Tag Archive | "tcpa"

No TCPA Vicarious Liability Without Ratification

The Ninth Circuit has ruled that payday lenders and two marketing companies were not liable under the Telephone Consumer Protection Act by virtue of working with a lead generator that utilized automated dialing equipment to disseminate text messages.

Here, the lender had separate agreements with a marketing company (LeadPile) that purchased/sold leads from a third-party marketing company (Click Media).  Click Media, in turn, acquired leads from a publisher, AC Referral.

The plaintiff filed a class action against the lenders, LeadPile and Click Media, alleging that they were vicariously liable for AC Referral’s alleged TCPA violations because they ratified such conduct.

Importantly, while Click Media and AC Referral had a contract, the lenders and LeadPile did not and represented that they did not even know who AC Referral was.  Click Media asserted that it was unaware of AC Referral’s alleged TCPA violations.

While recognizing that vicarious liability exists in TCPA matters, it determined that the plaintiff did not allege all of the necessary elements and that there was no issue of fact with respect to ratification of AC Referral’s telemarketing activities, notwithstanding defendants’ acceptance of benefits and failure to vet compliance.

“It is undisputed that AC Referral did not enter into a contract with any of the lenders or with LeadPile,” the court held.  “It is also undisputed that AC Referral did not communicate with or even know of the lenders or LeadPile before the lawsuit was filed.  Because AC Referral was neither an agent nor a purported agent of the lenders or LeadPile, AC Referral’s actions do not qualify as ratifiable acts.  Accordingly, the lenders and LeadPile cannot be held vicariously liable for AC Referral’s unlawful text messages under a ratification theory.”

With respect to Click Media, the court ruled that despite their contractual relationship, “[a]lthough AC Referral was an agent of Click Media, [plaintiff] presented no evidence that Click Media had actual knowledge that AC Referral was sending text messages in violation of TCPA.”  “Nor is there any basis to infer that Click Media assumed the risk of lack of knowledge, because [plaintiff] did not present evidence that Click Media ‘had knowledge of facts that would have led a reasonable person to investigate further,’ but ratified AC Referral’s acts anyway without investigation.”

“The knowledge that an agent is engaged in an otherwise commonplace marketing activity is not the sort of red flag that would lead a reasonable person to investigate whether the agent was engaging in unlawful activities,” the court said.  “Because Click Media had no ‘knowledge of facts that would have led a reasonable person to investigate further,’ Click Media cannot be deemed to have ratified AC Referral’s actions and therefore is not vicariously liable.”

Click here, to read the full opinion.

Contact the author if you are interested in learning more about the design and implementation of compliant lead generation protocols, or if you are the subject of a state or federal regulatory investigation.

Richard B. Newman is an Internet marketing compliance and regulatory defense attorney at Hinch Newman LLP focusing on advertising and digital media matters. His practice includes conducting legal compliance reviews of advertising campaigns, representing clients in investigations and enforcement actions brought by the Federal Trade Commission and state Attorneys General, commercial litigation, advising clients on promotional marketing programs, and negotiating and drafting legal agreements. You can find him on Twitter at FTC Defense Attorney.

 

ADVERTISING MATERIAL. These materials are provided for informational purposes only and are not to be considered legal advice, nor do they create a lawyer-client relationship. No person should act or rely on any information in this article without seeking the advice of an attorney. Information on previous case results does not guarantee a similar future result. Hinch Newman LLP | 40 Wall St., 35thFloor, New York, NY 10005 | (212) 756-8777.

 

 

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Changes to TCPA Related-Issues Likely Under Next Chairman of FCC

On January 23, 2017, President Trump appointed Commissioner Ajit Pai to serve as the next chairman of the Federal Communications Commission.  Pai was appointed to the FCC in 2012 and has vehemently criticized the FCC on TCPA rulings and orders.  Many believe that his appointment will result in significant changes to the FCC’s position on related issues and, consequently, relief to the telemarketing marketing industry.

Notable was Pai’s dissent in the FCC’s 2015 TCPA omnibus Declaratory Ruling and Order.

The Declaratory Ruling addressed several key issues, including an extremely broad interpretation of “automatic telephone dialing system.”  Of course, the expansive interpretation and lack of specific guidance remain a legitimate concern for all those that utilize an automated system to place telephone calls and transmit text messages.

An autodialer is system with the capacity to make calls without human intervention.  The degree of human intervention analysis is fact specific and made on a case-by-case basis.

The Declaratory Ruling states that all predictive dialers – however named – constitute autodialers under the TCPA, given their “capacity” to autodial, and are “not limited to any specific piece of equipment and [are] without regard to the name given the equipment for “marketing purposes.”

Additionally, pursuant to the Declaratory Ruling, any dialing equipment that “has the capacity to store or produce, and dial random or sequential numbers” or to call from a list of phone numbers is an automatic telephone dialing system, even if calls are not presently being made using autodialing functions.  In other words, according to the Declaratory Ruling, if a system could be enabled to autodial via the implementation of software, then it is potentially an autodialer.

Despite the foregoing, not all dialers with the capacity to autodial are necessarily covered.

In his dissent, Pai held that the majority’s interpretation of the term automatic telephone dialing system “transforms the TCPA from a statutory rifle-shot targeting specific companies that market their services through automated random or sequential dialing into an unpredictable shotgun blast covering virtually all communications devices.”

Opining on other issues addressed by the Declaratory Ruling, Pai called attention to what he considered to be “perverse incentives” for “litigious individuals” and their “trial lawyers.”

The Declaratory Ruling has been appealed and is currently pending in the D.C. Circuit Court of Appeal.  Depending upon the ruling and given Pai’s recent appointment, it is not inconceivable that he will strive to soften the Declaratory Ruling to “shut down the abusive lawsuits by closing the legal loopholes that trial lawyers have exploited to target legitimate communications between businesses and consumers.”

Contact an FTC defense lawyer if you would like to discuss the design and implementation of compliant telemarketing campaigns, or how Pai’s appointment might impact entities that  communicate with prospects via telephone and/or text message.

Richard B. Newman is an Internet marketing compliance and regulatory defense attorney at Hinch Newman LLP focusing on advertising and digital media matters. His practice includes conducting legal compliance reviews of advertising campaigns, representing clients in investigations and enforcement actions brought by the Federal Trade Commission and state attorneys general, commercial litigation, advising clients on eCommerce guidelines and promotional marketing programs, and negotiating and drafting legal agreements.

HINCH NEWMAN LLP. ADVERTISING MATERIAL. These materials are provided for informational purposes only and are not to be considered legal advice, nor do they create a lawyer-client relationship. No person should act or rely on any information in this article without seeking the advice of an attorney. Information on previous case results does not guarantee a similar future result.

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