FCC Warns that Unilateral PayPal User Agreement Changes May Violate the TCPA

In advance of the FCC’s highly anticipated June 18 meeting, during which it is likely to vote on an omnibus order disposing of a wide range of pending petitions for declaratory ruling, the FCC’s Enforcement Bureau took an early shot across the bow at a proposed change to  PayPal Inc.’s User Agreement. In an unusual move, the Bureau sent a public letter to PayPal warning it that its new broad “consent to contact” provision may violate the TCPA.

The updates to the User Agreement authorize PayPal to contact a consumer by “autodialed or prerecorded calls and text messages … at any telephone number provided … or otherwise obtained” in order to notify the consumer about his or her account, to troubleshoot problems, or resolve a dispute, collect a debt, poll for opinions, to contact a consumer with promotions, or “as otherwise necessary.” The terms lack an opt-out mechanism for consumers who do not wish to receive these calls. Further, PayPal’s PayPal’s Policy Updates page uses bold and capital letters to make consent to contact a condition of use: “IF YOU DO NOT AGREE TO THE AMENDED USER AGREEMENT, PRIVACY POLICY OR ACCEPTABLE USE POLICY, YOU MAY CLOSE YOUR ACCOUNT BEFORE JULY 1, 2015 AND YOU WILL NOT BE BOUND BY THE AMENDED TERMS.”

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Illinois Federal Court Follows Eleventh Circuit’s Broad Definition of “Sender” in Blast Fax Case

Through prior posts (see here, here, and here), we have monitored the FCC’s somewhat perplexing distinction between calls and faxes in the context of analyzing direct and vicarious liability under the TCPA. Just two months ago, the FCC’s position, as originally set forth in a letter brief, was adopted by the Eleventh Circuit in Palm Beach Golf Center-Boca, Inc. v. Sarris, 781 F.3d 1245 (11th Cir. 2015) (“Sarris”). The Sarris court held that “a person whose services are advertised in an unsolicited fax transmission, and on whose behalf the fax is transmitted, may be held liable directly” under the TCPA.

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Court Clarifies Free Offers and Dual Purpose Calls

A recent decision from the Southern District of Alabama provides more clarity as to the treatment of “dual purpose” telephone calls to wireless numbers that offer free goods and services. The Federal Communications Commission already has explained that “offers for free goods and services that are part of an overall marketing campaign to sell property, goods, or services” are advertisements under the TCPA and FCC regulations. The FCC also has explained that informational calls that are motivated in part by the intent to sell property, goods, or services are “in most instances” advertisements under the TCPA. This is true whether call recipients are encouraged to purchase, rent, or invest in property, goods, or services during the call or in the future (“such as in response to a message that provides a toll-free number”). Report and Order, In re Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, 18 FCC Rcd. 14014, ¶¶ 139-142 (2003).

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Court Grants Summary Judgment to Plaintiff Class in Blast Fax Case, Awards More Than $22 Million in Statutory Damages

In September, we reported that a court in the District ofNew Jersey denied the defendants’ motion for summary judgment in a “fax blast” class action, concluding that the defendants could be directly liable under the TCPA for fax advertisements they did not actually send, but rather that were sent by a third-party marketing firm to promote the defendants’ goods or services. See City Select Auto Sales, Inc. v. David Randall Associates, Inc., No. 11-2658, 2014 WL 4755487 (D.N.J. Sept. 24, 2014) (“City Select I”).

Six months later, relying heavily on that earlier ruling, the court has entered summary judgment on behalf of the plaintiff class and awarded it statutory damages of $22,405,000. City Select Auto Sales, Inc. v. David Randall Associates, Inc., et al., No. 11-2658, 2015 WL 1421539 (D. N.J. Mar. 27, 2015) (“City Select II”).

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New Jersey Federal Court Rejects FCC’s Dish Network Ruling in Blast Fax Case, Relies on FCC’s Letter Brief in Sarris

As we previously reported, on July 17, 2014, the FCC filed a letter brief in Palm Beach Golf Center-Boca, Inc. v. Sarris, No. 13-14013 (11th Cir.) (“Sarris”), in which it took the position that entities can be held directly liable under the TCPA whenever their products or services are advertised in an unsolicited fax—even if they did not actually send the fax, and even if they did not know the fax was going to be sent. The FCC’s letter brief stood in marked contrast to its decision last year in In re Joint Petition Filed by Dish Network, LLC, 28 F.C.C. Rcd. 6574 (2013) (“Dish Network”), where the FCC had limited direct liability to only “telemarketers” that “initiate” calls, and otherwise applied agency principles to determine whether “sellers” might be vicariously liable for calls made on their behalf. As readers may recall, the FCC’s letter brief does not articulate a policy reason why a “seller” in the voice call context should receive more protection than an entity whose goods and services are promoted through a fax advertisement. But whatever the merits of the letter brief, it has yet to be cited by the Eleventh Circuit (which has heard argument but not yet issued an opinion) or, at least for the past few months, any other court.

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Ninth Circuit Addresses TCPA Text Message Claims

In Gomez v. Campbell-Ewald Co., No. 13-55486, 2014 WL 4654478 (9th Cir. Sept. 19, 2014), a panel of the Ninth Circuit Court of Appeals addressed several recurring issues in TCPA litigation, including: the efficacy of Rule 68 offers to moot putative class actions; potential First Amendment defenses; and vicarious liability.

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The FTC Is Looking For A Few Good Robocall Hackers

The FCC is not the only federal agency tasked with regulating telephone calls. The FTC also regulates telephone calls pursuant to the Telemarketing Sales Rule (“TSR”) (16 C.F.R. § 310 et seq.). And while the scope of the TCPA and the TSR differs, the two sets of regulations overlap in a key area—prerecorded calls. See 47 C.F.R. § 227(b)(1); 16 C.F.R. § 310(b)(iv). As we have noted in a previous post, these regulations are not entirely consistent.

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Buyer Beware: When the Financially Challenged Marketing Partner is a Co-Defendant in TCPA Litigation

A recently proposed class action settlement agreement illustrates the potential litigation perils when any established business relies on outsourced, undercapitalized marketing agents who lack either the assets or insurance to adequately defend TCPA class action litigation.  Indeed, the only proposed recovery for the class is an agreement to provide testimony and documentary evidence of the co-defendant’s actual knowledge of the conduct that violated the TCPA, and its alleged authorization of the subject unlawful text messaging.

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