Automated Dialing Systems: Benefits Come With Significant Legal & Financial Risks
If your company uses automated telemarketing systems, then you're no stranger to the negative press about unsolicited automated calls and robocall scams.
But, in spite of the pervasive bad news, there are still many reputable companies that use automated calling technology with scrupulous attention to the law.
Automated dialing systems, robocalling, bulk text messages, direct-to-voicemail systems, and human-assisted automated response systems are highly effective marketing tools. They are often an indispensable way to reach customers who have already expressed an interest in a product.
In fact, for some companies, these marketing techniques are critical to the survival of their business models. They offer important advantages such as reducing or eliminating call center costs. These systems are efficient, low-cost technologies that yield high returns.
Unfortunately, bad actors have given a bad name to automated dialing systems. Many are criminal enterprises that operate from overseas. But, in spite of stepped-up enforcement, the appetite for illegal schemes seems to have no bounds. It's unfortunate - and unfair - that law-abiding companies are tainted due to the backdrop of massive, unlawful, and deceptive activities.
So, it’s no wonder that the very word, “robocall,” can stir up super-charged feelings among consumers. According to YouMail, a firm that offers robocall blocking services, there were 48 billion robocalls in 2018. That's 1,500 calls every second, many if not most of them unauthorized. Many are scammers attempting to obtain private information, selling bogus products and services, or manipulating unsuspecting victims into schemes such as paying for non-existent IRS tax bills.
Consumer complaints and class action lawsuits are rising. In 2017, the Federal Trade Commission (FTC) reported 4.5 million complaints about robocalls, double the complaints from 2013. And 2018 and 2019 have been filled with eye-popping class action settlements under the TCPA related to automated dialing systems.
Be Compliant Or Face Heavy Penalties
Demand for tougher regulations and greater enforcement has created an environment where no company using automated dialing technologies is safe from legal action. The legal risks include aggressive actions by both public and private plaintiffs, involving tens of millions of dollars in potential exposure. Consider these judgments and settlements:
- In 2018, the FCC levied a $120 million fine on Adrian Abramovich of Miami for placing 100 million illegal robocalls to critical emergency (911) phone lines. This is the largest fine ever imposed by the FCC.
- In 2017, an Illinois judge ordered Dish Network, the satellite television provider, to pay $280 million in penalties for violating the Telephone Consumer Protection Act, the Telemarketing Sales Rule, and state law.
- In 2014, Capital One and three collection agencies agreed to pay $75 million in a class action suit involving the use of robocalls to consumer cell phones.
- In 2017, Uber agreed to a $20 million settlement to resolve a class action suit alleging the company sent unauthorized text message to clients.
The FCC Finds Its Mojo
Recent public statements from FCC Chairman Ajit Pai indicate that the agency is taking more aggressive action to control unlawful robocalls and "malicious caller ID spoofing."
The agency now has more robust regulations covering call blocking, caller ID authentication, rules for reducing unwanted calls to reassigned numbers and robotexts. The agency has stated that it will continue to levy heavy fines against spoofers.
The regulatory environment is dynamic and constantly changing. Contact Kronenberger Rosenfeld about how to stay compliant. The high risk is not worth taking when you consider the relatively low cost of creating a robust compliance program.
Stay Compliant With These Tips
Get Prior Express Written Consent Under the Telephone Consumer Protection Act (TCPA)
Signed into law in 1991, the TCPA and the FCC’s implementing regulation provide extensive guidance on how to lawfully use automated dialing systems for pre-recorded voice messages, SMS text messages and automated fax messages. Contact Kronenberger Rosenfeld if you have questions about how to comply with the TCPA.
Under TCPA, marketers must obtain prior express written consent before using automated telephone dialing systems to contact consumer or business mobile phones. The consent must be “clear and conspicuous disclosure" relating to the receipt of marketing calls using an automated telephone dialing system, and must inform the consumer that consent is not necessary in order to buy a product or service. The signature used to obtain consent can be digital or electronic. A signature reflecting consent can be by email, website form, voice recording, or keypad touch.
The burden is on the company to prove that clear and conspicuous disclosure was provided and that unambiguous consent from the consumer was obtained.
Heavyweight Financial Penalties for Non-compliant Telemarketers
Violating the TCPA exposes a company to significant financial damages ranging from $500 to $1,500 for each individual non-complying phone call, robocall, or SMS message sent using an automated telephone dialing system. More significantly, there is no cap on total damages, and private plaintiffs may bring claims on behalf of all consumers called through the class action process.
The FCC and private plaintiffs can also hold a company vicariously liable under the TCPA for calls made by third-party telemarketers. If your firm uses third-party telemarketing services, contact Kronenberger Rosenfeld to implement a TCPA compliance program to avoid crippling litigation. We’ll review and thoroughly examine your practices and procedures to ensure compliance with the TCPA and other relevant laws.
Scrub Against the Do Not Call Registry & Train Your Staff
Federal law prohibits calls to consumers who have placed their numbers on the Do Not Call Registry (the “DNC list”). However, the federal government permits telemarketers, for a fee, to check, or “scrub,” their telemarketing lists against the master list of consumers who opted into the Do Not Call Registry. Importantly, violation of the Do Not Call List rules is a separate violation from TCPA violations. To reduce the risk of noncompliance with DNC rules, we recommend training programs for staff involved in telemarketing calls, or staff involved in managing lead providers that use automated calling systems.
The Compliance Officer, Your Existing Customers & Other Vital Details
Another great way to reduce risks inherent in telemarketing is to assign someone to be the in-house TCPA/DNC compliance officer. This person will be the go-to source within your company to ensure that policies are up-to-date and followed by employees.
Develop Your Telemarketing Best Practices Policies
Your compliance officer needs to implement policies and monitor compliance with those policies. Experienced counsel can help develop your company’s best practices list. The important topics to cover include:
Contacts with Current Customers. Having existing customers does not give you automatic permission to contact them. While the DNC rules do have some limited exceptions for contacting customers and people who express interest in your company, those exceptions are limited and, of course, the TCPA still applies without exceptions.
Internal DNC Lists. In addition to scrubbing against the government’s DNC list, it is important to maintain your own company-specific DNC list of consumers who asked not to be called.
Time Of Day Requirements. You must comply with time of day requirements, which prohibit calls before 8 a.m. or after 9 p.m., local time.
Comply with the Telemarketing Sales Rule (TSR). In addition to guidelines under the TCPA and DNC rules concerning when, how, and the consent needed for making phone calls to consumers, companies must also comply with the TSR. The full contours of this rule are beyond this article, but suffice to say that this is a comprehensive regulation that includes many rules, limits, and prohibitions related to communicating with consumers over the telephone. Experienced counsel is important to developing a plan for complying with the TSR.
The laws governing automated dialing systems are rapidly changing, and they are becoming increasingly complex. Consumers are angry, and government agencies are stepping up enforcement. Don’t risk your company’s reputation and the potential for massive financial penalties. Kronenberger Rosenfeld can help you manage the high risks involved in using automated dialing systems, so you can focus on running your business.
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This entry was posted on
Tuesday, September 10, 2019
and is filed under
General News & Firm Announcements, Internet Law News.