Davis Dwight & Tremaine LLP
Oregon business law firm
FTC and State AGs: Political Survey Preface Does Not Allow Sales Robocalls to Avoid Do-Not-Call and Telemarketing Sales Rule Compliance
By Ronald G. London and Bryan Thompson
Marketing and Consumer Privacy
The Federal Trade Commission (FTC) and 10 state Attorneys General announced the filing of a complaint and proposed stipulations against Caribbean Cruise Line (CCL) and several other companies that, respectively, alleged and resolved claims that the companies’ coordinated phone sales program violated the FTC’s Telemarketing Sales Rule (TSR) and state consumer protection laws. The enforcement action targeted what the regulators characterized as “billions of illegal robocalls” that allegedly sold cruise vacations in tandem with automated political surveys. The companies settled the charges by agreeing to millions in civil penalties – most of which were suspended under agreement to actual payments of over $500,000 by the companies – and to comply with the TSR’s do-not-call, caller ID, and other provisions, along with a duty to monitor lead generators on an ongoing basis.
Under the TSR, telemarketers may not call individuals on the national “Do-Not-Call” list or deliver prerecorded sales messages to persons who have not given their prior express written consent to receiving such calls. The TSR does not govern automated/prerecorded calls that are not for marketing, such as political surveying (though the Telephone Consumer Protection Act (TCPA) administered by the Federal Communications Commission (FCC) restricts autodialed and prerecorded calls to cell phones, regardless of their content). The FTC’s complaint – which was joined by Attorneys General from Colorado, Florida, Indiana, Kansas, Mississippi, Missouri, North Carolina, Ohio, Tennessee, and Washington – accused CCL, telemarketers Economic Strategy LLC (Economic Strategy) and Linked Service Solutions LLC (LSS), and several other call centers of violating the TSR by making automated calls to conduct political surveys that were followed by pitches for Caribbean cruises.
The complaint describes a campaign of offering individuals “free” cruises in exchange for taking part in the brief political survey. Those who participated and completed the survey were transferred to CCL telemarketers who stated that the consumer would have to pay taxes associated with the cruise, and tried to sell callers additional travel package items. According to the complaint, the campaign included calls to consumers on the national “Do-Not-Call” list, as well as to consumers who had previously requested not to be contacted, both of which violate the TSR. The complaint further alleged the telemarketers violated the TSR’s caller ID requirements by employing various telecom companies to disguise the telemarketers’ true identities.
CCL, and Economic Strategy and LSS, along with those companies’ owners, agreed to settle the government’s claims by entering settlements that prohibit them from telemarketing practices that violate the TSR, including delivering any prerecorded sales message without the called parties’ express written consent. This prohibits the settling parties from piggybacking sales messages onto political robocalls or other automated calls that are permitted under the TSR but which do not require called party’s explicit consent.
The companies also accepted the imposition of hefty civil penalties, with CCL agreeing to $7.73 million, which was partially suspended upon its payment of $500,000, while the other companies involved agreed to similarly high penalties that were partially suspended. The full penalty amounts become immediately due should any of the parties violate the terms of their settlement. Meanwhile, the case against the non-settling call centers continues. It will be interesting to see what defenses they offer, and whether the court will be moved by them. But the regulators’ message is clear – as the FTC’s Bureau of Consumer Protection Director Jessica Rich stated: “Marketers who know the [TSR’s] ropes understand you can’t steer clear of the do not call rules by tacking a political or survey call onto a sales pitch.”
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