CFPB Expands Call for Evidence with Additional RFIsThe CFPB has now issued six RFIs as part of Acting Director Mulvaney’s Call for Evidence Regarding Consumer Financial Protection Bureau Functions, which we have previously covered. The RFIs provide industry participants a chance to comment on the CFPB’s rules, policies, and practices regarding investigations, examinations, enforcement
We all have received an errant text message on our phone or a marketing message intended for someone else. This is surely annoying but most of us will either ignore the message, send a reply message opting out, or, as an extreme measure, leave a scathing review online, complete with ALL CAPS. What some individuals do, however, is intentionally solicit additional texts by replying or following through on some of the action requested. By using multiple phones and spending all day subscribing to services, these individuals inevitably receive a lot of calls and texts with offers. Some of those messages might even be from sellers that the individual didn’t actually contact because the consumer’s information has become so widely disseminated, which is exactly what certain serial litigants seek to achieve.
The incentive to become a serial litigant is clear when you consider that for each message received without consent, an individual can claim statutory damages under the Telephone Consumer Protection Act (“TCPA”). Those damages could be $3,000 per text and/or call if the message is automated and sent to an individual on the National Do Not Call Registry. Yes, you read it correctly, it may be up to $3,000 per violating text. One such serial litigant has brought suit for alleged TCPA violations over one hundred times since 2014. He often files complaints pro se and will continue litigation until companies decide it’s cheaper to settle rather than pay additional legal fees. He has openly bragged about these methods, writing blog posts entitled “TCPA enforcement for fun and profit up to 3k per call” and aspiring to author a book entitled Tales of a Debt Collection Terrorist: How I Beat the Credit Industry at Its Own Game.Continue Reading Relief from TCPA Trolls
On consecutive days last month, both the Consumer Product Safety Commission (CPSC) and the U.S. Food and Drug Administration (FDA) made clear that delays in reporting potential product hazards or defects could significantly damage a company’s reputation and bottom line. The message from these agencies is clear—manufacturers and distributors of products regulated by CPSC and/or FDA would be wise to ensure their product quality processes and compliance programs enable swift communication to regulators and the public. On January 18, FDA Commissioner Scott Gottlieb announced the publication of a draft guidance that “better describes the FDA’s policy on public warning and notification of recalled products as part of [the agency’s] effort to ensure better, more timely information reaches consumers.” The next day, the U.S. Department of Justice announced that a federal district court awarded $5 million in civil penalties in an action brought on behalf of the CPSC against a pharmaceutical company for alleged violations of the Poison Prevention Packaging Act (PPPA) and Consumer Product Safety Act (CPSA), including its failure to “immediately” notify the CPSC once it discovered that its products were not compliant with the PPPA.
The FDA’s draft guidance applies to voluntary recalls of all products under FDA’s purview, including food, drugs, medical devices, and cosmetics. It comments on a variety of issues associated with product recalls, including whether the general public should be informed, and, if so, what the content and method for communication should be. With respect to timing, the draft guidance notes that the agency’s expectations will be driven largely by the nature of the risk presented by the individual recall, although it generally expects firms to issue a public warning within 24 hours of FDA notifying the firm that it believes a public warning is appropriate.Continue Reading FDA, CPSC & the Need for Speed: Recent Actions Highlight Importance of Promptly Reporting Product Safety Issues
Sitting en banc, the U.S. Court of Appeals for the DC Circuit ruled that the Consumer Financial Protection Bureau’s (CFPB) structure is constitutional. By a vote of 7 to 3, the full panel of judges reversed an earlier panel decision that took issue with the independent agency’s single-director structure. The en banc decision left intact
Some people really do not like being told to get a flu shot and, in Latner v. Mount Sinai Health System, Inc., 2018 WL 265085 (2d Cir. amended decision Jan. 9, 2018), a man sued his hospital over it. Well, not exactly. Plaintiff Daniel Latner claimed that a text message sent by a third party telemarketer for Mt. Sinai Health System reminding him to get a flu shot violated his rights under the Telephone Consumer Protection Act (TCPA). Among other things, the TCPA allows individuals to file lawsuits and collect statutory damages for receiving autodialed text messages without the recipient’s prior express consent. Latner addressed the scope of consent required for a healthcare message made by a covered entity or its business associate, as those terms are defined by the Health Insurance Portability and Accountability Act of 1996 (HIPAA).
Continue Reading Dose of Relief for Healthcare Entities: Second Circuit Finds Hospital Had Sufficient Consent Under the TCPA
The FTC’s Northwest Regional Office has, for decades, led federal law enforcement efforts to investigate and shut down alleged fraud in the charity fundraising industry (state attorneys general are even more active in this space, as we’ve noted in previous writings). While the Northwest Region was somewhat active in the 1990s and early 2000s, its appetite for policing fundraising telemarketers clearly received a boost from its collaboration with state regulators against several allegedly sham charities in 2015. Just last year, we reported that enforcement against perceived charitable fundraising fraud remained a top FTC priority. With the beginning of 2018 upon us, the trend continues.
On January 10, 2018, the FTC asked the Department of Justice to file a complaint against Ohio-based charity and political fundraiser InfoCision, Inc., alleging violations of the FTC’s Telemarketing Sales Rule (for a good primer on why the FTC may refer litigation to the DOJ when it alleges violations of the TSR or other FTC trade regulation rules, click here). According to the complaint, InfoCision misrepresented the purpose of calls it placed to consumers in some of its telemarketing campaigns. The DOJ alleges that InfoCision told consumers at the beginning of the call that the purpose of the call was not to ask for a donation; however, the company’s telemarketers would then ask consumers to mail or hand-deliver materials to family, friends, or neighbors, asking for money donations to InfoCision’s charity client. In some cases, according to the DOJ, telemarketers would also ask the call recipient to make a charitable donation in contradiction of the initial representation that the purpose of the call was not to seek such a donation.Continue Reading Telemarketing by Charity Fundraisers Remains an FTC Enforcement Priority
The FCC’s Sponsorship Identification Rule is a close, perhaps neglected cousin of the FTC’s Enforcement Policy Statement on Deceptively Formatted Advertisements, i.e., its Native Advertising Guide. Nevertheless, the FCC’s latest enforcement action demonstrates how failure to follow the rule can result in penalties far larger than any imposed to date by the FTC. It also hints at the possibility that a single ad can result in dual liability for advertisers and broadcasters.
The Sponsorship ID Rule is fairly straightforward: if a broadcast station charges or accepts (or is promised) any money, service, or other valuable consideration in exchange for airing a piece of programming, then the broadcaster must disclose – at the time of the broadcast: (1) that the programming is “sponsored,” “paid,” or “furnished,” and (2) the identity of the sponsor. The Rule contains additional disclosure requirements for political ads, as well as “beneficial owner”-type provisions that require disclosure of the true sponsor in interest, rather than the name of any agent or middleman used to furnish the payment. A corollary to the Sponsorship ID Rule imposes a similar burden on sponsors to disclose to broadcasters when they have provided money, services or other consideration in exchange for the broadcast. 47 U.S.C. § 508.Continue Reading FCC Revives Its Own Native Advertising Rule: Sponsorship Identification
The midterm elections are just around the corner, and with them could come a host of potential Telephone Consumer Protection Act (“TCPA”) concerns if recent history is any indication. The TCPA places restrictions on, among other things, robocalls and automated text messages, both of which often are used by political campaigns seeking votes or donations. Less clear is whether the TCPA actually applies to political campaigns’ calling and texting operations.
The FCC has asserted that the TCPA covers campaign calls according to the Act’s plain language. But the FCC’s guidance isn’t necessarily heeded by campaigns, as shown by the different treatment of the issue in two recent articles. One describes the proliferation of robocalls in NYC elections and depicts political campaigns’ actions as politically protected speech that is exempt from the TCPA, directly contradicting the FCC’s stance on the matter. The other concerns the same scenario in Hickory, NC’s mayoral election, but acknowledges that a campaign’s robocalls may have been TCPA violations, with officials blaming North Carolina election law for the lack of guidance.
Continue Reading One Vote for a TCPA Violation? Campaign Robocalls During Recent Elections Draw Ire
In an internal email to CFPB staff, Director Cordray announced that he will be stepping down by the end of the month. Industry participants and observers have long speculated that Director Cordray might leave office prior to the expiration of his five-year term (July 2018) to run for governor of Ohio.
Upon his departure, Director
Usually this blog focuses on the FTC’s Bureau of Consumer Protection challenging unfair or deceptive advertising. Not so today. Instead, we write about the Bureau of Competition’s challenge to agreements 1-800 Contacts entered with its competitors concerning how they would advertise. The case provides useful insight into the nuts and bolts of Internet advertising as well as important reminders about how not to deal with your competitors, but it isn’t the first time the Commission has gone after competitors who have agreed to advertising restraints. Bottom line: While agreements to limit advertising competition are not per se illegal, if you are thinking of coming to this sort of agreement, you had better have a really good (i.e., pro-competitive) reason for it.
On August 8, 2016, the FTC alleged in an administrative complaint that 1-800 Contacts, one of the largest online retailers of contact lenses, engaged in anti-competitive practices through its agreements with competitors settling trademark suits. The agreements restricted competitors from showing up when consumers searched for 1-800 Contacts. Last week, Chief Administrative Law Judge D. Michael Chappell upheld the FTC’s complaint and ordered 1-800 Contacts to cease and desist enforcing anti-competitive provisions from the settlement agreements, among other remedies.Continue Reading The FTC Sees Red Over 1-800 Contacts’ Advertising Agreements with Competitors