Last week, a magistrate judge in U.S. District Court for the Western District of North Carolina dismissed a Telephone Consumer Protection Act (TCPA) lawsuit brought by a plaintiff who claimed calls made by an insurance lead generator to her cell phone number, which was registered on the national Do Not Call (DNC) registry, were unlawful. The decision takes a view contrary to that of at least one other district court in the Fourth Circuit, but sides with a district court in Texas in finding that the do not call prohibitions of the TCPA do not encompass cell phones.

Does this latest decision, Gaker v. Q3M Insurance Solutions et al., mean that telemarketing calls to cellphone numbers listed on the national DNC list are actually OK? Probably not. For starters, since 2003, the Federal Communications Commission (FCC) has allowed cell phone numbers to be registered on the DNC list and interpreted the TCPA’s do-not-call prohibitions to encompass cell phone numbers. Other courts have followed the FCC’s lead in this matter. However, the judge’s reasoning in the Gaker case is interesting to consider, particularly for anyone following a textualist reading of Congress’s laws.

Continue Reading North Carolina Judge Says Cell Phones Not Subject to Federal Do-Not-Call Protections

On January 19, 2023 the Third Circuit dismissed a TCPA class action lawsuit (Mauthe v. Millennium Health LLC) against a company that had sent a one-page promotional fax to consumers without their prior consent about a free educational seminar related to drug testing and medication monitoring.

The free seminar would “highlight national trends in opioid misuse and abuse…and discuss the role of medication monitoring as a valuable tool that provides objective, actionable information during the care of injured workers.” 

The fax did not promote specific goods or services. Nor did it include pricing information, testimonials, discount offers, coupons, or any product images. It also did not contain contact information for purchasing a product or service sold by the company. Nevertheless, Millennium Heath was sued under the TCPA’s fax provisions based on a claim that the fax was an unsolicited advertisement. 

Rejecting the claim, the Third Circuit held that “no reasonable recipient…could view [the fax] as promoting the purchase or sale of goods, services or property,” and thus directed dismissal of the suit.

If the contents of the fax had been only slightly different, such as mentioning a product sold by the company, the decision could have easily gone the other way. For marketers and advertisers, the case highlights the fine line companies face when sending consumers messages by telephone, text, or fax without obtaining their prior consent. 

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The Consumer Financial Protection Bureau (CFPB) has moved to curb digital mortgage comparison-shopping platforms from receiving referral fees, issuing an advisory opinion that outlines how companies violate the Real Estate Settlement Procedures Act (RESPA) when “they steer shoppers to lenders by using pay-to-play tactics rather than providing shoppers with comprehensive and objective information.” The advisory is a warning to digital marketing platforms of the potential consequences of business relationships with mortgage lenders. The CFPB has a direct sightline into the marketing activities of mortgage lenders though supervision and routine examinations, and has already put a target on digital marketing providers.

The CFPB’s advisory opinion describes how platform operations can violate Section 8 of RESPA by enhancing the placement of lenders or related service providers on the digital platforms, or by otherwise steering consumers to those lenders or service providers. in addition, the opinion provides illustrative examples.

Continue Reading CFPB Warns Digital Mortgage Comparison-Shopping Platforms About Referral Fees and Pay-to-Play Advertising

As the dust settles from the Supreme Court’s decision in AMG Capital Management, LLC v. FTC, 141 S. Ct. 1341 (2021), which gutted the Federal Trade Commission’s authority to obtain equitable monetary relief in court, the contours of the FTC’s remedial authority continue to be shaped by the lower courts.

Most recently, the Eleventh Circuit weighed in on whether Section 19 of the FTC Act authorizes the FTC to obtain an asset freeze and impose a receiver. Prior to AMG, the FTC routinely obtained such preliminary relief against companies and individuals the FTC believed were engaging, or about to engage, in unfair deceptive business practices. In doing so, the FTC would rely on its authority under Section 13(b) of the FTC Act. However, after AMG, the FTC can only use Section 13(b) to obtain forward-looking injunctive relief.

Continue Reading Eleventh Circuit Says FTC Can Seek Asset Freezes and Receivership Under Section 19

When it comes to negative options, the CFPB has strong opinions. As demonstrated in its new circular, these opinions generally align with those of the Federal Trade Commission (FTC), which has repeatedly targeted trial offers, subscription sales, and other programs involving recurring charges for enforcement. The circular reaffirms the CFPB’s focus—shared with the FTC—on combating digital dark patterns used to engage in unfair, deceptive, or abusive acts or practices, especially when those techniques are combined with negative option marketing.

In an upcoming webinar on March 1, 2023 (RSVP here), Venable will be presenting an in-depth analysis of the CFPB’s circular, as well as CFPB and FTC enforcement actions and private litigation based on purportedly unlawful negative option marketing. For those who can’t wait, we’ve summarized the highlights of the circular below.

Continue Reading The CFPB Joins the FTC on Negative Option Marketing and Dark Patterns in New Circular

Last week the Federal Trade Commission (FTC) announced it had issued a complaint and proposed consent order against Instant Brands LLC for allegedly marketing products as “Made in the USA,” when they were actually made in China. Instant Brands, which manufactures Pyrex-brand products that include a range of mostly glass baking and cooking accessories, has already agreed to the settlement, which requires a payment of a monetary judgment of $129,416.

The company also agreed to three marketing restrictions:

  1. The FTC restricts the company from making unqualified U.S.-origin claims unless the product’s final assembly or processing, and all significant processing, takes place in the United States, and that all or virtually all ingredients or components of the product are made and sourced in the U.S.
  2. The agency requires that qualified “Made in USA” claims be accompanied by a disclosure regarding the presence of foreign parts, ingredients or components, and processing
  3. For any U.S.-assembly claims, it must be the case that the product is last substantially transformed in the U.S., principal assembly takes place in the U.S., and U.S. assembly operations are substantial
Continue Reading FTC Brings the Heat on Pyrex Manufacturer’s “Made in USA” Claims for Products Made in China

For years, lead generators have obtained telephone numbers for their clients to call by obtaining the consumer’s consent to receive calls from certain entities specifically identified by the lead generator. A typical model uses language that asks for the consumer’s consent, via a checkbox or otherwise, to receive marketing calls from a few of the lead generator’s marketing partners named in the consent request.

A popular variation of this model is to include, instead of a list of partners by name, a clickable reference to “marketing partners” in the consent language. The specific marketing partners are visible only when the consumer clicks the link and views whatever list of marketing partner names the lead generator has provided.

Sometimes, the marketing partners list has several dozens, hundreds, or thousands of names.  With such long lists, one might ask: How many names on the marketing partners list is too many to evidence meaningful consent by the consumer to receive calls or texts? As recently declared by the Federal Communications Commission (FCC), the answer is 5,329.  As a practical matter, the number might be a whole lot less.

Continue Reading Telemarketing Lead Generators: How Many “Marketing Partners” Is Too Many?

At the tail end of 2022, the Federal Communications Commission (FCC) released a Notice of Proposed Rulemaking (NPRM) seeking comment on proposals to streamline the processing of satellite and Earth station applications under Part 25 of its rules. FCC Chairwoman Jessica Rosenworcel explained that “the new space age needs new rules,” given the growing space economy, and that the public and private sectors will need to collaborate better.

Innovations in the space industry, from low Earth orbit (LEO) constellations to developments in in-space servicing and manufacturing (ISAM), have led to an influx of satellite and gateway Earth station applications in recent years. The impact? Greater demand on the agency’s resources and longer and less predictable wait times for its review and grant of applications. In fact, the rapid rise in the number of satellites being launched, coupled with the novelty and complexity of many of the new systems and spacecraft, caused Rosenworcel to announce plans to create a Space Bureau at the agency.

Continue Reading FCC Planning New Rules to Streamline Satellites and Earth Station Applications

Like clockwork, the Federal Trade Commission (FTC) has issued its Adjustments to Civil Penalty Amounts for 2023. As instructed by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, the FTC and other similarly situated federal agencies ring in the new year not with champagne and confetti, but with adjusted maximum civil penalty amounts.

The adjustments, which occur every year, are intended to account for inflation and are based on the cost-of-living adjustment that is calculated from U.S. Department of Labor year-to-year Consumer Price Index data.

The FTC has revised its rule for adjusting civil monetary penalty amounts by listing increased civil penalty amounts for violations under 16 different provisions of law within its jurisdiction. For example, the penalty amounts for unfair or deceptive acts or practices under Sections 5(l), 5(m)(1)(A), and 5(m)(1)(B) of the FTC Act are set to increase from $46,517 to $50,120.

The FTC’s new penalty amounts will be applied to assessments made after publication of the new amounts in the Federal Register (the “effective date”), which should take only a few days. Significantly, the new penalty amounts—once effective—will apply to violations that took place even before the effective date of the adjustment, as long as the assessment itself occurs after the effective date for the adjustment. Inflation strikes again!

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Courts continue to grapple with issues surrounding Florida’s Telephone Solicitation Act, including what types of claims are sufficient to allege a concrete injury in fact to establish standing under Article III.

In December, the saga continued, with a federal court in Florida finding that the plaintiff did not adequately allege injury despite receiving five unsolicited text messages from the defendant between November 2020 and July 2021. In Muccio v. Global Motivation, Inc., the plaintiff filed a five-count class action complaint alleging violations of the Florida Telephone Solicitation Act (FTSA) and the Telephone Consumer Protection Act (TCPA). The defendant filed a motion to dismiss, arguing that the plaintiff failed to allege that she suffered an “injury in fact” sufficient to give rise to Article III standing.

The court agreed with the defendant, citing the framework set forth by the Eleventh Circuit in Salcedo v. Hanna, which found that the receipt of a single unsolicited text message does not give rise to Article III standing in a TCPA class action. Applying Salcedo, the court found that there were no allegations of “financial loss or other pecuniary harm,” nor did plaintiff allege he was unable to use his phone for other functions because of the unwanted messages, or that his cell phone was searched, disposed of, or seized for any length of time.

Continue Reading Florida Court Dismisses Telemarketing Claims for Failure to Plead Injury; Plaintiff Appeals to Eleventh Circuit