Telemarketing compliance continues to be of paramount importance for consumer-facing companies. ARDA members must comply with telemarketing laws when calling or texting consumers to generate sales and service accounts, and should exercise caution when using telemarketing vendors, autodialers, mass texting platforms, pre-recorded messages, and ringless voicemails.
Last year, in Facebook v. Duguid, 141 S. Ct. 1163 (2021), the Supreme Court resolved a longstanding split and narrowed the Telephone Consumer Protection Act’s (“TCPA”) definition of an autodialer. This was a good result for businesses; but even so, now is not the time to neglect telemarketing compliance. Autodialer lawsuits are still alive post-Facebook, and plaintiffs continue to bring claims under other TCPA provisions. Moreover, Facebook has seemingly pushed state legislatures into action, with at least three states passing new “mini-TCPA” laws (Florida, Oklahoma, and Washington) and others considering similar bills (Michigan and Georgia).
States have regulated telephone solicitation for decades, but these mini-TCPAs are significant because, when compared to the federal TCPA, they often cover more dialing technologies, prohibit additional telemarketing conduct, and modify consent requirements. These developments are also noteworthy because the liability and damages provisions of the TCPA and mini-TCPAs invite substantial exposure through class actions. The TCPA alone provides statutory damages of up to $500 per violation (trebled for willful or knowing violations) and a four-year window to sue. The liability provisions of the mini-TCPAs—expanded private rights of action, statutory damages similar to the TCPA, and attorneys’ fees—are also problematic.
Adhering to best practices is critical to minimize litigation risk and arm your company with defenses should it find itself named in a telemarketing lawsuit.
- Obtain Prior Express Written Consent. Your company should obtain prior express written consent before initiating a call for informational or marketing purposes. Although not required for certain calls (i.e., non-marketing calls), prior express written consent is a best practice. Written consent also reduces the likelihood that your company will violate the TCPA or mini-TCPAs during a so-called “dual purpose call.” Some account servicing calls morph into telemarketing as agents attempt to market a separate product or cross-sell other services. Prior express written consent can insulate your company from liability in these situations.
- Provide Clear and Conspicuous Disclosures. Valid written consent must be signed by the call recipient and preceded by clear and conspicuous disclosures. Disclosures should also identify the company’s name and its agents, indicate what the consent is for (i.e., marketing, servicing, etc.), whether autodialers or pre-recorded messages will be used, and specify that consent is not required for any purchase. Finally, keep in mind the FTC’s 4Ps: prominence, presentation, placement, and proximity. Font, spacing, contrast, and location all factor into clarity from the regulator’s perspective.
- Maintain Complete & Accurate Records. An effective recordkeeping system can be critical to combating allegations that your company violated the TCPA. If your company is named in a TCPA class action, it will likely need to produce evidence of consent (e.g., name, phone number, date/time of consent, IP address, etc.). Your company should obtain, maintain, and back-up evidence of consent so that it can produce the same when the need arises.
- Honor Do Not Call Lists. The TCPA imposes liability for certain calls to numbers on the National Do Not Call Registry. It also requires companies to maintain and honor an internal do not call list (keep enrolled names on your list for five years). Accordingly, your company should “scrub” call lists against both the National Do Not Call Registry and internal do not call lists.
- Use the FCC’s Reassigned Number Database. Your company may find itself in a “wrong number” class action if it contacts a phone number that has been reassigned from an owner who had consented to telemarketing to someone who has not. Your company can minimize risk of such claims by submitting numbers and dates of consent on your call list to the FCC’s Reassigned Number Database. This service should alert you to reassigned numbers and, in certain instances, may provide a valuable legal defense to a wrong number lawsuit.
- Avoid Automated Technologies. The TCPA and some mini-TCPAs have stricter requirements for autodialers and pre-recorded messages. These technologies, along with ringless voicemails, are often the impetus for TCPA class actions. Your company should thus consider switching to live calls or human-selection systems.
- Implement TCPA Compliance Policies. Your company should implement and regularly update written TCPA policies and procedures. It should also train employees and monitor their compliance with the same. Written policies and training are the foundation of a robust compliance program and may also be used as a “safe harbor” defense to some TCPA claims. Finally, your company’s call scripts should also require agents to identify the company, the purpose of the call, and opt-out mechanisms.
- Monitor TCPA and Mini-TCPA Developments. Telemarketing laws continue to evolve as states respond to Facebook. Your company should review and understand the patchwork of state laws. Florida’s law, for example, expands the definition of autodialers and expressly applies to “timeshare estates.” Even Florida’s less ambiguous requirements are problematic. For example, your company cannot make telemarketing calls to Florida consumers outside of 8 a.m. to 8 p.m. This can be challenging to operationalize given that Florida spans two time zones. Finally, Washington’s law introduces significant ambiguity by requiring callers to honor “indications” that recipients no longer want to receive calls.
- Manage Third-Party Risk. Vicarious liability issues are common in TCPA lawsuits. Your company should perform due diligence on telemarketing and account servicing vendors. Moreover, when purchasing leads, your company should include contractual provisions that require compliance with all telemarketing laws and your company’s policies, prohibit the third party from using subcontractors or other vendors without written consent, and indemnify your company for any liability that results from using the third party.
- Review Insurance Policies. Your company should know whether its insurance policies cover TCPA claims. If so, your company should identify what types of claims are covered, what the coverage limits are, and whether defense costs are included.
- Rely on Experienced Counsel. Counsel can help you establish telemarketing policies and procedures, identify issues with vendors and lead generators, track litigation trends, and bring important insights and nuanced defense strategies should litigation arise.
About the Authors
Doug Vonderhaar is a consumer financial services lawyer with a litigation and regulatory practice. Doug regularly defends companies in TCPA class actions. Moreover, as part of BakerHostetler’s Financial Services Industry team, Doug routinely counsels clients regarding TILA, RESPA, FDCPA, FCRA, and other federal consumer statutes and regulations. He also defends timeshare developers in complex litigation and advises them regarding consumer protection laws. You can reach Doug at (614) 462-2634 and [email protected].
Nick Cordova is a commercial litigator in BakerHostetler’s Columbus office. As a former law clerk at the Third Circuit Court of Appeals, Nick applies his knowledge of the judiciary to defend clients against TCPA lawsuits and other class actions. You can reach Nick at (614) 462-5126 and [email protected].