When the Federal Trade Commission (FTC) investigates a case, it looks at it from the first contact the consumer has with a product or service through the end of the consumer experience. For many consumers, the first contact with a product comes through lead generation, where a “lead generator” tries to find consumers interested in a particular type of good or service and then sell those leads to marketers. The FTC released its staff perspective paper on lead generation in September. Demonstrating that the FTC’s interest in lead generation is not just academic, the FTC recently asked the Department of Justice to file a complaint on the FTC’s behalf against a collection of entities known as the Consumer Education Group, charging them with violating the Telemarketing Sales Rule. The complaint alleged that the Defendants made illegal outbound telemarketing calls — some using robocalls delivering prerecorded messages — to consumers on the national Do Not Call (DNC) Registry without consumers’ express written consent or a preexisting business relationship.
According to the FTC complaint, the defendants operated a series of websites and landing pages where consumers could complete an online form to obtain more information about solar panels, reverse mortgages, walk-in bathtubs, and other products. Defendants would then use the names and phone numbers obtained through those forms to direct dial or robocall consumers to further gauge their interest in those products.
The problem with this? Many of the people called were on the DNC Registry and many of the calls were robocalls. The FTC alleged that the consumers on the DNC Registry did not have a pre-existing business relationship with the defendants nor had they given their express consent to be called by defendants or the companies for whom the defendants were generating leads. The same was true for the robocalls. This case highlights how strictly the FTC interprets consent for calls to persons on the DNC Registry or for the receipt of robocalls. The consent has to be specific to the entity calling. Similarly, filling out a generic indication of interest form does not constitute an existing business relationship.
To settle the case, the defendants agreed to pay a $100,000 civil penalty in addition to strong injunctive relief.
Lead generation and telemarketing remain important priorities for the FTC, and companies using either or both of these tools would be wise to review their compliance procedures. The failure to do so can be expensive.
*Maria Sinatra is a Law Clerk and is not yet admitted to practice law.