Telemarketing: Calling Customers Leads to Multi-Million Dollar Damage Payments

Most of us are familiar with the National Do-Not-Call List and appreciate the resulting decline in the frequency of robo-calls interrupting family dinner. What you may not realize is that the same federal laws that implemented these protections have also formed the basis for multi-million dollar lawsuits against businesses calling their own customers.

Since 2012, a dozen companies have agreed to pay in excess of $200,000,000 to settle lawsuits brought under the federal Telephone Consumer Protection Act (TCPA). This includes a $32,000,000 settlement by a US-based Fortune 100 bank to resolve complaints that calls to cell phones violated the TCPA. The number of telemarketing related cases has increased by nearly 70% in the past year, with many of these cases brought as class actions.

The TCPA and the federal Telemarketing and Consumer Fraud and Abuse Prevention Act (TCFAP) impose significant restrictions and requirements on telephone calls made to consumers, with heightened standards for calls to cell phones. Every call, text or fax that violates the TCPA can result in damages of $500 to $1,500, and there is no limit to the number of violations that can be included in an individual suit. Violations of the TCFAP may result in fines of up to $16,000 per violation.

While these laws have been on the books for decades, the litigation floodgates opened in 2012 when the U.S. Supreme Court ruled that lawsuits under the TCPA could be brought in federal court. Exposure also exists from regulatory action, as the FCC, the FTC and state attorneys general may enforce telemarketing laws and regulations.

Much of the litigation has arisen from the failure to obtain the consumer’s consent to place auto-dialed and prerecorded calls that promote the purchase of goods or services. Simply providing a phone number as a means of contact typically would not be sufficient to qualify as consent. In fact, with the exception of healthcare calls that are subject to HIPAA, the specific, detailed written consent of the consumer is required in order to place such calls.

Beyond consent requirements, legal liability for violating the telemarketing laws may arise from failure to comply with a myriad of other requirement and restrictions. Note that these do not apply solely to prerecorded and autodialed calls, but also apply to live and manually dialed “telemarketing calls.” Telemarketing calls generally include any call made to promote the purchase of goods or services. Examples of these requirements include the following:

Unless an established business relationship exists, telemarketing calls may not be made to any number listed on the National Do-Not-Call List.

Even if an established business relationship exists, you may not contact consumers if they have indicated that they do not wish to receive telemarketing calls.

Your company must document every request not to receive telemarketing calls, and create your own internal “do-not-call list.” No calls may be made for five years to numbers on the internal list and employees must be trained on the operation and implementation of this list. You may also be required to offer an automated mechanism for consumers to be added to your internal do-not-call list.

Specific disclosures must be made during the course of a telemarketing call. The required disclosures vary based on the nature of the call.

Additional requirements pertaining to record-keeping, call abandonment, calling time and caller identification apply to telemarketing calls.

Many companies will outsource their calling campaigns to telemarketing companies. However, be careful in evaluating compliance by your telemarketing subcontractor. You are legally liable under the telemarketing laws for their actions.

Finally, incoming calls to your business may also be subject to the telemarketing laws. For example, incoming calls made in response to a prize promotion, or calls made in response to certain letters or e-mails that fail to include required disclosures, may trigger telemarketing compliance obligations.

This article was written by the Firm’s John Darrow. Mr. Darrow is a corporate partner with a concentration in Healthcare Law. He can be reached at 312/840-7003 or jdarrow@burkelaw.com.