Ad Law Access : Washington D.C. Advertising Lawyer & Attorney : Kelley Drye & Warren Law Firm : New York, Chicago, Connecticut, New Jersey, Brussels

A few days ago, a Kansas state court entered a default judgment against Bullseye Target Marketing, a Missouri telemarketing company that solicited roofing business in Kansas, in an action brought by the Kansas Attorney General alleging violations of the Kansas No-Call Act (the state analogue to the federal Telemarketing Sales Rule). The court ordered the company to pay $600,000 in penalties. The action was filed after the Attorney General received complaints from Kansas consumers that they received unsolicited calls offering to schedule roof inspections in areas that had experienced storm damage, despite their numbers being registered on the state do-not-call list. The Kansas No-Call Act generally prohibits businesses from placing telemarketing calls to consumers registered on the state do-not-call list.

This Attorney General action should serve as a reminder that do-not-call compliance is not only being monitored and enforced by the Federal Trade Commission, but states, too, are active in the area.

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On May 9, 2013, the Federal Communications Commission ruled that sellers may be held vicariously liable under the Telephone Consumer Protection Act (“TCPA”) for unlawful telemarketing by third parties under certain circumstances. The FCC’s Declaratory Ruling addresses third-party liability for violations of the Do Not Call and prerecorded message restrictions of the Communications Act. The Commission ruled that, under both provisions, a seller may be held vicariously liable for violative calls placed by third-party marketing agents under principles of the federal common law of agency.

The Declaratory Ruling thus resolves a central question that is raised in a number of TCPA lawsuits: sellers may only be held liable for actions of those third party telemarketers that are determined to be agents, applying the federal common law of agency. Moreover, a manufacturer that simply puts a product in the chain of commerce that is later resold by a seller is not likely to be affected by this Ruling, provided that it does not otherwise trigger the TCPA’s seller definition.

With respect to how and under what circumstances the federal common law of agency will be applied to find a seller vicariously liable for the acts of third parties, the future is unclear – particularly with respect to claims based on alleged apparent authority and whether the FCC’s “illustrative examples” of such apparent authority set forth in the Ruling will influence courts in interpreting how the federal common law of agency should apply to the specific facts of a particular case.

For more on this decision, please reference the Kelley Drye client advisory.

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On August 14, 2012, New York Governor Andrew Cuomo signed legislation, which will regulate all telemarketers doing business in the State and strengthen consumer protections relating to pre-recorded telemarketing messages. Introduced on June 12, 2012 by Assembly member Didi Barrett (AD 103), the new law aligns significantly with those provisions of the federal Telephone Consumer Protection Act and the Telemarketing Sales Rule, particularly with respect to the requirements relating to obtaining a consumer’s “express written consent” to receive pre-recorded telemarketing messages. The bill has an effective date 90 days after passage.

The new substantive provisions relate to express written consent requirements and heightened opt-out mechanisms. Under the new law, telemarketers may not deliver a pre-recorded message without the express written agreement of the consumer that (1) was obtained only after the telemarketer’s clear and conspicuous disclosure that the purpose of the agreement is to authorize telemarketing calls to that customer; (2) was not executed as a condition of purchasing any goods or service; (3) evidences the willingness of the consumer to receive telemarketing sales calls from a specific seller; and (4) includes the consumer’s telephone number and signature.

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This afternoon, the FTC announced that the manufacturer of Rascal Scooters has agreed to pay $100,000 to settle charges that it illegally called millions of consumers whose phone numbers were on the national Do Not Call Registry.

The company asked consumers to provide their numbers on sweepstakes entry forms so that the company could contact them if they won. According to the FTC, however, the company also contacted non-winners with sales calls. Although the Telemarketing Sales Rule generally allows a company to call a consumer on the Do Not Call Registry for up to 18 months if it has an “established business relationship” with the consumer, the FTC has warned that companies may not rely on a sweepstakes entry form as the basis for that exception.

This case serves as a reminder that companies cannot misrepresent the reason for collecting phone numbers or assume that just because a consumer gives the company a phone number, the company can place a sales call to the consumer.  

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In the past month, we've posted two entries (here and here) regarding court decisions interpreting the Telephone Consumer Protection Act (the "TCPA") in the context of mobile marketing campaigns. This morning, our colleagues at the Telecom Law Monitor posted an entry about an FCC decision interpreting the TCPA in the context of a telemarketing case. In that case, a consumer had argued that companies made unsolicited calls to him in violation of the TCPA. The FCC's decision turned on whether the calls were "telephone solicitations" under the TCPA. The FCC held that unsolicited calls to a consumer were not TCPA violations because the messages were intended for current customers, not as solicitations to obtain new customers. Moreover, the telemarketer’s mistake in directing the calls to a non-customer did not make the calls actionable. This decision will make it harder for a consumer to prove a violation when communications are intended for current customers. A more detailed analysis of the decision is available here.

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