The TCPA was enacted to protect consumers from unsolicited telemarketers and other types of marketers who do not have permission to contact them or who break other TCPA laws, such as:
Feb 2022 - The federal Telephone Consumer Protection Act (TCPA; 47 U.S.C. § 227) and it's implementing regulations (47 C.F.R. § 64.1200) regulate the use of automatic telephone dialing systems (ATDS) and artificial or prerecorded voices (“prerecorded messages”) in telephone communications. Generally speaking, the TCPA prohibits using an ATDS or prerecorded message to contact cell phones, and prerecorded telemarketing messages to contact residential phones, unless the recipient has provided and not revoked “consent” to receive the call/text. This FAQ provides an overview of the TCPA’s requirements. Because every type of calling campaign raises different concerns and the TCPA is significantly more complicated than can be presented here, M&S recommends that businesses consult with an experienced TCPA attorney before conducting any type of calling campaign.
An ATDS is “equipment which has the capacity to store or produce telephone numbers to be called, using a random or sequential number generator, and to dial such numbers.” The FCC has held that a predictive dialer also constitutes an ATDS. When determining whether a system is an ATDS, the FCC, and courts often focus on whether it has “the capacity to dial numbers without human intervention.” For example, if a representative must click to dial each number, then the system may not be an ATDS because human intervention is required for dialing each number. In 2015, the FCC held that “the capacity of an autodialer is not limited to its current configuration but also includes its potential functionalities.” If auto-dialing features can be activated or deactivated within the system, or if auto dialing features can be added through software changes or updates, the FCC considered such features as part of the system’s capacity and, therefore, relevant when determining whether the system is an ATDS. On March 16, 2018, the U.S. Court of Appeals for the D.C. Circuit vacated the FCC’s potential functionalities test. The Court noted several conflicting views the FCC has taken and had specific concerns that the overbreadth of the Agency’s interpretation could result in the common smartphone being considered an ATDS. Since the D.C. Circuit’s decision, courts have generally only considered current capacities, including capacities that can be easily activated, akin to “flipping a switch.”The FCC clarified in June 2020 that a peer-to-peer texting platform, where each message is initiated by a person, is not an ATDS. The logic of its clarification, that a platform that “is not capable of dialing such numbers without a person actively and affirmatively manually dialing each one” is not an ATDS, would apply to similar voice click-to-dial systems as well. Although not binding on courts, the FCC’s position is very persuasive and aligns with court precedents.
What Is the Definition of an ATDS after the Facebook v. Duguid Ruling? On April 1, 2021, the Supreme Court issued its highly anticipated ATDS ruling Facebook, Inc., v. Noah Duguid, et al. The Supreme Court unanimously held that “To qualify as an automatic telephone dialing system under the Telephone Consumer Protection Act, a device must have the capacity either to store a telephone number using a random or sequential number generator or to produce a telephone number using a random or sequential number generator.”Facebook successfully argued for this narrow definition of an ATDS, that a dialing system must use a random or sequential number generator to store or produce numbers. Duguid’s broader ATDS definition, that an ATDS must only be capable of producing numbers from a stored list, was rejected by the Court. Had the Court followed Duguid’s interpretation, nearly any modern dialing equipment would have been within the definition of the ATDS interpretation. Though it resolved the circuit split over the definition of an ATDS, the Court’s ruling did not tie up all loose ends. Plaintiffs are using ambiguous language in footnote 7 of Facebook and potential flexibility under the term “capacity” to keep many TCPA cases alive. While courts resolve these loose ends, companies using dialer technology should consult with counsel to understand risk mitigation strategies for dialing under this new framework.
Telemarketing or advertising calls made using an ATDS or prerecorded voice (which includes a synthesized voice) to cell phones, or by prerecorded voice to residential lines, require prior express written consent (PEWC). Both the FCC and courts have made it clear that these terms are to be construed broadly and that a sale need not occur during the telephone call for it to be a telemarketing call or a call that introduces an advertisement. Likewise, dual-purpose calls (i.e., calls made for both non-solicitation and solicitation purposes) are considered telemarketing calls under the TCPA. If a call is motivated in part by the desire to achieve a future sale, the call is likely to be deemed a telemarketing call regardless of whether the sale takes place during the initial call, a future call, or a subsequent in-person meeting/transaction.PEWC means an agreement, in writing, bearing the signature of the person called that clearly and conspicuously discloses that the person authorizes the seller to deliver or cause to be delivered telemarketing calls using an automatic telephone dialing system or an artificial or prerecorded voice to a specified telephone number. Furthermore, the person must be informed they are not required to sign the agreement or agree to enter into such an agreement, as a condition of purchasing any property, goods, or services. Although the agreement must be in writing and include the call recipient’s signature, it does not need to be in a particular form or format because the FCC recognized, pursuant to the E-SIGN Act, consent obtained via an “email, Web site form, text message, telephone keypress, or voice recording” is sufficient so long as the other requirements (e.g., mandatory disclosures, identification of the phone number, clear authorization by the person providing consent) are met.
Non-telemarketing calls/texts to cell phones made using an ATDS or prerecorded voice require prior express consent (PEC). The term “prior express consent” is not defined under the TCPA or FCC regulations. However, in 1992, the FCC addressed the issue of PEC in the context of calling wireless numbers by stating: Persons who knowingly release their phone numbers to a caller have in effect given their invitation or permission to be called at the number which they have given, absent instructions to the contrary. […] However, if a caller’s number is “captured” by a caller ID or an ANI device without notice to the residential telephone subscriber, the caller cannot be considered to have given an invitation or permission to receive autodialer or prerecorded voice message calls. The FCC’s broad language in discussing the express consent consumers provide by releasing their telephone numbers is important. The FCC could have limited the scope of the express consent to the specific purpose(s) for which the consumer provided his/her number (e.g., to be contacted when an item is ready to be picked up); however, the only limits placed on this method of obtaining PEC were:1) the call recipient must have provided the number to the business directly or via an intermediary (i.e., capturing it via caller ID or from a third party is not sufficient);2) there is no express consent if the call recipient provided “instructions to the contrary” (i.e., indicated that he/she doesn’t want to be contacted at that number);3) the call must be for “normal business communications;” and4) the call must be closely related to the purpose for which consent was given. As recently as 2015, the FCC reiterated its PEC standard.
The TCPA requires that a caller have PEWC before calling a consumer’s wireless or landline number using a PRM for telemarketing purposes. All telemarketing prerecorded messages must include multiple identity and purpose disclosures, provide a phone number for Do Not Call requests, and an automated interactive voice or key-press-operated opt-out mechanism. Lastly, while the TCPA may not heavily regulate non-telemarketing prerecorded messages beyond ATDS requirements, several states restrict the use of prerecorded messages and automatic dialing and announcing devices.
At least one court has held that systems that deposit a prerecorded voicemail into a consumer’s voicemail box without ringing the consumer’s handset are making calls subject to the TCPA’s consent requirements.
The TCPA requires that a caller have PEWC before calling a consumer’s wireless or landline number using a prerecorded voice for telemarketing purposes. All telemarketing prerecorded messages must include multiple identity and purpose disclosures, provide a phone number for Do Not Call requests, and an automated interactive voice or key-press-operated opt-out mechanism. Lastly, while the TCPA may not heavily regulate non-telemarketing prerecorded messages beyond ATDS requirements, several states restrict the use of prerecorded messages and automatic dialing and announcing devices.
In 2003, the Federal Trade Commission and FCC jointly issued rules that together created the National Do Not Call Registry (DNC Registry). Callers are generally prohibited from calling consumer numbers listed on the DNC Registry for telemarketing purposes. Telemarketers must download and scrub against the DNC Registry at least every 31 days unless an exemption applies. The two exemptions are when the caller has (a) written consent from the consumer, or (b) an Established Business Relationship (EBR) with the consumer. The term EBR includes business relationships where the consumer engaged in a transaction with the seller within the previous 18 months (“Transactional EBR”) or inquired about the seller’s goods/services within the previous 3 months (“Inquiry EBR”). Federal DNC laws do not apply to business-to-business calls (except the sale of nondurable office or cleaning supplies). Individual states may have more restrictive requirements. Businesses that conduct telemarketing must also maintain an internal company-specific DNC list. In fact, no business may initiate any telemarketing call without having “instituted procedures for maintaining a list of persons who request not to receive telemarketing calls made by or on behalf of that [business].” Those procedures must include, at a minimum, a written DNC policy that complies with legal requirements and training of personnel in the use of the DNC list. Although the DNC regulations only require that company-specific DNC requests be honored for 5 years, many companies choose to honor the requests indefinitely for customer service purposes. Calls to consumers that previously made a company-specific DNC request are prohibited even if the seller has an EBR with the consumer or the consumer provided written consent for such calls prior to making a DNC request.
The FCC can seek up to $16,000 per violation ($26,000 per intentional violation), but the greater practical risk of noncompliance comes from private plaintiff class actions. The TCPA permits private individuals who received calls/texts in violation to seek up to $500 per communication ($1,500 for willful or knowing violations) in statutory damages. A cottage industry of professional plaintiffs and class action attorneys has developed in response to the potential for statutory damages. In the past several years, the number of TCPA cases filed in federal courts has increased dramatically and judgments have reached over $925 million.
STIR/SHAKEN is a set of technical standards to facilitate call authentication. At a high level, STIR/SHAKEN allows an originating carrier to cryptographically sign a call with a rating that demonstrates the carrier’s confidence that the person making the call has the right to use the caller ID associated with the call. The terminating carrier can then decrypt the signature and determine how the call should be dispositioned based on the rating. Call authentication is not part of the TCPA, but has been mandated by the TRACED Act and FCC regulations. Over time, STIR/SHAKEN should help call recipients to have more confidence that the caller is calling on behalf of the person or entity shown on their caller ID. For more information on STIR/SHAKEN, please view our webinar and blogs on the topic.
On July 1, 2021, Florida’s amended Do Not Call statute went into effect. The new law requires the called party’s prior express written consent before any person may make a telephonic solicitation call using 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. This definition is much broader than the TCPA’s ATDS definition and may pose challenges for businesses using equipment that is not considered an ATDS under the TCPA. As with the TCPA, the amended Do Not Call law provides a private right of action for actual damages or a $500 penalty per violation (trebled to $1,500 if willful), whichever is greater, plus attorneys’ fees and costs.
Before conducting a calling or texting campaign, seek the advice of skilled TCPA counsel. The TCPA and other state and federal teleservices regulations form a complicated structure that requires specific knowledge and business acumen to successfully navigate.* Note: This article is intended to provide a general overview of a topic area and is not legal advice. Still, have questions about the TCPA? We can help! Contact us at compliance@mslawgroup.com or 614.939.9955.
Unless you have provided prior express consent to be contacted, the Telephone Consumer Protection Act generally prohibits the following - even if you’ve established a business relationship with the company:
• Calls placed to residences before 8 am or after 9 pm, local time.
• Calling consumers who specifically asked the company not to call them (companies must maintain and honor an internal “do-not-call” list for 5 years).
• Calling consumers placed on the National Do Not Call Registry.
• Failing to identify the person or entity on whose behalf the call is being made and providing a telephone number or address at which that person or entity may be contacted.
• Using an artificial voice or a recorded message.
• Using an automated dialing machine to place the call.
• Sending unsolicited advertising faxes.
A robocall is any phone call made using an automatic dialing system (equipment or computer software that dials phone numbers without human intervention) or that contains a pre-recorded message or artificial voice.
Even if a live person is on the line, the call may have been made using an autodialer. You can often tell if you notice a period of “dead air” before the live person comes on the line.
Robocalls have been frequently used for automated marketing, as seen in the number of companies that have been hit with lawsuits after being faced with allegations of using robocalls to promote their services, with fines of up to $16,000 per call made.
The Federal Communications Commission (FCC), which enforces the Telephone Consumer Protection Act, has interpreted robocalls to include SMS text messages and ringless voice messages directed at cell phone voice mailboxes.
There are certain calls that are not subject to the rules of the TCPA. This list includes calls that are made from tax-exempt non-profit companies, political groups, calls made with a non-commercial intent or calls that do not include any unsolicited promotion.
For a company to legally place a robocall, it must first have “prior express consent.” Under old TCPA rules, the FCC interpreted this to include oral approval or implied approval to receive calls, such as by providing your phone number to the company when purchasing a product or service.
However, this “established business relationship” exemption no longer applies. The FCC’s interpretation of prior express consent now requires a signed, written agreement, specifically agreeing to receive telemarketing calls or text messages via an auto-dialer and/or pre-recorded voice. This rule does not apply to debt collection calls or texts unless they contain any sort of advertisement or marketing material.
Individuals and/or companies engaged in any aspect of telemarketing or robocalling activities are subject to a host of highly detailed and complex federal and state laws and regulations governing such activities. Federal regulation of these activities is generally overseen by both the Federal Communications Commission (FCC) and the Federal Trade Commission (FTC). Each of these agencies maintains and enforces detailed rules on telemarketing and robocalling activities.
Parties engaged in these activities could also be subject to increasing federal enforcement actions by the FCC, the FTC, as well as the Department of Justice (DOJ). Federal and state enforcement authorities have held voice providers accountable for illegal robocalling and telemarketing activities enable through their networks in some circumstances, including when they originate, or otherwise have “assisted and facilitated” in the generation of, such calls. Federal enforcement actions have ranged from citations and fines to business shutdowns and – in some instances – imprisonment.
The following summary is provided as a general overview of relevant laws and associated enforcement actions. This information does not constitute legal advice, is not exhaustive and does not include state-specific rules. Individuals and/or companies engaged in any aspect of robocalling activities, therefore are strongly advised to consult with an attorney who is well-versed in the many complexities and nuances associated with these laws and regulations.
· Authorizes Network-Blocking of Bad-Actor Voice Providers
· Examples of Threatened Network Blocking of Bad-Actor Voice Providers
· Overview of TCPA
· Key TCPA Requirements
· Examples of FCC Enforcement Actions Under TCPA
· Overview of Truth in Caller ID Act
· Key Truth in Caller ID Requirements
· Examples of FCC Enforcement Actions Under Truth in Caller ID Act
· Overview of TSR
· Key TSR Requirements
· Examples of FTC Enforcement Actions Under TSR
· Overview of Wire Fraud Statute
· Examples of DOJ Criminal Enforcement Actions Under the Wire Fraud Statute
· Examples of DOJ Civil Enforcement Actions Under the Wire Fraud Statute
· Examples of FCC Civil Enforcement Actions Under the Wire Fraud Statute
Authority for Network-Blocking of Bad-Actor Voice Providers
Regulated and Enforced by: FCC, Downstream Voice Providers
In July 2020, the FCC clarified that voice service providers may block calls from certain bad- actor upstream voice service providers and established a safe harbor from liability for such blocking. The FCC concluded that the safe harbor would incentivize upstream voice service providers to better police their networks by raising the cost of passing along bad traffic. A voice service provider may block calls from an upstream voice service provider that, when notified that it is carrying bad traffic by the FCC, fails to effectively mitigate such traffic or fails to implement effective measures to prevent new and renewing customers from using its network to originate illegal calls. The notification from the FCC will be based on information obtained through traceback, likely in coordination with the Industry Traceback Group as the official Registered Traceback Consortium.
§ April 3, 2020, Letter from FCC and FTC, to Connexum. The joint letters advised the company that, if after 48 hours of receipt of the letter, the company continued to route or transmit harmful robocall traffic, the FCC would authorize other U.S. voice providers to block all calls from Connexum. The company was also advised that the FCC would “take any other steps as needed to prevent further transmission of unlawful calls from Connexum, and [would] evaluate whether further action is appropriate in connection with your activity.”
§ May 20, 2020, Letter from FCC and FTC, to PTGi International Carriers Services, Inc. The joint letters advised the company that, if after 48 hours of receipt of the letter, the company continued to route or transmit harmful robocall traffic, the FCC would authorize other U.S. voice providers to block all calls from PTGi. The company was also advised that the FCC would “take any other steps as needed to prevent further transmission of unlawful calls from PTGi, and [would] evaluate whether further action is appropriate in connection with your activity.”
Telephone Consumer Protection Act of 1991 (TCPA) Relevant Citations: 47 USC § 227; 47 CFR § 64.1200 Regulated and Enforced by: FCC, Private Lawsuits
In an effort to address a growing number of telephone marketing calls, Congress enacted the Telephone Consumer Protection Act (TCPA) in 1991. The TCPA restricts the use of automatic telephone dialing systems (i.e., “autodialers”) and artificial or prerecorded voice messages in the making of telephone calls. In 1992, the FCC adopted rules to implement the TCPA, including the requirement that entities making telephone solicitations institute procedures for maintaining company-specific do-not-call lists.
In 2003, the FCC revised its TCPA rules to establish, in coordination with the Federal Trade Commission (FTC), a national Do-Not-Call registry. The national registry is nationwide in scope,
covers all telemarketers (with the exception of certain nonprofit organizations), and applies to both interstate and intrastate calls. The registry went into effect on October 1, 2003, and is administered by the FTC. The FCC’s website includes additional information and guidance on its regulation and enforcement of the TCPA.
§ 47 USC 227(b); 47 CFR § 64.1200(a). Restrictions on Use of Automated Telephone Equipment.
o Without prior express consent or in the case of an emergency, no person or entity may initiate a telephone call using an autodialer or an artificial or prerecorded voice:
§ To any emergency telephone line, including any 911 line and any emergency line of a hospital, medical physician or service office, health care facility, poison control center, or fire protection or law enforcement agency. See 47 USC § 227(1)(A)(i); 47 CFR § 64.1200(a)(1)(i).
§ To any telephone number assigned to a paging service, cellular telephone service, specialized mobile radio service, or other radio common carrier service, or any service for which the called party is charged for the call. See 47 USC § 227(1)(A)(iii); 47 CFR § 64.1200(a)(1)(iii).
o Without prior express written consent, no person or entity may initiate a telephone call to any residential line using an artificial or prerecorded voice to deliver a message, unless the call meets one of five conditions (e.g., is made for emergency purposes, is not made for commercial purposes). See 47 CFR § 64.1200(a)(3).
o No person or entity may disconnect an unanswered telemarketing call prior to at least 15 seconds or four (4) rings. See 47 CFR § 64.1200(a)(6).
§ 47 CFR § 64.1200(b). Prerecorded Message Requirements. All artificial or prerecorded voice telephone messages must:
o At the beginning of the message, state clearly the identity of the business, individual, or other entity that is responsible for initiating the call. If a business is responsible for initiating the call, the name under which the entity is registered to conduct business with the State Corporation Commission (or comparable regulatory authority) must be stated. See 47 CFR § 64.1200(b)(1).
o During or after the message, state clearly the telephone number (other than that of the autodailer or prerecorded message player that placed the call) of such business, other entity, or individual. The telephone number provided may not be a 900 number or any other number for which charges exceed local or long distance transmission charges. See 47 CFR § 64.1200(b)(2).
o If they include or introduce an advertisement or constitute telemarketing to a residential or cellular line, provide an automated, interactive opt-out mechanism. When the message is left on an answering machine or a voice mail service, it must include a toll free number that enables the called person to call back and connect directly to the automated, interacted opt-out mechanism. See 47 CFR § 64.1200(b)(3).
§ 47 CFR § 64.1200(c). Further Restrictions on Telephone Solicitations. No person or entity may initiate a telephone solicitation to:
o Any residential telephone subscriber before the hour of 8 a.m. or after 9 p.m. (local time at the called party's location). See 47 CFR § 64.1200(c)(1).
o A residential telephone subscriber who has registered his or her telephone number on the national do-not-call registry of persons who do not wish to receive telephone solicitations that is maintained by the Federal Government, unless certain conditions are met. See 47 CFR § 64.1200(c)(2).
§ ="https://www.fcc.gov/document/fcc-proposes-fine-against-campaign-consultant-spoofed-robocalls" >Kenneth Moser dba Marketing Support Systems. The FCC’s Enforcement Bureau issued a citation to Kenneth Moser after concluding that he sent more than 11,000 prerecorded voice messages to wireless phones, without consent, in violation of the TCPA. The Enforcement Bureau found that Moser also violated the TCPA’s requirement that prerecorded messages include the phone number and identity of the entity responsible for initiating the call. The citation accompanied a Notice of Apparent Liability proposing a $10 million fine against Moser for actions related to the calls.
§ <a href="https://www.fcc.gov/document/fcc-cites-call-em-all-robocalls-cell-phones"> Call-Em-All, LLC. The FCC’s Enforcement Bureau issued a citation to Call-Em-All, LLC for violating the TCPA’s rules that prohibit making calls to cell phones using autodialers or artificial or prerecorded messages absent an emergency purpose or prior express consent. The citation noted that if the company failed to comply with the TCPA, it could be liable for significant penalties, including fines of up to $16,000 per call.</a>
§ <a href="https://www.fcc.gov/document/fcc-issues-citation-manasseh-jordan-robocalls-cell-phones"> Yakim Jordan a/k/a Manasseh Jordan, et. al. The FCC’s Enforcement Bureau issued a citation to Yakim Jordan (a/k/a Manasseh Jordan and Manasseh Jordan Ministries) for violating the TCPA’s rules that prohibit making calls to cell phones using autodialers or artificial or prerecorded messages absent an emergency purpose or prior express consent.</a>
Truth in Caller ID Act of 2009
In order to address the growing problem of caller ID spoofing done for fraudulent or harmful purposes, Congress enacted the Truth in Caller ID Act in 2009. The Act makes it “unlawful for any person within the United States, in connection with any telecommunications service or IP- enabled voice service, to cause any caller identification service to knowingly transmit misleading or inaccurate caller identification information with the intent to defraud, cause harm, or wrongfully obtain anything of value.”
Under the Truth in Caller ID Act, FCC rules prohibit anyone from transmitting misleading or inaccurate caller ID information with the intent to defraud, cause harm or wrongly obtain anything of value. Anyone who is illegally spoofing can face penalties of up to $10,000 for each violation. Although there are legitimate, legal uses for spoofing, the FCC has aggressively
enforced the Truth in Caller ID Act on many occasions. In fact, the FCC’s largest fine in its history was based on violations of the Truth in Caller ID Act. The FCC’s website includes additional information and guidance on its regulation and enforcement of the Truth in Caller ID Act.
§ 47 CFR § 64.1604(a). Prohibition on Transmission of Inaccurate or Misleading Caller ID. Information. No person or entity in the United States, nor any person or entity outside the United States if the recipient is within the United States, may with the intent to defraud, cause harm, or wrongfully obtain anything of value, knowingly cause, directly, or indirectly, any caller identification service to transmit or display misleading or inaccurate caller identification information in connection with any voice service or text messaging service.
§ 47 CFR § 64.1601(a). Caller ID Required. Any person or entity that engages in telemarketing must transmit caller identification information.
§ John C. Spiller; Jakob A. Mears; Rising Eagle Capital Group, LLC, et al. The FCC proposed a $225 million fine against Texas-based health insurance telemarketers for allegedly making approximately 1 billion illegally spoofed robocalls in apparent violation of the Truth in Caller ID Act. This is the largest proposed fine in the FCC’s 86-year history. Rising Eagle allegedly made approximately 1 billion spoofed robocalls across the country during the first four-and-a-half months of 2019 on behalf of clients that sell short-term, limited-duration health insurance plans. Mr. Spiller admitted that he knowingly called consumers on the FTC’s Do Not Call list as he believed that it was more profitable to target these consumers. He also admitted that he made millions of calls per day, and that he was using spoofed numbers.
§ Adrian Abramovich, Marketing Strategy Leaders, Inc. et. al. The FCC fined Adrian Abramovich $120 million for malicious spoofing that was part of a massive robocalling operation aimed at selling timeshares and other travel packages. The caller ID spoofing operation made almost 100 million spoofed robocalls over three months, in violation of the Truth in Caller ID Act.
§ Philip Roesel, dba Wilmington Insurance Quotes, et. al. The FCC fined telemarketer Philip Roesel and his companies more than $82 million for illegal caller ID spoofing. Using spoofed caller ID information, Roesel made more than 21 million robocalls to market health insurance, and to generate leads for such sales, in violation of the Truth in Caller ID Act.
The Telemarketing Sales Rule (TSR)
Regulated and Enforced by: FTC
The FTC’s Telemarketing Sales Rule (TSR) has been in effect since December 31, 1995. The underlying statutory authority for the TSR is the Telemarketing and Consumer Fraud and Abuse
Prevention Act (TCFPA), which gave the FTC and state attorneys general law enforcement tools to combat telemarketing fraud.
Companies violating the TSR could be subject to fines of up to $11,000 per violation. The FTC defines telemarketing as any “plan, program, or campaign . . . to induce the purchase of goods or services or a charitable contribution” involving more than one interstate telephone call. With some important exceptions, any businesses or individuals that take part in “telemarketing” must comply with the TSR. This is true whether, as “telemarketers,” they initiate or receive phone calls to or from consumers, or as “sellers,” they provide, offer to provide, or arrange to provide goods or services to consumers in exchange for payment.
The FTC also has focused on Voice over Internet Protocol (VoIP) providers. Specifically, the FTC has sent letters to VoIP service providers warning them that “assisting and facilitating” illegal telemarketing or robocalls could constitute a violation of the TSR and noting that the FTC successfully sued a VoIP service provider for TSR violations.
The do not call provisions of the TSR cover any plan, program or campaign to sell goods or services through interstate phone calls. This includes calls by telemarketers who solicit consumers, often on behalf of third-party sellers. It also includes sellers who provide, offer to provide, or arrange to provide goods or services to consumers in return for some type of payment as part of a telemarketing transaction.
The TSR requires telemarketers to make specific disclosures of material information; prohibits misrepresentations; sets limits on the times telemarketers may call consumers; prohibits calls to a consumer who has asked not to be called again; and sets payment restrictions for the sale of certain goods and services.
The FTC’s website includes additional information and guidance on its regulation and enforcement of the TSR.
§ 16 CFR § 310.3. Deceptive Telemarketing Acts or Practices. Sellers and telemarketers are prohibited from:
o Failing to disclose the total costs to purchase, receive, or use, and the quantity of, any goods or services that are the subject of the sales offer. 16 CFR § 310.3(a)(1)(i).
o Failing to disclose all material costs or conditions to receive or redeem a prize that is the subject of the prize promotion. 16 CFR § 310.3(a)(1)(v).
§ 16 CFR § 310.4. Abusive Telemarketing Acts or Practices. Sellers and Telemarketers are prohibited from:
o Causing any telephone to ring, or engaging any person in telephone conversation, repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number. 16 CFR § 310.4(b)(1)(i).
o Initiating any outbound telephone call to a person when that person previously has stated that he or she does not wish to receive an outbound telephone call made by or on behalf of the seller whose goods or services are being offered or made on behalf of the charitable organization for which a charitable contribution is being solicited. 16 CFR § 310.4(b)(1)(iii)(A).
o Abandoning any outbound telephone call. An outbound telephone call is “abandoned” under this section if a person answers it and the telemarketer does not connect the call to a sales representative within two (2) seconds of the person's completed greeting. 16 CFR § 310.4(b)(1)(iv).
§ href="https://www.ftc.gov/enforcement/cases-proceedings/192-3033/educare-centre-services-inc" >FTC v. Educare Centre Services; Globex Telecom, Inc. The FTC and Ohio Attorney General entered into a $2.1 million settlement with VoIP service provider Globex and its associates, settling allegations that Globex provided a company called Educare with the means to deliver illegal robocalls pitching bogus credit card interest rate reduction services to consumers. The FTC and Ohio Attorney General argued that Globex assisted and facilitated Educare’s underlying scheme, in violation of the TSR and Ohio law. The settlement was the FTC’s first consumer protection case against a VoIP provider.
§ FTC v. James Christiano. In June 2018, the FTC filed a complaint seeking to stop two related operations and their principals who facilitated billions of illegal robocalls to consumers nationwide, pitching everything from auto warranties to home security systems and supposed debt-relief services. According to the complaint, James “Jamie” Christiano and the companies he controls operated “TelWeb,” a computer-based telephone dialing platform that can be used to blast out a large volume of telephone calls‒‒especially robocalls‒‒in a short time. The FTC alleged that, through TelWeb,
Jones’s operation bombarded consumers with more than one billion illegal robocalls annually. The FTC charges were settled with a $1.35 million judgment.
§ FTC vs. Aaron Michael Jones. The FTC’s complaint charged nine individuals and 10 corporate entities with operating robocalling enterprises allegedly controlled by Mike Jones. According to the FTC’s complaint, between at least March 2009 and May 2016, the defendants made or helped to make billions of robocalls, many of which sold extended auto warranties, search engine optimization services, and home security systems, or generated leads for companies selling those goods and services. Many of those calls were to numbers on the FTC’s DNC Registry. A court approved a $2.7 million penalty against Jones.
§ FTC v. Pointbreak Media, LLC. In May 2018, the FTC alleged that this Florida-based scheme deceived small business owners by falsely claiming to represent Google, falsely threatening businesses with removal from Google search results, falsely claiming that they could associate keywords with these businesses, and falsely promising first-place or first-page placement in Google search results. The defendants ultimately had to pay over $3.3 million.
The Wire Fraud Statute
Enforced by: DOJ and FCC
Under Section 1343 of Title 18, Crimes and Criminal Procedure of the U.S. Code, there are two elements to a wire fraud violation: (1) a scheme to defraud, and (2) the use of an interstate wire or radio communication to further the scheme. The statute addresses fraudulent conduct that may also come within the reach of other federal criminal and/or civil statutes and includes both civil and criminal provisions. In the criminal context, crimes are punishable by imprisonment for not more than 20 years; for not more than 30 years, if the victim is a financial institution or the offense is committed in the context of major disaster or emergency. The DOJ’s Criminal Resource Manual details the elements of wire fraud.
Section 503(b)(1)(D) of the Communications Act also allows the FCC to pursue a forfeiture penalty against any person who has violated the federal wire fraud statute.
§ United States v. Andrew Smith, et. al. The DOJ secured convictions against two individuals who were sentenced to 25 and 20 years in prison for their roles in a $10 million telemarketing scheme that defrauded primarily elderly victims in the United States from call centers in Costa Rica. Andrew Smith and Christopher Lee Griffin were convicted of one count of conspiracy to commit wire fraud, eight counts of wire fraud, one count of conspiracy to commit money laundering and seven counts of international money laundering. The court also ordered Smith to pay $10,222,838.76 in restitution to be paid jointly and severally with his co-conspirators and forfeit $406,324.96. Griffin was ordered to pay $9,612,590.39 in restitution to be paid jointly and severally with his co-conspirators and forfeit $182,439.
§ United States v. HGlobal, Sunny M. Joshi, et. al. The DOJ secured convictions against twenty-one members of a massive India-based fraud and money laundering conspiracy that defrauded thousands of U.S. residents of hundreds of millions of dollars. Among the many charges were conspiracy to commit wire fraud, and the criminals were eventually sentenced to terms of imprisonment up to 20 years. The original indictment charged a total of 61 individuals and entities for their alleged involvement in the scheme.
§ United States v. Nicholas Palumbo, TollFreeDeals, et. al. The DOJ alleged that VoIP provider TollFreeDeals was warned numerous times that it was carrying fraudulent robocalls and yet continued to do so. Numerous foreign-based criminal organizations were alleged to have used the defendants’ VoIP carrier services to pass fraudulent government- and business-imposter fraud robocalls to American victims. The complaint specifically charged the defendants with wire fraud, and alleged that the company served as a “gateway carrier,” making it the entry point for foreign-initiated calls into the U.S. telecommunications system. In securing a preliminary injunction, the court agreed with DOJ “that ‘multiple individual victims in the United States suffered
significant fraud losses,’ and that ‘[e]very day that the defendants’ actions in this vein continue, the public is at risk of harm in the form of additional high-dollar fraud losses.’”
§ United States v. Jon Kahem, Global Voicecom, Inc., et. al. In a similar complaint against a different VoIP provider, the DOJ eventually secured a consent decree that permanently barred the defendants from, among other things, using the U.S. telephone system to: deliver prerecorded messages through automatic means, carry calls to the United States from foreign locations, and provide calling and toll-free services for calls originating in the United States. In addition, the defendants were permanently barred from serving as employees, agents, or consultants to any person or entity engaged in these activities.
§ f="https://www.fcc.gov/document/fcc-fines-massive-neighbor-spoofing-robocall-operation-120-million" >Adrian Abramovich, Marketing Strategy Leaders, Inc. et. al. In addition, to fining Adrian Abramovich $120 million for malicious spoofing that was part of a massive robocalling operation, the FCC also determined that he violated the wire fraud statute. In determining the total fine, the FCC took into account that Abramovich’s violation of the wire fraud statute demonstrated the “egregiousness of [his] violations, the consumers he harmed, and the scale and scope of his illegal activities.”
In August of 2019, 51 attorneys general and 12 telecommunications providers agreed to certain principles to fight illegal robocalls. The purpose of this effort was to help protect phone users from illegal robocalls and to make it easier for attorneys general to investigate and prosecute violators.
The principles address the robocall problem in two main ways: prevention and enforcement. For voice service providers, including VoIP providers, the principles recommend that such companies:
§ Monitor their networks for robocall traffic;
§ Know who their customers are so bad actors can be identified and investigated;
§ Investigate and take action against suspicious callers – including notifying law enforcement and state attorneys general;
§ Work with law enforcement, including state attorneys general, to trace the origins of illegal robocalls; and
§ Require telephone companies with which they contract to cooperate in traceback investigations.
A copy of the principles can be accessed here.
The law implements new consumer protections, gives more teeth to law enforcement efforts and takes other steps to combat unwanted robocalls.
President Trump signed the TRACED Act, the first federal law designed to curb unwanted robocalls. With the problem of robocalls running rampant, the legislation passed with strong support in both the Democratic-led House and the Republican-led Senate.
The legislation takes on the problem from multiple fronts. First, it gives the Federal Communications Commission (FCC) more authority to go after the scammers responsible for unwanted robocalls. It allows the FCC to go after scammers the first time they break the law and extends the statute of limitations by up to four years in some cases. It also ups the financial penalties against robocallers.
Additionally, it encourages stronger Justice Department criminal prosecution of unlawful robocalls by requiring the FCC to provide the DOJ with evidence of criminal robocall violations.
Next, the law requires all carriers to eventually implement new technologies to authenticate caller-ID information, preventing call spoofing -- at no additional line-item cost to consumers. As Congress notes in its summary of the law, many illegal robocalls use call spoofing so the call appears to be coming from a trusted number.
The FCC is already planning to mandate that carriers implement its SHAKEN/STIR authentication system to help combat robocalls. In March, AT&T and Comcast announced that they successfully tested the first SHAKEN/STIR-authenticated call between two different telecom networks.
Meanwhile, the law additionally says consumers should also get access to robocall blocking at no additional line item charge on their bill.
The law also requires the FCC to put new limits on robocalls that are legal, even without consumer consent -- such as calls from financial institutions regarding potentially fraudulent transactions. Specifically, the law calls for new limits on the kinds of organizations that may make such calls, who can receive such calls and the number of calls allowed under the exemption.
The TRACE Act also clarifies that when a person gets a new phone number, robocallers cannot keep calling to look for the person previously had that number.
It also requires the FCC to work to stop one-ring scams and helps the FCC and carriers trace back the origin of unlawful robocalls.
The law passed in the House earlier this month by a vote of 417 to 3, and it passed in the Senate by voice vote.
During the legislative debate, Congress put out a white paper with data on the extent of the robocall problem: In 2018, there were an estimated 48 billion robocalls, up over 64 percent since 2016, according to YouMail. Meanwhile, First Orion predicts that this year 44.6 percent of all calls to mobile phones will be scam calls.
In a statement, the cloud communications company Twilio said the legislation should have a notable impact: "The law will aid efforts among law enforcement authorities, government agencies and the communications industry to stop the bad calls and restore consumers' faith that they will receive the calls they want. With its strong emphasis on the implementation of the SHAKEN/STIR protocol and consumer protection efforts, we expect to see a dramatic change in the robocall landscape in the next 12 to 18 months."
Prohibition on the knowing transmission of misleading or inaccurate caller ID information, 'with the intent to defraud cause harm, or wrongfully obtain anything of value.' Prohibits 'spoofing' of caller IDs.
Telemarketers must consult the National Do Not Call Registry before calling, and not call those who are listed, unless exempt.
Prohibits deceptive and abusive telemarketing acts or practices.
Protect Your Business from AI-Powered Telephone Fraud.
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