First Data Merchant Services, LLC (First Data), and its former executive, Chi “Vincent” Ko, will pay $40.2 million to settle Federal Trade Commission (FTC) charges that they ignored obvious warning signs of fraud and processed transactions for an array of scams that caused tens of millions of dollars in harm to consumers.

This action serves as a powerful reminder that the FTC seeks to hold processors and their independent sales organizations (ISOs) financially responsible for facilitating the unlawful conduct of merchants by enabling merchants to access the payments system to allegedly defraud consumers and launder card transactions. Just as noteworthy, the settlement agreed to by First Data may propel new industry standards for processors to formally oversee the merchant onboarding activities of ISOs given responsibility for underwriting merchant accounts.


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On Wednesday May 6, 2020 the Supreme Court heard oral argument in Barr v. American Association of Political Consultants, Inc., a case that will answer whether the government debt exception (“the Exception”) to the Telephone Consumer Protection Act (“TCPA”), which allows for government-backed debt collection calls to be placed to cell phones via autodialer without the prior express consent of the debtor, is unconstitutional under the First Amendment. If the answer is yes, then the Court will also decide whether the Exception—passed in 2015—is severable from the rest of the TCPA—passed in 1991. A toilet flushing was heard during Justice Kagan’s questioning of AAPC’s counsel—not figuratively, but literally. Does this flushing foreshadow the fate of the TCPA? We likely will see in the next few months when a decision is expected.

Though the Government began oral argument by maintaining that the Exception is not content- based, it appeared that a majority of the Court did not agree. Justices Ginsburg, Sotomayor, and Kavanaugh each questioned the Deputy Solicitor General about the Government’s ability to meet its strict scrutiny burden, indicating that they have trouble avoiding the conclusion that the Exception isn’t content-based. Further, Justices Roberts, Thomas, Alito, and Gorsuch bypassed questioning the Government on the constitutionality question (Justice Gorsuch began his questioning by stating, “I think the government debt exception is almost certainly content-based”), but, instead, focused on whether the Exception is severable from the TCPA. The Government proffered two arguments in defense of severability: (1) that striking down the entirety of the TCPA because of the Exception is akin to the “tail wagging the dog,” and (2) that the temporal sequence of the TCPA predating the Exception indicates that the exception can be severed.


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This week, a group of financial services stakeholders submitted a joint petition to the Federal Communications Commission (FCC) for an expedited declaratory ruling, clarification, or waiver so that phone calls and text messages placed to consumers using autodialers and prerecorded voice messages about matters related to the COVID-19 pandemic would not be subject to onerous consent requirements under the Telephone Consumer Protection Act (TCPA).

According to the petitioners, class action litigation risks under the TCPA limit banks and other financial services organizations in the communications they send to consumers, and without confirmation by the FCC that certain COVID-19 calls and texts are subject to the “emergency purposes” exception under the TCPA, financial institutions may not be able to effectively distribute messages about fee waivers, payment deferrals, mortgages, loan modifications, low-rate and zero-rate loans, and other accommodations made in light of the COVID-19 crisis.


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Last week, the Arizona Attorney General filed a complaint against telemarketer Valley Delivery LLC and affiliated companies Next Day Delivery LLC and My Home Services LLC, and an individual defendant, Mathew Willes, for allegedly distributing fake missed package slips to homeowners to collect their personal information in a “delivery slip scheme.” While the conduct here seems particularly egregious, the case serves as a good reminder that the State AGs remain focused on consumer protection issues especially involving personal data and telemarketing.

The complaint alleged that since January 2017, Valley Delivery gathered new homeowners’ addresses from the county recorder’s office and then dispatched “delivery drivers” to those addresses to post fake delivery slips, with the caption “Sorry We Missed You” on the door of each home. The delivery slips contained a callback telephone number, purportedly for consumers to reschedule the delivery. However, when consumers dialed the callback number on the slips, representatives allegedly collected consumers’ information for telemarketing purposes by affiliated companies and third parties. In addition, according to the complaint, the defendants created websites with false information about the company meant to induce consumers to contact the companies about their “missed delivery.” The defendants allegedly failed to provide sufficient disclosure to consumers concerning their business practices, both on the companies’ websites and on the delivery slips themselves. Even though, there was a purported disclaimer on the back of the slip that any contact information customers provide may be used by the companies or any of its partners for marketing purposes, many homeowners did not see this less conspicuous language placed in a smaller font than the language on the front of the slip.


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Last weekend, New York Governor Andrew Cuomo declared a state of emergency in the State due to the coronavirus outbreak. That’s scary enough. But there is an equally scary and somewhat odd consequence of New York’s declared state of emergency: the recently enacted New York Nuisance Call Act kicks in automatically. As a practical matter,

Last week, companies engaged in debt collection were not-so-gently reminded that making calls using an automated dialer to any number other than the one provided by the consumer is incredibly risky—and in Rash Curtis & Associates’ case, a $267 million risk.

Calls made to phone numbers with the consumer’s prior express consent are not prohibited

Many children, including myself, were taught the childhood mantra: “Sticks and stones may break my bones, but words will never hurt me.” The chant intended to be a retort to name calling—a declaration that you were above the insults. But what about text messages? Could a single text message hurt me in a way that could amount to the harm required to sustain a Telephone Consumer Protection Act (TCPA) claim? On August 28, 2019, the Eleventh Circuit answered this question in the negative with its decision in Salcedo v. Hanna, — F. 3d –, 2019 U.S. App. LEXIS 25967 (11th Cir. Aug. 28, 2019). With Salcedo, the Eleventh Circuit created a potential circuit split by finding that a plaintiff could not rely on a single text message to amount an injury in fact necessary to establish Article III standing for a TCPA action.

The plaintiff filed a TCPA suit after having received a single multimedia text message from his former attorney and that attorneys’ law firm offering a ten percent discount on future services. The Plaintiff alleged this lone message caused him harm by (1) wasting his time during which both he and his phone “were unavailable for otherwise legitimate pursuits,” and (2)”resulted in an invasion of [his] privacy and right to enjoy the full utility of his cellular device.” The Eleventh Circuit rejected both arguments.


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Utah traditionally has been a hive of activity in the telemarketing and “how to make money” education verticals.  The Utah Consumer Protection Division (the “Division”) and the Division’s lawyers at the Office of the Attorney General appear to be trying to change that.  Industry participants have been watching closely a lawsuit filed by the attorney general on behalf of the Division in federal court in Utah.  Last week, that lawsuit was thrown out on jurisdictional grounds.  The lawsuit and the court decision shed light on the aggressive approach the Division is taking to this type of business activity and the limits on the authority of states to use the remedial tools available to the FTC.

Under 15 U.S.C § 6103(a), an attorney general of any state can bring suit in federal district court, as parens patriae, when the state has reason to believe that telemarketing violations are adversely affecting its residents.  The district court here concluded that the Division did not have parens patriae standing, because no Utah resident had been injured—REW did not sell its services to Utah residents.


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A bipartisan, public/private coalition of 51 attorneys general and 12 phone companies have agreed to create the “Anti-Robocall Principles,” a set of eight principles to fight “illegal robocalls” that the phone companies have voluntarily agreed to adopt by incorporation, or continued incorporation into their business practices.  The principles are available here and press release is here.

Why it matters:  “Illegal and unwanted robocalls continue to harm and hassle people every day. Consumer fraud often originates with an illegal call, and robocalls regularly interrupt our daily lives.  Robocalls and telemarketing calls are the number one source of consumer complaints at many state Attorneys General offices, as well as at both the Federal Communications Commission and the Federal Trade Commission.  State Attorneys General are on the front lines of enforcing do-not-call laws and helping people who are scammed and harassed by these calls.” according to the principles.

The coalition of companies includes twelve major carriers.


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On May 17, 2019, the U.S. Supreme Court announced it would not hear an appeal in Supply Pro Sorbents, LLC v. RingCentral, Inc., apparently satisfied with a Ninth Circuit ruling that the inclusion of a one-line company identifier on a fax cover page was not in violation of the TCPA’s bar on unsolicited advertisements.