March 11, 2013
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Litigation Update - The Telephone Consumer Protection Act - How Telemarketing Can Threaten Your Business
Answer the following question: Telemarketing is –
a) The bane of modern existence
Congress and many states have, in the name of protecting personal privacy, implemented a number of laws that regulate how companies can use telemarketing to promote their goods and services. The most significant of these laws is the Telephone Consumer Protection Act, 47 U.S.C. § 227, (TCPA). If your company uses telemarketing, the TCPA affects you.
What does the TCPA prohibit?
The TCPA is a complex statute that is implemented by an even more complex set of regulations promulgated by the Federal Communications Commission. In general terms, the TCPA prohibits:
The FCC has also adopted regulations that restrict the manner in which otherwise permissible robocalling may be conducted. These regulations require that persons receiving robocalls be provided with an interactive opt-out mechanism and also limit the frequency of “abandoned calls” (i.e., those irritating calls where you answer the phone only to be greeted by silence).
What is the risk?
The TCPA provides for recovery of damages in a suit by a person who has received a prohibited telemarketing solicitation in the amount of $500 per violation or $1,500 per violation in the case of a willful violation. Because telemarketing is typically conducted on a high volume basis, the TCPA has become increasingly popular fodder for “professional” class action plaintiffs and their attorneys, with claims often resulting in multi-million dollar settlements. For example, a federal court in California recently approved the settlement of a class action alleging that Wells Fargo had violated the TCPA. In approving the settlement amount of $17.1 million (which included more than $4 million in attorneys’ fees), the court noted that the defendants’ maximum exposure, at $500 per call, was approximately $2.9 billion. Given the financial incentives, it is perhaps not surprising that lawsuits alleging violation of the TCPA are reported to be on the rise.
The FCC has interpreted liability to extend not just to the entity that makes the call, but also the entity on whose behalf the call is made. The courts have extended liability to individual corporate executives who participated in business practices that were found to have violated the TCPA.
What can be done to reduce risk?
There are a number of steps that a business can take to reduce the risk of liability under the TCPA. Such measures include:
* “Call,” for purposes of the TCPA, has been interpreted to include text messages.
This article is provided for general informational purposes only and should not be construed as legal advice or legal opinion on any specific facts or circumstances. You are urged to consult a lawyer concerning any specific legal questions you may have.
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