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good afternoon my name is Joey liner chair of the leaf council and also a chief revenue officer of digital media solutions on behalf of leaf council the executive director Rob Seaver and the entire board of directors I want to welcome you all to today's webinar generating leads legally brought to you by Leeds Council and the law firm Venable LLP lead counsel mission is to maintain a trusted association of vendors buyers and sellers adhering to industry best practices we promote and protect the growth and performance marketing through establishing and managing the ethical standards and guidelines regarding online performance marketing through self-regulation education and government association advocacy lobbying on behalf of those members please feel free to check out more at our website Leeds councils org or follow us on Twitter and the lead counsel Venable is a nationwide law firm that provides legal counsel to legal counsel the lead counsel and many other advertisers and marketers throughout its Austin Washington Newark la San Francisco and my hometown Baltimore Maryland at least con we had a great set of sessions as buyers and sellers summit including a regulatory fireside chat with the head of the FTC Bureau consumer protection and today's session cover that and a lot more I know this Dan blend D Freeland Alex McGarrett and Jonathon pomp in have a lot of experience and insights to share I'm now going to turn it over to my good friend Jonathan let you take it from here thanks Joey and I would like to thank the Leeds Council for helping us support this webinar today today's webinar is generating leads legally regulatory and litigation quick hits and before we get started just a couple housekeeping notes we will take questions from the audience so if anyone has questions throughout please feel free to use the interface on your screen and today's session is also for CLE continuing legal accreditation for those of you who are attorneys and seeking CLE credit you'll receive an email after today's session about an hour an hour today later with forms to fill out and appropriate information we will also provide a verbal code at the end of today's session for silly credit and of course today's session is just a summary of the issues it doesn't represent the opinions of venable law firm Leeds Council or our clients and is merely for educational purposes and so today I am joined by my colleagues and partners and Lyn Steve Freeland and Alex McGarrett all of whom work with advertising and marketers in lead generation and related matters both from a defensive standpoint and government investigations and enforcement matters the compliance matters and of course the tag team of Steve and Dan work closely on defending class action and private lawsuits particularly in the telemarketing and TCPA area whether you're at generating leads um or purchasing leads the Federal Trade Commission plays a significant role in regulating advertising and marketing practices and it's evolving or in the lead generation space and its focus on lead generation ever since a workshop and even before that on lead generation in 2016 has been a extreme focus or enforcement and really regulation through enforcement as well as education activities that they've done to the business sector and also through to consumers there's also other federal and state regulatory consumer protection priorities that are evidenced by the work of the Consumer Financial Protection Bureau other federal agencies and state attorneys general as well as also for those in the consumer financial services space state banking and financial services regulators and of course the one topic that we certainly could not do a webinar on without including is the telephone Consumer Protection Act and the private right of action under that that wreaks havoc for legitimate advertising and marketing practices both by those generating inquiries as well as also those trying and seeking to deliver the services that consumers are seeking and we're also discussed today of course strategies for enhancing compliance and avoiding legal pitfalls no shortage of tips and best practices and collectively we'll be discussing those today but to start with you know as Joey mentioned just three weeks ago at the Leeds councils buyers sellers summit at Leeds Con in Las Vegas there was a panel session that we facilitated and Alex that you moderated with the head of consumer protection for the Federal Trade Commission and their mandate is to protect consumers against unfair deceptive or fraudulent practices and they've taken an important role in discussing lead generation advertising and consumer protection issues the bureau enforces a variety of consumer protection laws and Alex you really had a terrific conversation with Andrew a fireside chat where the focus was very much what what the FTC has been doing in the space as well as also where it's headed what were some of the takeaways and what was the session from your perspective sure so thanks thanks Jonathan as you know as Jonathan mentioned I I had the privilege at the fires cellar summit at least on a few weeks ago to moderate this conversation with Andrew Smith's where he was I think surprisingly refreshing Lee Frank with the audience and with me and answering questions and as we'll discuss in a little bit you know he he struggled a little bit and answering some of the pointed questions that came from the audience on you know taking the kind of lessons learned from cases enforcement actions that the FTC has brought and that he highlighted during his remarks and putting them into practice but first let's take a step back next slide please you know who is Andrew Smith why the focus on the FTC in this presentation and you know every time you you know participate in one of these webinars or conference panels you know obviously the FTC is always top of mind so first and foremost the Federal Trade Commission independent federal agency it's led by five commissioners it's out you know bipartisan group and for the first time but that's the you know gee nice group right these the commissioners because I you're about to say I think that there's their brand new um but it's also a diversity because you've got three Republicans and two Democrats but fairly United on consumer protection matters you know even more basic than they're all new they're actually the seats are filled it's been years since all five seats at the Commission has even been filled so these last few years you had a situation we're one things were very slow and there's a lot of paralysis because of the constant exiting of Commissioners and then you also have this you know that I think at one point there was you know two and then one commissioners at the helm you know things moving really really graphically because you didn't need consensus which is how the Commission which has been in existence for over a hundred years you know it was designed to be a deliberating body you know with five members and yes on a bipartisan basis and so the current composition you've got three Republicans two Democrats very different background and experience I think all but one really don't have any traditional consumer protection experience and you have Rohit Chopra who is the diamond one of the Democrats on the Commission he comes from a conservative stronghold the others more strong on the antitrust anti competition side of the house but as you mentioned all pretty United in terms of focus on consumers which is the FTC's mandate and also using the FTC's power authority the tools in its toolbox in a really effective way you have to see the jurisdiction is very broad the FTC Act which is the statute that gives it its powers gives it very broad jurisdiction to enforce what's called section 5 of the Act that bands you know deceptive and unfair practices and acts and interstate commerce and that basically would cover any business or person except for you know very specific entities that are carved out like banks you know airline carriers etc and in addition to that mandate to prohibit unfair and deceptive practices there's also very you know handful dozens of other statutes and regulations that it writes itself that it enforces in the consumer protection space next slide please the the fu C itself is divided into two bureaus the Bureau of competition in the Bureau of Consumer Protection and this brings us back to Andrew Smith's who was at Leeds Caan he is the head of the entire Bureau of Consumer Protection and that Bureau itself has a handful of divisions that are listed on the right-hand side of this slide plus seven regional offices about 450 full-time employees roll up to Andrew and the way the the divisions are broken out is a handful on this slide including the division of advertising practices the division of financial practices of marketing practices of privacy and identity protection all of which touch lead generation and this was something that Andrew emphasized in his remarks because you know lead generation itself touches so many you know facets of what you know he considers to be you know within his you know his boundaries and so there's the privacy side of it the collection of personal data the storage of it the sharing of it that is a very obviously a very hot topic nationally but that's something that the FTC has primary jurisdiction for governing and policing and the division of financial practices although they don't have authority over banks all non banks that are in the lending space you know selling leads buying leads for you know lending products other credit products the division of my financial practices is very active and we'll talk about one of the cases abroad ah it brought soon and you know and of course marketing practices which is looking at dietary supplements other very specific verticals and very specific practices at all relatedly generation on the next slide we'll talk about you know the takeaways and jump in you were there I'd love to hear what you think - but first Andrew emphasized you know although the commissioners are all new meaning less in about a year since you know four out of five came on board and there started learning the ropes they all are very committed to rigorous enforcement and that's and that is bipartisan a lot of you know prognosticators when Donald Trump was elected president had predicted that there would be a much more you know lays a fair business friendly version of the FTC and we just we just haven't seen that I think there's a couple reasons for that one of which of course is that the new leadership is relatively new but we've also you know since watching observing how the new commission and the new chairman you know are going to be using their their power you know they've decided you know to effectively use the resources to bring you know cases that have a strong deterrent effect and that means when they decide to bring a case and I know they they're bringing you know the full load of their power behind it and we're seeing still I think we're seeing fewer cases but we're seeing you know still very large monetary judgments very powerful injunctive provisions oftentimes you're seeing them still trying to completely shut down operations and we'll talk about one of those cases second Andrew made clear that the FTC you know it does have you know the ability to write rules if it got a Reno rule making shop there's a lot of Education and consumer advisory opinions and guidance but really it is a law enforcement body that's what they do they hire litigators and they bring cases that they are prepared to litigate and they're not afraid to litigate third with respect to lead generation specifically transparency with the consumer with the lead is the keen will talk about the ways that manifests whether we're talking about you know using you know Adwords in you know for google the domain names that you select for your websites that's on the website but you know consumers think that's the lead form is going to happen when they submit information in the lead form and then you know when they start receiving emails and phone calls what is what they're told and then you know with respect to compliance which we'll talk about at the end you know doing due diligence on your buyers on your sellers on the folks that are going to be conducting the telemarketing calls ensuring that you know who you're working with is me really important because the FTC will go after any party in the in the you know its transaction that it can find and so if the bad actor is the telemarketer but you know the FTC decides it's easier to go after you know the website owner it will and because you know you're in a relationship with that telemarketer and they have very broad authority to hold parties accountable for other parties you know business partners activities next slide please yes and I thought Alex I thought what was really relevant with the conversation and of course there was the second panel with Andrew Smith on that the following day too at Leeds con was the the idea that they have a patchwork that is the Federal Trade Commission has a patchwork of statutes in addition to just its broad authority under the FTC Act and it's able to deploy you know a variety of enforcement hooks when necessary so it may be that the and in fact because of those different divisions within the Bureau of Consumer Protection it may be that the focus in one case is telemarketing and another investigation it may be email marketing and another it may be the buyers conduct but the sum total is that there has been a slew of cases and certainly even more investigations that many people would not even know about necessarily although again I think they do they are making a concerted effort that when they even bring an investigation it's for there's a reason for it other than in some cases historically there's been some sweeps but what they'll do is they will look at the facts and that they have a really wide variety of tools available to them whether it be the telemarketing Sales rule which has hooks for do-not-call in addition to a variety of advertising and claims substantiation through telemarketing that needs to be their material terms and conditions and consents to matters related to consumer financial services laws where they can bring those to bear and couple that with the Federal Trade Commission Act which gives them broad authority to go after deceptive and misleading practices and I know Alex you had selected one of the examples that Andrea brought attention to that illustrates that all right so I think the most important recent case the FTC has brought in the lead generation space is the one against its dub website was art you know army comm and list army comm and an Andrew spent a lot of time focusing on this case and I think it's because the FTC really touched on the entire you know flow from how the consumer was first identified all the way through the telemarketing and I'll go through it here as well this case was brought by the division of financial practices because it's in immunity education space but there was a you know network of websites that you know were targeting people that were seeking to join the Armed Forces and so folks that were entering you know into you know search engines terms like you know enlisting army reserves you know US Army they were getting served you know a the ability to click on this website which this one on this page is army and list comm but they also owned army comm and the sites were designed to look like they were recruitment sites this is a big this in the FTC's complaint and in its press release so not only were the sites and the operators of the sites you know see what their AdWords targeting folks that we're looking to enlist but then the site itself continued that kind of affiliation or representation that these were sites to collect your information for folks that were interested in listing and so that the lead form itself kind of suggests that you'll be contacted by essentially a recruiter and you know throughout the website you know words like contact a recruiter get information about joining the various web pages even if it included in a real information about how to contact recruiters etcetera the fact was
hat that was you know all designed to look like this is a recruitment safe and once you entered your information you know talks like are you ready to talk to a recruiter there was no disclosure or any type of you know obvious information about you know where this information is going in fact those representation that we will not you know share your information with third parties once you entered your information to the site and then you will receive telephone calls and the telephone representatives would continue the representation that this was in silly ation with the military services in fact the trainings on that the FTC reviewed says you know just to make sure that folks don't hang up the phone when you when they pick up start with you know this is me they calm or you know this is Navy you know and then slow down and then you know calling for John about and then soon the pivot to a pitch for education would begin and so the sleeves were actually sold to secondary for such aquino education shops that were looking to recruit students that also were would be getting benefits and enrolling in the military and getting benefits to attend for secondary school and so the FTC brought enforcement action saying that the entities there are owners of the both the websites and the telemarketers violated the t our telemarketing Sales rule and the FTC Act for deceptively representing affiliation with the US military when there when there was none and as part of their order they were going to ban from making you know these mess representations but they also had to turn over their websites which you can imagine we're very valuable properties you know army comm and so the FTC as Andrew said a few weeks ago they still haven't figured out what they're going to do with those sites maybe you know turn them over to the military to use themselves or you know some sort of pro just discontinued them so that you you know you can't so others can't use it in that way but I think for my for me to take away for this case is that the FTC is not looking just at the lead form and the language around the submit button they're looking at the entire process the entire from the consumers perspective so you know what are people entering what search terms are people entering to get to your to your website what's the website's domain name what's the net impression of all the text and graphics on on the website the various web pages and then of course what were you telling consumers about what's going to happen to their data and I think that's ultimately you know the most important thing is that you're transparent to consumers on that front other you know cases that the FTC has brought emphasized one you know making deceptive claims to consumers in order to induce them to submit their information are always going to be a problem and and the FTC will continue to look at all the parties in the transaction the publisher an affiliate Network the service provider like a telemarketing service provider and the ultimate you know end user of the lead are all on the hook and you emphasize that throughout and part of that is again to serve as a deterrent and part of that is just practical in some cases the FCC can't get to all the parties or can't find you know can identify it's not apparent to them who's behind a telemarketing operation of things or who's the owner of the website but when I can get to some parties they will and they prefer obviously to to bring in all the parties when they can they also although hasn't had to have not brought any very recent cases but in 2017 and 16 they brought a slew of cases under their unfairness prong concluding that the way infirmity was collected from consumers and shared with third parties was done unfairly because consumers were not told what would be happening to their data and there was no ways to protect themselves from you know bad actors that accessed their data and so there was a slew of cases designed to shut down you know phantom Debt Collection so you know folks that were receiving phone calls about debts that didn't exist you know their information had been you know disclosed from various brokers that had information from you know a lead generation site that consumers were clearly in debt and Jonathan I know you want to talk a little bit about marketplace lenders and the FTC's involvement there yeah consumer financial services is an area that on the federal level the Consumer Financial Protection Bureau has been getting a lot of attention on but even still the Federal Trade Commission has been extremely active in bringing attention to bear on marketplace lending and other small dollar loans and personal loans and we'll also talk about in a moment small business loans but going back even just to the last few years with the marketplace lending really taking off in the public eye the FTC has drawn attention through a 2016 workshop where they drew attention to marketplace lending had gone through over 20 different marketplace lending websites at that workshop and identified a variety of different features and air quotes that they saw and then lo and behold just about a year after that started to bring enforcement actions around issues that were brought to bear and light was shined on at that workshop so the the generating of leads for loans continues to be a focus and Alex as we heard Andrew Smith is a former Consumer Financial Services attorney or not even a former because I think he's still very much considers himself one and with that as his background there's certainly no no way that the sort of lending and consumer financial space is going to escape attention in the next several years and even with the CFPB online there is certainly attention that is being brought by the FTC and that actually started going back to 2016 with the FTC did a workshop on lead generation and I Andrew touched on this too in both sessions at leads con and leads counsels buy or seller summit where up until recently the activities related to lead gen and the focus at the at BCP in his shop were really focused in the financial services sector with the other areas sort of being tangential because in the education space and in the small dollar lending space that's where they were seeing the most activity related to lead gen and doing very active investigations and so this workshop came out of financial practices but that's now the Learning layer and the focus and attention out has spread amongst his colleagues amongst the staff and I and we're starting to see now that happening in the focus and in other areas now the takeaways from the workshop not surprisingly are very similar to the takeaways from Andrews comments and I think very much would reflect the best practices that that we would advocate to when working with folks on compliance and certainly in defending matters and investigations that's the disclosed clearly the consumers who are are and how you will share their information the sensitive information certainly but even just the mirror email address and contact information what's it being provided for and are you getting consent for it monitor the lead sources for deceptive claims and other warning signs Andrew really pushed on this that buyers have a responsibility to understand what lead generators are saying about products and services whether it's their products that are being advertised or just a generic statement about products services or benefits that could be achieved by making an inquiry and vetting buyers on the seller side to avoid selling leads to buyers or either non-compliant with laws that apply for their products and services or perhaps just incompatible with the lead that's being generated that's an issue certainly with remanent leads to buyers with no legitimate needs for the sensitive data that may be collected but nonetheless a seller's looking for a monetization path and sensitive data being kept secure I think it is certainly always the case but something that was really brought to attention and some of the enforcement actions over the last several years where data not just was sold but in some cases was stolen by employees and others at lead generation organizations and in some cases that information was not just name and contact information but it's banking information social security numbers and the like that could lead to identity theft debt collection issues and others for the consumers all that is to say that there is a big focus on all of the different areas of consumer protections the FTC has and that's something that certainly permeates other areas as well now as I mentioned the FTC in May is having a session on small business financing and small business lending is an area that is starting to get a lot of attention in the marketplace and the FTC has identified a need to draw attention to it from a regulatory and enforcement standpoint so they're going to be examining the trends and consumer protection issues in small business financing including what they're seeing as being a proliferation of quote online loans and alternative financing products what that really stands for is that they know that online there's a lot of activity around small business financing and just like they put the spotlight on marketplace lending they're going to put the small the spotlight and probably enforcement attention on small business financing and so it's an important area particularly for folks that are in that space or thinking of going in that space to recognize that just because the FTC is frequently thought of as a consumer protection agency and we certainly have referred to it as such they do have the ability to regulate and enforce laws that they do in the consumer space with respect to both small business lending and other small business offerings and in fact have a very long track record of doing so now there's also other federal and state regulatory consumer protection priorities that are out there we certainly don't want to give those short shrift today and I know Alex one of the things that you certainly have been keeping an eye on as is what's happening at the Consumer Financial Protection Bureau which I think a lot of people have thought as being a bit of a 2.0 or 3.0 depending on how one thinks of it in terms of where they're at in doing regulation forcement and regulating advertising and marketing practices related to financial services yeah I mean we're seeing the CFPB's recently bringing more cases there certainly was a period of time between acting director Mulvaney's tenure and you know current directors crown injures in the vote that got her in there was a lot of the CVB was you know taking a look at all of its policies and practices and reevaluating processes internally it seems like they've you know come out of that review period and now are operating under a new business as usual and we're seeing more and more cases hey you know small dollar loan lending is still a very you know high priority at the bureau and debt collection and we're seeing them bringing more and more cases including you know opening or you know bringing back you know their investigations that have been on hold for a long time and a lot of the focus on these cases are you know more traditional advertising and then trying to kind of you know regulate you know the financial product itself which was obviously a very big priority under the Cordray administration and so I think what we can you know be sure in the future that we're going to see a lot more enforcement from the CFPB but I'd also think that in terms of their general view about the industry you know and the the financial verticals that heavily rely on online lead generation not going to see the same the same emphasis that the prior administration had on holding the ad you know the lead generators and aggregators accountable for what the lenders did or did not do or the licenses they had or had not had I mean I I think that you know we'll see if that's the case that's that's my you know that's my field right now and well and that's an important point because you know at the state level there's certainly no shortage of developments to where you have whether you have in California or in Vermont and Connecticut and other states a lot of emphasis on trying to wrangle um and in some cases push the boundaries of what is a broker or in some cases some legislative activity around actually creating carve outs or specific licensing categories for quote lead generators or finders and in California the consumer finance lenders law that's in legislative activity there in the last session and the current session there's been enforcement as well there by the California dbo and in Vermont there's been activity in several other states too Connecticut has licensing for mortgage lead-gen related activity and other states have continued to be active in that space licensing for mortgage lead gen activity and is often expected if not by the regulator by the buyer and going through diligence through that process and as Alex mentioned at least in a consumer financial services space the CFPB has shown the ability to bring in underlying compliance with state law as an issue whether it be from substantive standpoint or just from an advertising and marketing standpoint some advertising that they can provide a particular service that implicitly would mean that they're legally doing so and that's been the rub even before the CFPB took some of its aggressive actions in the lead generation space now all eyes to are also on California and the California consumer Privacy Act which is going through a regulatory rulemaking and takes effect in 2020 but you've got quite quite a lot of activity there perhaps the story isn't completely written yet but nonetheless there is a lot of attention on what could be significant regulatory requirements around the collection use and transmittal of consumer data related to Californians and has many vestiges and influences from the gdpr regime in Europe and the EU and has the potential for spreading across the country certainly the concepts that are there are popping up in other legislative proposals consumer groups are pushing that and there is no shortage of debate in the public policy arena around what is appropriate regulation of consumer data collection use of sharing practices all of which could have a profound effect but the reality is is that there's some very core compliance requirements that one needs to take into account today to avoid legal risk and I think also baked into the system and planning for future used too often times we think of this as a snapshot in time but with lead generation and the collection of consumer data information that's collected today may certainly be used years from now if not longer now States Attorneys General is another hot area and that's an area that transcends of course all advertising and marketing and all different types of products and services historically been very active in the areas of education advertising general advertising for household goods and services consumer lending and other areas and we see continuously a single state and multi-state investigations in that area and stemming from both consumer protection concerns as well as also specific marketing practices related to particular channels including telemarketing and so that brings us to our tag team today of dan Blinn and Steve Freeland who on a day-to-day basis both advise and defend enforcement actions and private lawsuits in the telethons telephone Consumer Protection Act arena and generally around telemarketing than at base when we always talk about this it always seems simple full and clear disclosure and consent should rule the day but people quibble about what that really means right yeah I'm actually gonna let Steve handle this this answer but before before he does you know Jonathan mentioned we're we're now talking about the use of the telephone or anyone who uses fax but also this was also apply to them but we're talking about telephone communications right now texts or calls and for those on the phone who are lead generating but only using web forms or selling leads and the like you still need to pay attention here because there are theories of vicarious liability that have been extende
in FTC enforcement actions under the telemarketing Sales rule which we'll talk about and the telephone Consumer Protection Act which we really will talk about given that it's got a private right of action we've we've seen both agencies and plaintiffs and course take the view that selling lead data if you know that it's going to be used in a manner that violates either the TSR the or the TCPA you can be on the hook for that as well so don't don't you know put us on unmute or turn the volume down if you're not using the phone because you may may find what we're talking about applicable right and so with that good afternoon everyone I'm Steve Freeland dan and I have been doing this for quite some time now and have a good feel for both where the regulator's are having on this and have had it as well as the class-action plaintiffs bar which can be a baned for some of our clients existence and so Jonathan and Alex already covered some of the concepts here that are on the screen and they're back up there again because they're so important that we have to reinforce that this is sort of the threshold issue if you're generating if you're generating a lead if everything from the start when your consent is bad then everything that comes after it is also bad you know we can harken back to stories about fruits of the poisonous tree to sit the same thing happens here okay and so we advise a lot of clients that generate leads in a lot of ways a lot of folks doing it online as I imagine a lot of the folks on the phone do and I just I want to start with sort of a real-world example to talk about what some of these concepts on the screen mean if let's assume that we have a lead generator who's generating leads through Facebook for discounted vacations okay but it's also a Coe registration page so their generate their main offer is a discounted vacation but they're also generating leads for folks that do car insurance and sell hearing aids and sell home security systems okay sort of the gold standard of having valid consent there and this goes back to what Alex was talking about and her fireside chat with Andrew Smith is it's it's going to be generally okay for you to collect the phone number and get the consent for all those folks as long as your funnel is clear so if a consumer lands on the Facebook offer and says I'm very interested in the vacation and clicks on the button then they go to a next page let's say it's a three or four step funnel till they get to the submit button what we've been encouraging clients to do is go ahead and disclose those other verticals early on in the funnel process such as you know we've got these great offers on vacations you know tell us when you want to leave tell us where you want to go we've got vacation deals for the following cities you know pick one oh and by the way we're also going to give you some great information on these other offers about you know hearing aids or home security systems or car insurance wouldn't that be great then by the time they get to the submit page where they've got you know you've got your magic TCPA language in there on in that language you actually disclose who those other partners are by name that are going to be calling about the other verticals that's the gold standard and it's very hard if that's all done in a very clear and conspicuous way it's very hard to say that consent from that consumer is going to be invalid or otherwise not clear and conspicuous because you've disclosed everything to them along the way and an important thing to keep in mind you don't have to be married to the legalese and this is something that we work with with clients all the time you can get the requisite consent that you need and still market at the same time there's a way to do it there's a way to thread that needle and that's where we try to work with clients to get them the compliance that they need and make all these disclosures but also do it in a very marketing friendly way and so that's just that sort of right right here at the outset a high-level example of what we're talking about here sort of taking these general rules and apply them to a real world situation so that leads us to the to the next slide which is these are sort of the other core issues that come up with respect to TCPA compliance and and for those on the phone that don't know I just want to home a few bars about the TCPA I'll never admit this in court if I'm arguing a case but the pleading standards are relatively low for a plaintiff and the class actions can be relatively easy to certify which is why they're problematic especially given the $500 in statutory penalties that applies per violation call or text so if you've got one campaign that goes awry for example that let's say you make 10,000 calls that number gets really big really fast okay so that that's why it's important for for the compliance on the front end to reduce the exposure on the back and so these are the issues that come up routinely for us and one one of the main drivers of the types of consent that that you need to get is the type of call that you're making are you calling to market something or are you calling to just give them information about an existing account for those on the phone is probably more on the marketing side than it is on the informational side which means a higher level of consent is going to be needed and then the other issues that pop up occasionally are what's called revocation of consent and that what that means is a consumer can provide you consent today to receive all kinds of telemarketing calls and receipt about all kinds of different verticals and all types of different products they can turn around tomorrow and revoke that consent using any reasonable means and once they revoke you've got a certain amount of time generally 30 days to honor that request and then calls or texts place to them after that would be violation calls and then we're also dealing with some Danna I actually have a current case right now dealing with some new technology such as sound board technology for this is also called avatar for those on the phone which the plaintiffs lawyers are starting to go after as well so and so this gets the this next slide gets into okay so what is a telemarketing call let me start with what's not a telemarketing call a bank sends an automated text message to one of its to one of its customers saying we have an alert for you it looks like someone's trying to hack into your account that is not a telemarketing call or a telemarketing text now same text someone's trying to hack into your account and oh by the way call this number and get great information about a new loan for that new boat you've been wanting that is now a telemarketing text which requires the higher level of prior express written consent which we'll get into in a little bit but this is the point that telemarketing is broadly construed by the courts if it's what's called a mixed message which is the example I just gave it's both account or informational related as well as trying to market another loan then the higher level of consent is needed yeah and you know err on the side of caution I mean you will be thoroughly confused but if we do our job you'll be thoroughly confused by the end of our presentation as to what is compliant and what's not compliant an ounce of compliance right now will save you a pound of TCPA liability later you know is the TCPA is a real minefield so you know we're going to give you kind of the issues but you know we always recommend consulting legal counsel it doesn't have to be a long call but a lot of times you know thorny issues can get sorted out very quickly that's right and in a lot of this stems from the type of technology that you're using to make a telemarketing call or send a telemarketing text and so we have here on the on the on slide 23 but are the the key issues that are the drivers of liability manual dialling for all intents and purposes with a live operator very low risk and only really need to comply with the do-not-call rules and scrub your numbers against the Do Not Call list if you're using any form of automated technology or a pre-recorded voice we're now into a higher level of potential liability and so what are these technologies okay so I'm sure everyone that's on the line is heard at some level about a TDs and auto dialer and there's been a lot of case law movement or a lot of a lot of movement in the industry as to what it is and what it isn't so for years the definition was very broad and it included even text sent from iPhones right and that's because the FCC said well it doesn't matter if it's used in an autodialer fashion if it has the potential capacity to be used in an autodialer fashion that's sufficient the DC circuit which is the court here in DC that oversees the FCC's rulings said nope that's a dumb rule you're finished we're setting that aside and so what we've been seeing now in the last few year or so since that decision came down our courts wrestling with just what the statutory definition of auto dialer is and fortunately for the folks on the phone a lot of the courts have said well look looking at the statutory definition it's pretty simple it's got to have the current capacity to generate to generate random or sequential numbers and then dial those numbers what does that mean if you're dialing from a pre-existing list of numbers that you've generated through lead forms online or through customer you know customer lists that's not an auto dialer because those numbers are not generated random or sequentially so that's a very very favorable for industry right now here's the rub the FCC in their infinite wisdom has decided that they are going to come up with a new definition of auto dialer in light of the DC Circuit DC Circuit's setting aside their old one and so we all wait with bated breath to see what that definition is going to be and how it may be different from what the courts are currently holding in terms of really cabining in what is an auto dialer let me take a bit of a contrarian view so so Steve has mentioned you know if you're dialing from a list and not randomly or sequentially generating generating the numbers you're calling yes there are certainly courts that have found that recently that is not an auto dialer there are our courts have gone the other way the ninth circuit if you're out in California or Nevada or Washington State dialing from a list is enough right now to be an auto dialer even if it's a list of numbers that you have cultivated in the third circuit up in New Jersey in Pennsylvania I think Delaware as well Steve's right there you know dialing from a cultivated list is not an auto dialer in both cases it would matter where you are if you're dialing using human involvement such as there's a technology out there that allows calls to be launched simply by a human sitting in a room pressing a keyboard button repeatedly you know in a predictive sort of way like a traditional predictive dialer that that is usually not that is usually not an auto dialer I spoke with the plaintiff's attorney this morning on another panel and he referred you know kind of laughingly but accurately ATDs does not stand for automatic telephone dialing system and stands for a total disaster system and like Steve said that is exactly what that CC is working on right now that's right and we do we do our prediction is whatever rule comes out of the FCC on their new definition of a TDS that also will be litigated up to the DC Circuit and may take some time to sort out so this is very much an evolving an evolving in fluid legal eagle situation which is you know which depending on where you are could be fortunate and if you're as Dan said in California or in the Ninth Circuit could be unfortunate but the courts continue to wrestle with this every day and in a lot of cases that we're working on we can use the doubt of how the court may rule on this in our favor to drive a lower dollar settlement that's one of the things that Dan and I've been doing over the last six months or so of all of all the things that Dan and I have said during our portion of the presentation the chart that's on the screen right now is probably the most valuable thing that you can take away from us this is a chart that Dan and I have been using for a long time this is a summary of the type of consent that you need based on the type of call you're making and the type of technology that you are using and the things with if you see in that second column there under cellphone not-not-not telemarketing the little asterisk next to prior express consent there has been a petition on file by a plaintiff with the FCC I think it's been a few years now that they've not the date that they've not yet ruled upon where he's saying that no even for not telemarketing you would need prior express written consent for those technological calls that has not been ruled upon yet and so as of today the rule is still just prior express consent and that is the simple provisioning of the number okay so if a customer gives you their cellphone number that is prior express consent to use an auto dialer to reach out to them for informational messages only such as the bank alert the fraud alert that I was talking about earlier but those messages cannot include any any telemarketing at all yeah so you know real quickly because their time is getting short you know technology always outpaces the law and in the last couple years we've seen new kinds of technologies being developed either well to in an attempt to avoid TCP a liability issues you've seen you've seen different kinds of calling platforms there's there's been nine last few years a number of our clients have asked us about ringless voice mails which are a technology that avoids the cellular network and delivers a voicemail message right into your cell phone voicemail box so you only or phone doesn't even ring you just all of a sudden you have a voicemail you know the argument has been that those aren't calls so they don't go across the cellular network and therefore the TCPA doesn't apply Florida has legislation specifically on this now is enacted last year the first court case to have addressed ringless voicemail was this saunders case up on the slide in 2018 it said ringless voicemail our calls subject to the TCPA and timely for this just on Monday the Southern District of Florida came out with a decision similar to Saunders saying yes ringless is definitely a call under the TCPA the consumer will apply avatar calls or calls that utilize where a live human representative interacts with the consumer but uses pre-recorded audio snippets to have a dynamic real-time two-way conversation it's not a passive kind of pre-recorded message where you pick up the phone and you hear a message played you can't you can't yell you can't slam down the receiver nothing like that right now Steve and I are litigating this issue it's the first case of first impression sound federal court in Oklahoma we've also petitioned the FCC for a ruling on that that avatar and soundboard calls are not pre-recorded message calls under the TCPA do-not-call rules real briefly so we spent a lot of time talking about autodialers and pre-recorded messages there's another category of TCPA and telemarketing Sales rule issues that comes up live is or you know calls to numbers on the National Do Not Call Registry or a sellers own internal Do Not Call list these rules only apply to telemarketing calls but again I think given the folks home phone is probably meant for you guys you can't call folks who are on the National Do Not Call Registry you can't call folks regardless of how you're calling whether it's manual or auto dialer you can't call folks on an internal Do Not Call list what that means for a lead generator is you can't call you need you and theory need to be scrubbing a call list against the sellers internal do not call this as well as the National do-not-call this now there are a couple exceptions if you have written consent that's okay that trumps I do not call request or if there's an established business relationship which is where a consumer fills out a lead form requesting a call that is a called an inquiry EBR there are also established business rel
tionships based on ongoing business relationships with with the seller you want to the next slide Jonathan the companion to the TCPA is the telemarketing Sales rule this is aggressively enforced by the Federal Trade Commission but there's no private right of action so you don't see private class-action litigation you do see the FTC imposing fines of tens of millions of dollars if not hundreds of millions of dollars in at least one case but this does not apply to auto dialer it only applies to pre-recorded messages as well as calls to numbers on the do-not-call it does not apply to p2p transactions unless you are selling essentially cleaning supplies and other non I think perishable office products so if you're selling vacuums or or Windex to businesses then you need to worry about this but most most don't finally as folks on the phone may be aware there have been a lot of legislative enactments and bills introduced to deal with robo calls and a lot of people you know people do not like robo calls until in bipartisan fashion you've seen a lot of bills introduced to address robo calls to me it's a lot of a sound of fury signifying nothing these are bills really designed to expand or confirm the FCC's enforcement hours or they expressly allow carriers to block calls that are deemed to be fraudulent or scam kinds of calls or from those kinds of numbers but frankly the carriers have had that power for quite some time and then less we probably will see something passed but I don't think it'll change the landscape too much and now of briefly strategies for enhancing compliance and avoiding legal pitfalls we'll go around our panelists and why don't you pick one or two that you want to emphasize best practices we'll start with Steve in telemarketing or otherwise if you had one thing to impart to a company that's buying or generating a lead what would you advise a watch out for I would I would certainly advise if you're if you're generating the lead then I would go back to the first discussion that we had about making sure your consent is clear and conspicuous disclosing who you are who may be calling the consumer when they fill out that form or complete the phone call all of that is vitally important to getting all - making it a valid lead on the front end that minimizes all the risk on the back end if you're buying leads from someone else get reps and warranties in your contracts that say they generated those leads in a compliant fashion and I would even go one further to say that in the event that it's determined that they didn't they fully indemnify you for any resulting legal liability that you may have as a result of buying those leads from them and so those would be the two big things from my perspective and Alix sometimes that indemnity may not be enough they don't have any money or assurance of what would you advise well coming back to plan mate earlier you know your lead source or buyer having a documented monitoring and diligence program that is you can replicate for each new partner that enters your ecosystem and importantly that you can stay on top of how they're using the lead or generating the leads so that you can be proactive and avoid downstream liability for me the most important part of that is developing the program so that I can basically be on on autopilot yeah so a little bit of wisdom from my late father there were two message that that left a real mark on me one is don't half-ass anything and close only counts in horseshoes and hand-grenades if you are going to engage with consumers especially over the phone you know give a lot of thought to how you are going to structure your your-your-your program and make sure it's compliant because under the TCPA and TS are these are essentially like strict liability statutes you know getting getting it pretty close to right doesn't save you even even if you're trying to do it right it doesn't save you so again give a lot of thought before you engage in one of these kinds of campaigns right so bottom line for both buyers and sellers don't put your head in the sand know what's going on above or beyond you and know what happens before you right from the beginning all the way to the end well with that I'd like to thank our panelists Steve Frehley Dan Blinn and Alex McGarry I'm Jonathan Pompton in Washington DC and I'd like to thank the Leeds Council for helping put up on this webinar today and our team here at Venable for more information please check out our firm's website Venable comm our advertising law blog all about advertising law comm and for consumer financial services matters Venable comm backslash CFS
