Before your business cruises its way to violating the Telemarketing Sales Rule (TSR), you’ll want to pay attention to the FTC’s latest case against telemarketers. The lesson: if the call includes a sales pitch, the TSR applies – no matter what other purpose the call may have.
The FTC and ten state Attorneys General have filed suit against Caribbean Cruise Line, Inc. (CCL), and seven other companies behind a massive telemarketing campaign involving billions of robocalls. According to the complaint, the companies used robocalls that began with a political survey to generate leads for CCL. Although the TSR doesn’t prohibit political survey robocalls, these calls allegedly violated the TSR because they added a sales pitch for a cruise to the Bahamas.
Here’s how the robocalls worked: Consumers got a recorded call from “John from Political Opinions of America” who said they would receive a Bahamas cruise if they completed a 30-second survey. When consumers tried to claim their reward, they were connected to CCL, asked to pay $59 per person in port taxes for the cruise, and offered other travel packages to purchase.
Co-defendants Linked Service Solutions, LLC (LSS) and Economic Strategy, Inc. (ES) placed about 12 to 15 million such robocalls each day between October 2011 and July 2012. The calls generated millions of dollars in sales for CCL.
The government says that these calls violated numerous TSR provisions, including those that prohibit:
- calling numbers listed on the Do Not Call (DNC) Registry;
- calling people who had asked not to be called again;
- delivering a pre-recorded message to induce a purchase; and
- failing to state the name of the seller.
In addition to the TSR counts, the states assert various violations of state laws.
Five other interrelated companies (Telephone Management Corp., T M Caller ID, LLC, Pacific Telecom Communications Group, International Telephone Corp. and International Telephone LLC), and their owner, Fred Accuardi, are charged with assisting and facilitating the calls by, among other methods,manipulating caller ID information to hide the commercial purpose of the call.
Litigation continues against those five companies and Mr. Accuardi, while the other defendants (CCL; LSS and its owners; ES and its owner; and Steve Hamilton, one of the owners of Pacific Telecom Communications Group) have agreed to court orders settling the charges against them. The proposed settlements:
- ban the settling defendants from engaging in abusive telemarketing practices, including calling consumers listed in the DNC Registry or anyone who said they don’t want to be called again, spoofing caller ID, or placing illegal robocalls;
- require CCL to monitor its lead generators; and
- impose millions of dollars of civil penalties, which are partially suspended based on the defendants’ inability to pay.
This case provides some valuable lessons to telemarketers and the firms that represent them:
- The TSR covers calls made with multiple purposes, if one of the purposes is the sale of goods or services. So, companies who use political survey robocalls, or other legal robocalls, to sell goods or services risk violating the TSR.
- Liability is broad under the TSR. Liability is not limited to the company that made the calls. It’s also illegal to “provide substantial assistance or support” to a seller or telemarketer when you know or consciously avoid knowing they’re violating the Rule. The TSR makes it clear that “but I wasn’t the one doing the dialing” isn’t a defense.
- The states and feds are united in the fight against illegal telemarketing. The FTC, DOJ, and State AGs remain committed to working together to protect consumers from illegal telemarketing. This case is another example of that cooperative relationship.
The FTC has free resources to help streamline your compliance obligations.