TCPA and Telemarketing Lead Generation Legal Update

Lead generators and those within the telemarketing ecosystem should know and appreciate the legal regulatory requirements, restrictions and risks prior to engaging such high-risk campaigns.  Violations of regulations, statutes and best practice guidelines can result in statutory penalties, as well as both personal and corporate.

Below is a brief summary of recent legal developments may be of interest to telemarketers.  Whether you operate a call center, an advertising agency, or sell a product or service, contact and experienced FTC attorney to discuss compliance requirements, policy development, marketing contracts, best practices and liability limiting techniques.

     What is TCPA “Residential” Use of Cellphone Number?

A U.S. District Court for the Southern District of New York recently held that a Telephone Consumer Protection Act (“TCPA”) plaintiff sufficiently alleged facts to survive a motion to dismiss by defendant in an alleged prerecorded call and Do Not Call Registry case.

The opinion and order in Rose v. New TSI Holdings, Inc. can be read, here.

In 2004, Patrick Rose registered his cellphone number on the National DNC Registry, which he claimed to use only for personal purposes.  He alleged that in 2018 he visited a Boston Sports Club owned and operated by New TSI Holdings, Inc. (“TSI”).  According to Mr. Rose, he subsequently began receiving commercial solicitation calls on behalf of the gym.

According to Mr. Rose, he asked TSO to stop contacting him numerous times, including an email communication to TSI wherein Mr. Rose expressly wrote: “STOP CALLING AND TEXTING ME.”  Mr. Rose alleged that he continued to receive commercial solicitation calls, including identical prerecorded messages.

Mr. Rose also alleged that through 2021 he received roughly twelve commercial solicitation calls from TSI.  As a consequence, he filed suit and allged that TSI violated the TCPA by virtue of the alleged facts that the calls were prerecorded and made with prior express written authorization, that the calls were made to a number on the DNC Registry, and that the calls continued even after he requested that the alleged marketing messages cease.

When TSI attempted to have the lawsuit dismissed, the Court held that Mr. Rose alleged sufficient facts to overcome TSI’s challenge that he received prerecorded messages.  “These allegations sufficiently support Rose’s claim that he received prerecorded messages at this stage.”  In doing so, the Court also noted that Mr. Rose’s Complaint alleged that at least two of the prerecorded messages were identical and that he provided a transcript of the messages.

The record reflects that Mr. Rose also alleged that his phone never rang when he received the messages, “potential evidence that he received a kind of prerecorded message known as ‘ringless voicemails,’” [emphasis added] the Court opined.

When TSI put forth argument that Mr. Rose did not possess a private right of action under the TCPA because failed to establish that he received prerecorded messages on a residential telephone number, the Court notes, “As TSI concedes, however, cellular telephone numbers can qualify as residential numbers under the TCPA … The FCC, which possesses authority to issue implementing rules and regulations for the TCPA, defines a ‘residential subscriber’ as a ‘subscriber to a telephone exchange service that is not a business subscriber’ – a definition that can include cellphone users.  Indeed, the FCC has explicitly determined that the DNC Registry applies to cellphone numbers.”

Importantly here is that the Court deviated from substantial legal precedent in other states that requires allegations actually setting forth the purported residential use of a telephone number to move forward a DNC Registry claim at the motion to dismiss stage.  Specifically, the New York District Court held that bare allegations in the Complaint that the cellphone was “personal” and not used for “business purposes” were adequate at the early stage of the litigation.  “Though Rose does not specifically allege that his cellphone number was a residential one, he alleges that it was a personal number that he did not use for business purposes and that it has been listed on the DNC Registry since 2004,” the Court stated.  “At the motion to dismiss stage, these allegations are sufficient for Rose’s TCPA claims to move forward.”  The Court also permitted Mr. Rose’s claims for treble damages to advance based upon his allegations that he asked TSI to stop contacting him, but the prerecorded messages continued.

     Can a Single Ringless Voicemail Can Establish Standing to Pursue TCPA           Claims? 

An Ohio federal court recent held that a plaintiff that failed to allege that he suffered a concrete injury from the receipt of a single ringless voicemail did not create Article III standing for a Telephone Consumer Protection Act lawsuit.

The opinion and order in Dickson v. Direct Energy, LP can be read, here.

Here, Mr. Dickson allegedly received an ringless voicemail that was subsequently transformed into a text message.  He alleged that he read the message when he filed a lawsuit against Direct Energy.

The U.S. District Court for the Northern District of Ohio granted Direct Energy’s motion to dismiss, ruling that an allegation of a statutory violation absent concrete harm does not necessarily amount to a requisite concrete injury.  The Court opined that federal courts of appeal  are divided on the standing issue, including in the context of a single ringless voicemail.

Ultimately, the Court held that the receipt of a single ringless voicemail is insufficient “under the specific facts presented herein.”  In fact, the Court considered that “Dickson’s deposition testimony reveals that his allegation is the ‘bare procedural violation’ that the U.S. Supreme Court ruled in Spokeo, Inc. v. Robins does not amount to proper standing.

“Dickson cannot recall where he was or what he was doing when he received the ringless voicemail.  His only recollection appears to be that at one point in time, he read the ringless voicemail and subsequently forwarded it on to counsel because he had previous experience with the TCPA. … Dickson’s sole alleged harm appears to be the de minimis time he took to read the ringless voicemail, a time so limited that he did not even recall its contents,” the Court stated.

This case provides further guidance for telemarketers named in a TCPA lawsuit about different legal defense strategies that may become available based upon the facts alleged by a plaintiff.

     Do Text Messaging Platform Operators Have Potential Liability Under               TCPA?

The Eighth Circuit recent held that a system that sends text messages to stored numbers is not an ATDS.  More specifically, that a text messaging software that randomly selects telephone numbers from a stored list is not an ATDS if it does not generate random or sequential telephone numbers to start with.

In Beal v. Outfield Brew House, the Eighth Circuit Court of Appeals rejected plaintiff’s position that the software platform constituted an ATDS because it “produced” numbers through the “random selection of phone numbers from an existing list of contacts.”  The Court explained that: “Under the language of § 227(a)(1), a “random or sequential number generator” does the producing.  While subjects in other contexts may produce by selecting, a generator produces by generating.  An electrical generator produces by generating electricity.  A password generator produces by generating a password.  And a random number generator produces by generating a random number.  Because Txt Live does not generate phone numbers to be called, it does not “produce telephone numbers to be called” for purposes of § 227(a)(1) of the TCPA.”

Importantly, the Court opined that the U.S. Supreme Court’s opinion in Facebook v. Duguid “strongly bolstered” its findings.  The Facebook decision limited the application of the TCPA to live calls and text messages

In considering Facebook, the Eighth Circuit specifically opined that that platform at issue “is exactly the kind of equipment Facebook excluded from § 227(a)(1) – ‘equipment that merely stores and dials telephone numbers.’”  The infamous Footnote 7 argument borne from the Facebook v. Duguid opinion – that the TCPA applies to equipment that selects numbers randomly but does not generate numbers randomly – was also squarely rejected (here, in the context of a text messaging platform).

A win for telemarketer defendants.

     Are There New State Telemarketing Law Updates?

Oklahoma recently joint Florida and other states when it passed legislation that restricts telephone solicitation calls.  The Oklahoma Telephone Solicitation Act of 2022 becomes effective November 2022.

In short, the OTSA prohibits the use of an “automated system” to make a “commercial telephonic sales call” without the “prior express written consent” of the “called party.”  It defines an “automatic telephone dialing system” more broadly than does the TCPA.  The OTSA applies to “commercial telephonic sales calls” that involve “an automated system for the selection or dialing of telephone numbers or the playing of a recorded message when a connection is completed to a number called.”

The new law prohibits “more than 3 calls in a 24-hour period” on the same subject matter and sales calls between 8:00 PM and 8:00 AM.  It addresses spoofing and related identification issues, as well as important exemptions that telemarketers should consider alongside a qualified FTC lawyer.

But the statute is arguably vague and does not offer numerous definitions, such as for “automated system,” “commercial telephonic sales call” and “prior express written consent.”

The law provides for $500 statutory damages per violation and a private right of action.  Statutory damages can be increased for willful or knowing violations.

In Washington, there is also a new law that covers “telephone solicitations,” to wit, an  “unsolicited initiation of a telephone call…for the purpose of encouraging the person to purchase property, goods, or services or soliciting donations….”  The scope of exemptions with regard to the foregoing may very well be heavily litigated.

Calling parties are required to terminate and stop telephone calls if a consumer “states or indicates” that they do not want to receive them.  There are also caller identification and curfew requirements.

Interestingly, if a consumer indicates that he/she does not want to be called, selling or otherwise providing the consumer’s contact information to a third-party is restricted.

The Washington law permits the Washington attorney general and a private right of action for consumers, but limits that to repeated violations.  There is also no private right of action for a single call and the Washington OAG is only permitted to issue a warning.  The statutory penalty is $100 per violation plus attorneys’ fees to prevailing plaintiffs.

A number of other states are presently considering the enactment of similar legislation.  Now is a good time to assess legal regulatory telemarketing best practices.

Richard B. Newman is an FTC defense attorney at Hinch Newman LLP. He defends marketers against local, state and federal legal regulatory investigations and enforcement actions. Follow FTC lawyer on National Law Review.

Informational purposes only. Not legal advice. May be considered attorney advertising.