Florida Delivers Message to Telemarketers: No Unsolicited Ringless Voicemails Starting July 1, 2018

telemarketing lawsIt’s been a busy few weeks with respect to the federal Telephone Consumer Protection Act (TCPA), with recent decisions handed down by the D.C. Circuit in ACA International v. FCC and the Ninth Circuit in Romero v. Department Stores National Bank further shaping the contours of the federal law. However, lest we forget, states have telemarketing laws as well and, this week, Florida Governor Rick Scott signed into law Senate Bill 568, which explicitly sweeps ringless voicemail technology within the state’s law. Ringless voicemail – technology that, in very basic terms, allows for messages to be delivered directly into a consumer’s cell phone voice mailbox without any ringing and without the calls being carried over a cellular network – has been largely untested in court. Several petitions have been filed with the FCC over the past few years requesting declaratory rulings that such messages are not “calls” under the TCPA; we have blogged about them and their status here and here.

The new Florida law makes clear, however, that, as of July 1, 2018, unsolicited ringless voicemails are a no-no within the state. Specifically, Senate Bill 568 amended the definition of “telephonic sales call” to include “voicemail transmissions.” “Voicemail transmissions,” in turn, are defined as “technologies that deliver a voice message directly to a voicemail application, service, or device” – i.e., ringless voicemails. Telemarketers thus should closely scrutinize their calling practices and the technologies they use, and consider whether the Florida orange juice is worth the squeeze in the wake of the new law.

CPSC’s Annual Agenda and Priorities Hearing Is an Important Opportunity for Stakeholders

checking off agenda itemsOn April 11, 2018, the Consumer Product Safety Commission (CPSC) will hold its annual Agenda and Priorities Hearing to discuss fiscal years 2019 and 2020. The upcoming hearing offers a valuable opportunity for all stakeholders to help shape the CPSC’s near-term agenda. CPSC has broad jurisdiction over 15,000 product lines, including toys, cribs, power tools, ATVs, cigarette lighters, small appliances, furniture, electronics, and household products. For companies that sell, manufacture, or import consumer products, this is a chance to engage directly with the CPSC and have their concerns and suggestions heard.

CPSC has explicitly invited the public to submit comments regarding which issues it should prioritize and dedicate resources to and, conversely, which issues the Commission should consider de-emphasizing in the upcoming fiscal years.

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The FTC Formed a Blockchain Working Group (And Maybe That’s A Good Thing)

blockchain technologyThe FTC just announced that it, too, will join the federal government’s growing crypto/blockchain regulation club, right alongside the ranks of the SEC, CFTC, and Congress.

Officially, this means the FTC has now created its own internal “Blockchain Working Group.” Though the FTC has been publishing information about cryptocurrencies since 2014 (see this hilariously-titled and well-written informative alert, Back, Back, Back It Up, for example) and brought its first cryptocurrency-related case as early as June 2015, the agency’s decision to form a working group shows a deeper level of commitment by the agency to engaging with players in the crypto space. And, certainly, it shows that blockchain and crypto assets are likely here to stay.

But does the creation of the FTC’s Blockchain Working Group mean *terrified gasp* . . . more regulation? Well, frankly, the amount of regulation doesn’t really matter in this context, so that isn’t even the right question to ask (the “right question to ask” appears at the end of this article). Preoccupation with the number of new laws aimed at regulating this previously unregulated space is futile. The crypto community enjoyed the absence of specific government oversight for years, but that didn’t stop state and federal agencies from bringing enforcement actions based on existing laws. Of course, the existing laws those agencies asked the courts to apply never contemplated the existence or consequences of this new, world-changing technology.

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FWIW: Millennials More Likely to Be Victims of Fraud

The FTC seeks to combat deceptive practices in the United States generally, but often it pays particularly close attention to the elderly, which it views as a vulnerable demographic. Last year for example, the FTC testified before the Senate Judiciary Committee on Aging that it’s taking action specifically against those fraudulent schemes that affect the elderly. It makes intuitive sense that the people asking their grandchildren how to turn on the computer would be more likely to fall for online scams than those glued to technology 24/7. For millennials, however, hubris may be their downfall, as a new report from the FTC shows that Americans in their twenties and early thirties are more likely to be scammed than the elderly. Specifically, 40% of this age group who reported fraud also reported losing money, while only 18% of those 70 and older who reported fraud also reported a loss. It is worth noting, however, that when these older adults did report losing money to a scammer, the median amount lost was greater. That is, the median reported loss for people age 80 and older was $1,092 compared to $400 for those aged 20-29.

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FTC Obtains Injunction Halting Alleged Cryptocurrency Pyramid Scheme

virtual currencyIt is perhaps not surprising that companies are already trying to make money (allegedly the unlawful way) from cryptocurrencies. Last week the FTC demonstrated that it can keep up with any marketplace trend when it succeeded in obtaining a federal court order to shut down a cryptocurrency-related pyramid scheme. This is the first action brought by the FTC involving cryptocurrencies since 2016, which, along with its 2015 action, is only the third ever FTC action in the space.

The complaint, filed on February 20, 2018 in Florida and made public late last week, pursues UDAP (unfair and deceptive practices in or affecting commerce) violations against individuals who allegedly coordinated and promoted multiple “chain referral schemes” under the business names Bitcoin Funding Team, My7Network, and Jetcoin. Specifically, the claims allege defendants deceptively advertised, marketed, and promoted their purported money-making schemes.

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March Madness: Long-Awaited D.C. Circuit Decision Strikes Down Parts of the FCC’s 2015 Omnibus TCPA Order

telemarketing lawsAfter keeping us waiting for nearly a year and a half after oral argument in October 2016, a three-judge panel of the U.S. Court of Appeals for the D.C. Circuit last week weighed in on the Federal Communications Commission’s (FCC) 2015 Omnibus Telephone Consumer Protection Act (TCPA) Order, which we previously summarized. The court was asked to opine on four aspects of the 2015 Order, including its expanded definition of “automatic telephone dialing system” (more commonly referred to as an “autodialer” or ATDS), restrictions on calling reassigned numbers, and whether and when previously provided consent may be revoked. Although we happily welcome the ruling, we did not get all the answers that industry was likely hoping for.

In the 51-page ruling, the court first set aside the FCC’s efforts to “clarify” the definition of “autodialer” and explicitly rejected its expanded definition of “capacity,” holding that “the Commission’s interpretation of the term ‘capacity’ in the statutory definition of an ATDS is ‘utterly unreasonable in the breadth of its regulatory [in]clusion.'” However, the court did not agree that the label “present ability” or use of a calling platform should be the determining factor either:

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TCPA Plaintiffs Standing Tall After Ninth Circuit Decision

We recently blogged about the possibility of courts limiting serial litigants’ standing under the Telephone Consumer Protection Act (TCPA) based on them not falling within the statute’s “zone of interest” and, thus, not having standing under Article III of the U.S. Constitution. Nate Silver’s job clearly isn’t threatened by our predictive blog posts, because in Romero v. Department Stores National Bank, — Fed. Appx. –, No. 16-56265, 2018 WL 1079728 (9th Cir. Feb. 28, 2018), the Ninth Circuit provided support with respect to standing for TCPA plaintiffs (albeit in a different context than serial litigants). The court, in an unpublished opinion, relied on Van Patten v. Vertical Fitness Group in finding that a TCPA violation is a de facto injury sufficient for standing in federal court under Article III. Here, the alleged TCPA violation was placing nearly three hundred calls to a cell phone using an automatic telephone dialing system without the called party’s consent.

Romero is slightly different from most TCPA cases we blog about because the plaintiff did not receive calls from a telemarketer, but from the bank that provided her a loan. As a result, there likely was consent from the outset, which only later was revoked to potentially create TCPA liability. The plaintiff provided her cell phone number when she created a credit card account at a national retailer. After she failed to satisfy delinquent payments on that account, she began receiving collection calls from banks. She claims that she received over 290 collection calls made with an automatic dialing system and that she requested to stop receiving calls on each of the three instances in which she answered. After the last of these do-not-call requests, she stopped receiving the calls.

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Can I Use that Photo? No. Yes. Maybe?

questionsBusinesses often have a need to make use of photographs as decorative art, for illustration, in connection with programs, events, or seminars, or for other purposes. For photographs not created by the respective business, the question arises whether photos from other sources can be used without first obtaining a license. The general answer is no. United States copyright law provides certain rights to the owner of the work of authorship that include the exclusive rights to reproduce, publicly distribute, and publicly display directly or through others. Before using a copyrightable work, it’s therefore important to evaluate its respective copyright rights. This should happen regardless of where the work was found or how the work will be used.

For photographs, it’s even more important to consider copyright interests. Photographs are generally going to be considered a creative work of authorship subject to copyright protection. The U.S. Copyright Office recently amended the regulations governing the application process for photographs to permit group registration of photographs. Under the final rule (37 CFR Parts 201-02), which took effect February 20, 2018, photographers can utilize an online application and refined deposit submission requirements to facilitate and increase the efficiency of applying for a copyright registration for multiple photos. Up to 750 photographs can now be included in a single claim. These processes will make it easier for photographers to enhance their rights in their photos (with a copyright registration), which, in turn, will increase the risk for third-party users that make use of such photos without permission. To avoid complications, particularly with copyright trolls that aggressively assert rights in photographs and often against innocent users, it’s best for businesses to consider the following steps before making use of a third-party photo.

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The Department of Justice’s Consumer Protection Branch Believes a Coupon-Driven Class Action Settlement Is “Unfair” and States it Is Cracking Down on “Unfair” Class Action Settlement Proposals

wine bottlesIs the government about to make it harder for companies to settle consumer class actions? The Department of Justice’s Consumer Protection Branch, in a Statement of Interest (Statement), has requested that a Judge set aside a proposed class action settlement that would enrich plaintiffs’ attorneys to the tune of nearly $2 million. Specifically, the DOJ argues that the settlement, in the form of coupons, would “transfer a massive $1.7 million windfall payment to plaintiffs’ counsel” and that such a payout outweighs the harm incurred by consumers. The DOJ, under the Class Action Fairness Act of 2005 (CAFA), receives proposed settlement notices from the participating defendants, and may issue a Statement of Interest to the presiding court if it believes a settlement is unfair or unreasonable.

In Cannon v. Ashburn Corp., No. 1:16-cv-01452, 2016 WL 7130913 (D.N.J. Dec. 7, 2016), the plaintiffs alleged that a wine distribution member website, Wines ‘Til Sold Out, violated New Jersey’s fraud and contract laws and was unjustly enriched by falsely advertising discounted prices without ever selling the wine at an original price. The proposed settlement would provide class members credits ranging from $0.20 to $2.25 per previously purchased wine bottle and permit members to put the credits towards future wine purchases on the website.

The parties claim the settlement is worth $10.8 million. The DOJ disagrees, stating that the value is “far below” $10.8 million and that the $1.7 million is, therefore, “not appropriate.” The DOJ argues that the credits are akin to coupons, and coupons are subject to more scrutiny under the CAFA. Although the DOJ acknowledges that the consumers incurred a harm, the DOJ feels the harm was minimal because the consumers “actually received the products they ordered at the prices to which they agreed.” Nonetheless, the DOJ argues, even if the court disagrees with the DOJ and finds that the consumers’ harm was beyond minimal, then the DOJ feels the proposed settlement is “even worse” because the coupons would have strict requirements and require the consumers to “navigate [an] unnecessarily complex process.” The court will hold a Fairness Hearing on March 19th.

According to then Associate Attorney General Rachel Brand, the DOJ, despite receiving about 700 class action settlement notices per year under the CAFA, has only involved itself in two cases in more than a decade because the review process has been time-consuming and inefficient. However, Ms. Brand said, “[the DOJ] has begun to fix that process, and [is] already in a better position to review settlements.” Indeed, the DOJ’s recent Statement of Interest as well as Ms. Brand’s remarks suggest that the DOJ is starting to act under the CAFA and crack down on what it believes to be unfair settlements.


*Dan Rosenzweig is admitted in New York only and is practicing under the supervision of Venable partners in Washington, DC.

CFPB issues new RFIs, FFIEC releases new HMDA guide, and more in this issue of Consumer Financial Services Practice Digest

request for informationCFPB Expands Call for Evidence with Additional RFIs

The 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 actions, and external engagement.

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