Of course, robocalls are a major annoyance for consumers. But anyone who works from home knows how illegal robocalls can cut into productivity, too. An FTC settlement with an outfit doing business as USA Vacation Station offers insights into the economics of robocalling and how the FTC’s concerns dovetail ongoing issues involving lead generation.
The defendants – Orlando-based Lilly Management and Marketing and owner Kevin W. Lawrence – had lead generation contracts with companies that manage resort properties. The defendants hired people who operated high-speed dialing equipment to call the numbers on those lists. Once consumers picked up the line, they heard a pre-recorded pitch for a vacation package. A typical tout went something like this: “Let the memories begin . . . You have been selected for a magical Walt Disney World area holiday special. Your claim number is 545. To take advantage of this promotion, press 1 now.” (Let’s be clear: The recording referred to the Disney World area, not a vacation actually affiliated with that company.) If consumers pressed a button, they were transferred to one of the defendants’ sales agents, who tried to close the deal.
If you've ever wondered about the economics of robocalling, you’ll be interested to know that the defendants paid an average of less than a penny per outbound call. Do the math and it means that one single sale was sufficient to cover the cost of 100,000 calls. So it didn’t require many takers for the defendants to recoup what they spent on the campaign.
Curious why we haven’t mentioned the National Do Not Call Registry? That’s because the FTC’s rules make it illegal for a company to place robocalls to any phone number – even numbers that aren’t on the Do Not Call Registry – unless the consumer has given signed written permission to receive robocalls. Here, nobody gave defendants permission to robocall them to sell vacation packages.
Not surprisingly, consumers began to complain to the defendants about the pre-recorded calls and that they’d been called despite the fact that their numbers were on the DNC Registry or that they had specifically told the defendants to stop. What’s more, the Better Business Bureau notified the company that they’d been getting consumer complaints about the calls. The BBB followed up with a letter to defendant Kevin W. Lawrence regarding what it described as a “pattern of complaints regarding the violation of the National Do Not Call Registry.” The BBB told the defendants that “[c]onsumers have also requested to be removed from your list and claim your company continues to call.” But that didn’t deter the onslaught of illegal telemarketing. According to the FTC, neither did the receipt of an FTC subpoena. Instead, the defendants stepped up their efforts and even began placing calls to Canadian consumers.
The FTC says the defendants placed calls to tens of millions of numbers on the Do Not Call Registry and thousands more to consumers who had asked to be put on their entity-specific Do Not Call list. The lawsuit charges the defendants with three separate Telemarketing Sales Rule violations: 1) initiating (or causing others to initiate) an outbound telemarketing call with a pre-recorded message; 2) calling numbers on the Do Not Call Registry; and 3) failing to honor consumers’ entity-specific Do Not Call requests. The proposed settlement bans robocalling, mandates TSR compliance, and imposes a $1.2 million civil penalty, most of which will be suspended based on the defendants’ financial status.
What can other companies learn from the case? Whether you sell lists and leads or buy them, it’s a major mistake to assume Do Not Call compliance is someone else’s responsibility.
Looking for tips on how to respond to robocalls? Watch our video, Hate Robocall Scams? The FTC Does, Too.
(Note: Edited June 1, 2016, to correct a reference to the fact that the TSR makes it illegal to place robocalls to any number, even those not on the Do Not Call Registry, without the consumer’s written permission.)