensitive information are safe by having procedures for handling this type of paperwork. This could include shredding practices and locks.
Discrimination. You can proactively reduce the risk of allegations of sexual, age, gender, religion, ethnicity, and other forms of discrimination with training. The risk generally decreases when workers are aware of what is and is not allowed.
Taxes. Business owners are likely required to pay employment taxes. A failure to do so can result in serious charges of wrongdoing, potentially including criminal charges. Review tax obligations and make sure you are meeting the Internal Revenue Service (IRS) expectations as well as those of state and local taxing authorities.

Additional matters will vary depending on the type of business. This is when customization comes into play. For example, businesses like a gas stations would also need a review of compliance with environmental laws while those that conduct marketing campaigns will need to make sure they comply with the Telephone Consumer and Protection Act.

To complete the audit, it is important to interview employees from different parts of the business. Business owners can then designate a compliance officer or team to use this information to put together a work plan to address any issues.

Lawsuits begin to attack businesses in FL over TCPA violations

2021-08-04T21:24:06Z

Florida lawmakers recently revised the Florida Telephone Solicitation Act (FTSA) into what the legal world is referring to as a “mini TCPA.” The nickname is primarily due to the fact that the FTSA incorporated many of the same elements of the TCPA that plague business owners. This includes the ability to get up to three times the alleged damages if the plaintiff can establish the business was willful in its violation.

How will this new law impact businesses?

The amended FTSA went into effect in July. Multiple lawsuits are already moving forward, attempting to use these revisions to attack businesses who operate throughout the state. In a recent example, a class action suit is moving forward against Dickey’s Barbecue Restaurants for a series of text messages sent out to clients to let them know about an upcoming Fourth of July sale. The messages encouraged customers to take advantage of free delivery, free sides and $5 off certain orders. A group of customers took issue with the messages and are suing, stating they had not given written consent for the business to send text messages. They are seeking an injunction and monetary award.

What should business owners learn from this case?

We will provide updates on the case as it moves forward, but it highlights what will likely be a growing trend throughout Florida in coming months. As such, businesses are wise to review their practices to make sure they comply with the new law and act to aggressively defend themselves if/when they face similar allegations of a TCPA or FTSA violation.

Getting consent online? Avoid these 3 common TCPA errors.

2021-08-03T20:19:22Z

The Telephone Consumer Protection Act (TCPA) requires businesses to get consent from clients before using an automated telephone dialing system (ATDS) to deliver a pre-recorded message. Like all things in the business world, the practice of reaching out to customers has evolved beyond reaching out with mailed correspondence. Now businesses can reach out get consent for these contacts online. But how do business leaders make sure their practices follow the complicated TCPA? Avoiding the following common errors can help.

Error #1: Not listing the caller by name

It is tempting to keep the consent form vague for convenience’s sake, but a failure to list the specific seller that will make the call can void the online consent form.

Error #2: Hiding an arbitration provision

Including an arbitration clause is smart but hiding it within the terms and conditions page or link on the business’ website can cause problems. As noted in a recent publication by The Blacklist Academy, an online compliance and marketing law resources that focuses on TCPA issues, prevailing law generally requires the website provide notice of the terms the business wishes to enforce. Having a terms and conditions link as a small button at the bottom of the page and burying the arbitration clause within that link is unlikely to suffice.

Error #3: Failing to offer another way to view content

Businesses cannot force consumers to agree to contact in order to purchase or receive a good or service.

Bonus error: Doing it all on your own

Unless your business is large enough to have its own compliance department, it is a good idea to reach out to professionals to review your business’s practices for compliance. An audit can help to better ensure everything is in line and offer suggestions if changes are needed.

Can allegations of a TCPA violation lead to criminal charges?

2021-07-27T18:08:57Z

Lawmakers designed the Telephone Consumer Protection Act (TCPA) to reduce unwanted contact from businesses to consumers. Although noble in their goals, the reality of this law has led to many headaches for businesses and consumers alike. A prime example is the possibility that this law, designed simply to navigate communications issues, could potentially snowball into allegations of criminal wrongdoing.

Option #1: The TCPA itself

Although the language of the TCPA does not include criminal provisions, the Communications Act, where the TCPA is found, does. It seems pretty convoluted, but this connection makes it possible (though unlikely) for a TCPA civil case to evolve into a criminal case. A recent case dove into this. The case, Van Connor v. One Life Am., involved a defendant who refused to provide requested information citing the 5^th Amendment protection against self-incrimination. The court agreed, stating that the plaintiff could not require the defendant to respond to the information requested during discovery as there was a chance, however unlikely, that the government could use the responses against the defendant during criminal prosecution. Ultimately, the court stated the plaintiff could ask general questions about telemarketing, but not specifics about the manner and means of the contacts.

Option #2: New legislation

U.S. Senator Maggie Hassan joined a number of lawmakers to push for passage of the Deter Obnoxious, Nefarious, and Outrageous Telephone (DO NOT) Call Act. If passed, this law will increase penalties and include a potential prison sentence of up to one year for knowing and willful violations of the TCPA. It would also double the current maximum allowable penalties under the TCPA for falsification of caller identification crimes, increasing the fine from $10,000 to $20,000.

What’s a business to do?

Tread carefully. Reevaluate marketing practices and take cautious but assertive action if you face allegations of a TCPA violation. We will watch this evolving area of the law and provide updates as they become available.

States pass telemarketing laws in wake of FB holding

2021-07-12T20:15:31Z

Earlier this year, the Supreme Court of the United States (SCOTUS) issued a decision in Facebook, Inc. v. Duguid stating that a dialing system for the purposes of the Telephone Consumer Protection Act (TCPA) must meet the exact definition provided within the law. This means it must have the “capacity to either store or produce a telephone number based on a random or sequential number generator.” The holding, discussed in more detail in a previous post available here, was a big win for businesses. But, as highlighted by a recent law passed by Florida lawmakers, it is not the end of the continuing debate between when and how businesses can and cannot contact potential, current, past, or future clients.

What is this new telemarketing law in Florida?

According to a recent piece in Reuters, Florida lawmakers passed a law that expands the definition of an automatic dialer system to include those that allow users to select numbers. This appears to allow the law to cover predictive dialers that operate using a database. A violation can result in a monetary fine of $500/call or $1,500/call if the contact is deemed a willful violation, much like the penalties present for violations of the federal TCPA. There is also the possibility of additional fines for injunctive relief as the court sees fit. It is important to note that Florida Governor Ron DeSantis has yet to sign the law — but, even if he doesn’t, it appears likely the Florida Legislature would override a veto.

What does this mean for other states throughout the country?

Florida’s new law could be a sign of a new trend. Even though SCOTUS clearly states the federal law does not cover these types of contacts, states can pass their own that do. States throughout the country could decide to pass similar laws, further hindering businesses’ ability to reach clients.

Definition of ATDS for TCPA continues to evolve

2021-07-01T18:16:18Z

The Supreme Court recently gave businesses a big win with a recent ruling. The ruling, simply referred to in the Telephone Consumer Protection Act (TCPA) arena as the Facebook case, provided some guidance on the definition of an automatic telephone dialing system (ATDS). In the case, discussed in more detail in a previous post available here, the court basically said that the law means exactly what it says. That the definition for an ATDS as used within the TCPA should not extend to include a whole bunch of other things. That the definition is narrow and refers to a device that stores and automatically dials numbers. Case closed. Unfortunately things are rarely that simple in the legal world. Case after case has come through the court system after this holding attempting to shake out the impact of the holding and look for holes. In a recent example, Huffnus v. DoNotPay, a consumer accused a business of a TCPA violation when it used a list of phone numbers to randomly reach out to potential clients. One of the contacts tried to argue that this was an ATDS as defined by the TCPA so they could move forward with a claim that the business violated the TCPA. The problem: the numbers on the list were all supplied by consumers. The numbers themselves were not randomly generated. Although the consumer tried to argue that the machine still randomly chose the numbers, the fact that the list was generated by numbers supplied by consumers was enough for this federal court to rule in favor of the business and hold the practice was within the confines of the law and the Facebook holding noted above.