Telemarketers and Crammers BewareTelemarketers and Crammers Beware

The FCC, FTC and New York legislature are not only watching, but taking action.

Recently, I found myself annoyed when I got back to the office and noticed a fourth unsolicited junk fax in a week. My fax number is on the Do-Not-Call list, and every time I receive a junk fax, I file a complaint (see www.fcc.gov/complaints). Like KoKo, the Lord High Executioner in Gilbert & Sullivan's Mikado, "I've Got a Little List" and it's getting longer by the day. My feeling is that if I don't want to receive these unwarranted solicitations, I have to do my part. And I do. I've filed four complaints this week.

FCC Enforcement
The FCC has stepped up its enforcement actions against those who intentionally, willfully and repeatedly violate Commission rules. This is particularly true for crammers who have been subject to costly and enforceable fines.

Most notably, the FCC has recently issued a notice of apparent liability for forfeiture of $1,108,000 against LDC Telecommunications Inc. for repeated violations of the FCC's slamming rules. Not only did the FCC find that LDC had frequently and systematically violated rules by changing the long distance carriers of a mere 27 consumers without proper authorization, but that it had further failed to respond to both numerous consumer complaints and to regulators who sought to determine what was going on. Compounding these challenges was LDC's failure to return phone calls--both from customers and regulators, according to the FCC.

One of the two newest commissioners (Ajit Pai) wrote a dissenting opinion, reflecting his concern that the amount of the fine was not sufficiently large given the egregious conduct alleged of LDC. His dissent further suggested that before assessing fines designed to punish bad behavior, the commission should have access to information to allow it to determine whether the offending entity is in a position to pay a greater fine amount than is required, to serve as a greater deterrent. The dissent also argues that the proper course of action for the Commission is to consider an inability to pay only after a violator responds with concrete evidence that it cannot pay.

LDC must now either pay the full amount of the proposed forfeiture or file a written statement seeking reduction or cancellation of the proposed forfeiture. For a full description of the FCC's action in this matter, please see http://www.fcc.gov/document/ldc-telecommunications-inc-12.

FTC Enforcement
Interestingly, the Federal Trade Commission, the entity that manages the Do Not Call Registry, is taking note of this issue as well. It's also taking aim--most recently at DISH Network, whom the FTC has sued in federal court in Illinois for making "millions" of outbound calls since September 1, 2007 that it alleges were illegal. The FTC is seeking a permanent injunction against DISH for ongoing bad action, as well as monetary fines of up to $11,000 per violation for those calls that occurred on or before February 9, 2009 and up to $16,000 per day for each violation (not each day...each call) that occurred since then.

According to the complaint filed in late August in U.S. District Court in the Central District of Illinois, DISH Network and its agents, including third parties working on behalf of DISH, have repeatedly placed telemarketing calls to individuals who have formally registered on the Do-Not-Call list. Because this current example is far from DISH's first time around the horn for alleged violations of the Do-Not-Call rules, the FTC has indicated that it intends to enforce its rules with vigor. The FTC has been joined by the attorneys general of California, Illinois, Ohio and North Carolina in ongoing litigation that began in 2009 for alleged additional (and numerous) and repeated violations of both the Telemarketing and Consumer Fraud and Abuse Prevention Act and the Federal Trade Commission's Telemarketing Sales Rule.

Telemarketing Rules: New York Ups the Ante
In late August, New York Governor Andrew Cuomo signed a bill toughening the terms under which telemarketers from both within and outside New York must operate if they plan to make calls to consumers within New York State. This information is relevant to those consultants and vendors who serve customers beyond New York's borders, because it's a reflection of the general animus directed toward telemarketers. Additionally, the fact that the bill passed the New York State Assembly unanimously suggests that no one wanted lack of support for this issue to affect an election going forward. The fact that the entirety of the New York Legislature could agree on anything is monumental in and of itself. But I digress.

Primarily, the new substantive provisions involve express written consent requirements and increased opt-out mechanisms. Under the new law, telemarketers may not deliver a pre-recorded message without the express written agreement of the consumer that includes the following information: (1) that such consent 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) that the agreement to allow telemarketing calls was not executed as a condition of purchasing any goods or service; (3) proof that the consumer has actively agreed to receive telemarketing sales calls from a specific seller; and (4) provides the consumer's telephone number and signature.

The new law also requires that telemarketers provide customers with more opt-out mechanisms than are currently required under either federal or state law. At present, a telemarketer that delivers a pre-recorded message to a live customer must offer an automated interactive voice and/or keypress opt-out mechanism to invoke a do-not-call request. The new law further requires that the call also include a mechanism to allow the consumer to automatically add the number called to the seller's entity-specific do-not-call list. Once this option is invoked, the telemarketer must immediately end the call. Further, if the call is answered by a consumer's voicemail, the new law requires that the telemarketer's message include a toll-free number at which the consumer may add the number called to the seller's entity-specific do-not-call request. Again, once this option is invoked, the telemarketer must immediately end the call.

Additionally, a further new requirement is a mandatory registration by those firms that telemarket to consumers within New York State with the NY Secretary of State's office in Albany, even if the firm making the calls is NOT located within New York. Firms that fail to register are subject to additional and onerous penalties.

For a copy of the full text of the bill (A10569), please see http://assembly.state.ny.us/leg/?default_fld=&bn=A10569&term=2011&Summary=Y&Actions=Y&Text=Y&Votes=Y.