There’s not much talk anymore about the Generation Gap – at least not in terms of crazy teens and their rock ‘n’ roll music. But there’s another kind of Generation Gap that has the FTC concerned: the compliance gap between the established standards of the National Do Not Call Registry and the way some companies are using lists from lead generators without careful consideration of how those lists were compiled. An FTC settlement with Versatile Marketing Solutions (VMS) should help close that gap and encourage companies to pay closer attention.
VMS is a home security company that buys sales leads from lead generators to support its telemarketing efforts. During the time at issue in the FTC’s lawsuit, VMS placed more than 2 million outbound telemarketing calls. The problem: More than a million of the numbers VMS bought were on the National Do Not Call Registry. But that’s not all. A lot of consumers whose numbers were on those lists had told VMS “enough already” and had exercised their right to stop calls from that particular company. But that didn’t deter VMS from calling them again.
VMS’ legal responsibility for the information on the lists is where the FTC’s case gets interesting for marketers. VMS says it bought the lists from lead generators who claimed to have consumers’ express consent to get telemarketing calls about home security systems. But according to the FTC, those sale leads were collected through illegal means, including an annoying onslaught of robocalls from “Tom with Home Protection” and fake telephone surveys. And under the Telemarketing Sales Rule, what a lead generator may claim about consumer consent doesn't change a company's compliance obligations.
In addition to provisions that will protect consumers in the future, the settlement includes a $3.4 million judgment, with all but $320,700 suspended due to the defendants’ inability to pay. The case names both the corporate entities and VMS owner Jasjit Gotra.
If you’re involved in lead generation or telemarketing, here are some tips for closing the compliance gap.
Consider yourself responsible for compliance. Scully and Mulder had it right on The X Files: Trust No One. If your company or a company you hire provides leads, the due diligence onus is on you to comply with the Telemarketing Sales Rule. Don’t just take the word of a lead generator – who is trying to sell you something, by the way – that everything is on the up and up. Furthermore, consider the company you keep. Don’t do business with lead generators unless you’re confident they know the law and comply with it. Otherwise, you could be staking your financial future on the potentially unreliable word of an illegal robocaller.
Pay attention to consumer complaints. Not to mix our scifi metaphors, but when you get a “Danger, Will Robinson” warning, it’s wise to heed the signs that a list may have been compiled illegally. According to the FTC, many people whom VMS called gave them an earful that they hadn’t agreed to get telemarketing calls. But even as complaints mounted, VMS went back to the well and bought more lists from the lead generators who sold them the faulty lists in the first place. The takeaway for marketers: Putting your fingers in your ears and doing that “la la la “ thing isn’t likely to be an effective legal defense.
“Tom from Home Protection”, meet “Rachel from Card Member Services.” We’re not saying these two are the Bonnie and Clyde of illegal telemarketing, but they’re certainly a match made in, well, somewhere other than heaven. The FTC’s complaint offers insights into some of the methods those lead generators used to compile the lists VMS bought. For example, a robocall from “Tom” opened with FBI burglary statistics and then asked consumers to press “1” to hear about how to get a “free” home security system. But all consumers really got was their number on a marketing list. Another bogus method involved a home safety “survey.” After answering a few routine questions, consumers were told “For participating in our survey, there is a chance you could be selected to receive a new G.E. Life Safety System. If you are selected, when would be the best time to reach you?” If a consumer provided a convenient time when they could be contacted about their “prize,” the lead generator sold their name and phone number. Of course, it’s possible for consumers to change their minds about receiving telemarketing calls, but “consent” achieved through trickery isn’t consent at all.
The TSR defines defenses narrowly. We're not saying there aren’t valid defenses under the TSR. Of course there are. For example, a company may call a number on the Registry if the consumer gives express written consent to get those calls. Under the established business relationship exception, there may be a defense if a consumer initiates the inquiry and the inquiry is made to the specific seller. There’s also a safe harbor defense for an isolated violation that’s the result of error. But to fall within that defense, a company needs to have a tip-top compliance process already in place. According to the FTC’s complaint, none of those defenses applied to VMS.