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TCPA Class Action Against CallFire Dismissed

November 5, 2015 by David Klein

November 5, 2015

On October 8, 2015, the United States District Court for the Southern District of California dismissed a putative class action complaint alleging that CallFire, Inc. (“CallFire”) violated the Telephone Consumer Protection Act (“TCPA”). CallFire offers an Internet-based platform through which customers may prepare a text message and send that message to a list of mobile phone numbers provided by the customer. The complaint alleged that the plaintiff received unsolicited text messages from The Sports Network, a co-defendant that remains in the action. The plaintiff argued that CallFire was hired by The Sports Network to send the allegedly unlawful text messages. However, CallFire moved to dismiss the complaint against it, arguing that CallFire is immune from liability under the TCPA because it is a common carrier and did not initiate the text messages at issue.

Is CallFire Immune from Liability Under the TCPA?

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Text Message Marketer Found in Civil Contempt of Court Order

May 30, 2014 by David Klein

In 2011, the Federal Trade Commission (“FTC”) filed a complaint against text message marketer Phil Flora alleging that he had sent millions of deceptive text messages to consumers in violation of the FTC Act. The FTC’s complaint alleged that Mr. Flora used a network of affiliate marketers to deliver unsolicited text messages advertising deceptive mortgage loan modifications. Mr. Flora and the FTC settled the case in 2011 and, pursuant to the terms of the settlement agreement, Mr. Flora was permanently banned from sending deceptive text messages in the future.

Text Message Marketer Found to Be in Civil Contempt

Despite the 2011 settlement, in 2013, the FTC alleged that Mr. Flora was operating a similar deceptive text message marketing scheme. According to the FTC, Mr. Flora used a network of affiliate marketers to deliver unsolicited text messages offering free merchandise to consumers, such as Wal-Mart and Best Buy gift cards. However, none of the merchandise actually was free. In fact, consumers who clicked on any of the links in the subject text messages were taken to deceptive websites that requested the consumers’ personal information and required them to sign up for trial offers to “qualify” for free merchandise. In most instances, the trial offers included monthly recurring charges that were billed to the consumers’ credit cards.

The FTC has stated on several occasions that it takes violations of settlement orders very seriously and that “no matter how much scammers may try to hide their involvement, we will work to uncover their role and ensure they give up their ill-gotten gains.”

True to its word, the FTC came down hard on Mr. Flora and obtained an order and default judgment from a federal court in California finding Mr. Flora in civil contempt of the 2011 settlement agreement. In addition to permanently banning Mr. Flora from sending deceptive text messages in the future, the order has imposed a default judgment of almost $150,000 against him.

How to Avoid a Text Message Lawsuit

In light of the FTC’s massive crackdown on commercial text message spam, Mr. Flora’s case should serve as a cautionary tale. For peace of mind, as well as to save the potential substantial costs of litigation, a penny of prevention is worth a pound of cure. The best way to succeed in any FTC action is to never appear on the FTC’s radar screen in the first place.

Are you currently working on a regular basis with experienced Internet marketing counsel, versed in the intricacies and nuances of the FTC Act, Telephone Consumer Protection Act (“TCPA”) and online marketing law? As referenced above, if you are served with a lawsuit, the ability to demonstrate that you worked with counsel to implement practices and procedures to prevent the sending of unlawful commercial text messages should go a long way toward significantly reducing your potential damages.

This topic should be of interest to any company or individual engaging in mobile marketing.

If you are interested in ensuring that you are compliant with current text message marketing regulations, or if you are facing text message marketing litigation or other regulatory complaint, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.

The material contained herein is provided for informational purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.

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FCC Grants TCPA Exemption for Package Delivery Alert Text Messages

April 3, 2014 by David Klein

On March 27, 2014, the Federal Communications Commission (“FCC”) issued an Order granting package delivery companies an exemption from the Telephone Consumer Protection Act (“TCPA”) to permit them to alert wireless consumers about delivery of their packages, as long as consumers are not charged and may easily opt-out of future messages.

Background

The Order was issued in response to a petition filed by the Cargo Airline Association (the “CAA”), which sought an expedited declaratory ruling permitting package delivery companies to alert wireless consumers about the status of their packages without violating the TCPA. While the CAA did not dispute that the TCPA’s restrictions on the use of autodialers and prerecorded messages apply to the notifications at issue, it indicated that the notifications do not contain telemarketing, solicitation, or advertising, or raise other TCPA concerns.

The Order notes that the CAA’s members already provide delivery notifications to consumers’ residential phones, which is permissible without consumer consent under the TCPA, and seek to do the same to wireless phones, either by voice or via text message. The CAA noted that package delivery notifications to residential phones include the expected date and time of delivery, the tracking number, the delivery company’s toll-free telephone number and web address for customer service, whether a signature is required, and how to opt out of future notifications. If a package can be picked up by the consumer at the delivery company’s facility, the notification will include that facility’s address and hours of operation. Upon a favorable ruling from the FCC, CAA members would provide the same information in package delivery notifications via voice or text message to wireless numbers. In its filings, the CAA indicated that its members are capable of providing notifications that are not charged to consumers by, among other options, using third-party solutions that can be used for cell phone subscribers to the four largest nationwide wireless carriers.

The FCC noted that package delivery notifications are usually welcome to consumers because they conveniently alert consumers when their packages will arrive and usually guard against package theft.

The FCC granted the CAA’s petition, in part, with conditions.

The Conditions for Each Message/Call Sent Under this TCPA Exemption

A notification may be sent only to the telephone number for the package recipient;
Notifications must identify the name of the delivery company and include contact information for the delivery company;
Notifications must not include any telemarketing, solicitation, or advertising content;
Voice call and text message notifications must be concise, generally one minute or less in length for voice calls and 160 characters or less in length for text messages;
Delivery companies may send only one notification (whether by voice call or text message) per package, except if the package was undeliverable, in which case one additional notification may be sent for each of the following two delivery attempts;
Delivery companies relying on this exemption must offer parties the ability to opt out of receiving future delivery notification calls and messages and must honor the opt-out requests within a reasonable period of time from the date such requests are made, not to exceed thirty days; and
Each notification must include information on how to opt out of future delivery notifications; voice call notifications that could be answered by a live person must include an automated, interactive voice- and/or key press-activated opt-out mechanism that enables the called party to submit an opt-out request prior to terminating the call; voice call notifications that could be answered by an answering machine or voice mail service must include a toll-free number that the consumer can call to opt out of future package delivery notifications; and text notifications must include the ability for the recipient to opt out by replying “STOP.”

This ruling should provide considerable guidance for future non-telemarketing automated calling/text messaging activities. This is one of the first petitions that the FCC has acted upon since its most recent TCPA regulatory changes went into effect on October 16, 2013. This is a business friendly ruling and, as such, those in the telemarketing industry are optimistic that this will signal more favorable guidance to come when the FCC rules on other TCPA petitions that are currently pending for ruling.

If you are interested in learning more about this topic, or if you have been served with legal process relating to the TCPA, please e-mail us at info@kleinmoynihan.com or call us at (212) 246-0900.

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Alleged Text Message Spammer Settles with FTC

February 7, 2014 by David Klein

The Federal Trade Commission (“FTC”) recently entered into a court-approved settlement agreement with Jason Q. Cruz, individually and doing business as Appidemic, Inc., who was accused of transmitting unsolicited commercial text messages offering consumers free merchandise, including $1,000 gift cards to large retailers and iPads.

According to the FTC, none of the merchandise actually was free. In fact, consumers who clicked on any of the links in the subject text messages were taken to websites that requested their personal information and required them to sign up for trial offers to “qualify” for free merchandise. In most instances, the trial offers included monthly recurring charges that were billed to the consumer.

As part of the settlement filed in Illinois federal court, the defendant agreed to a number of injunctions, including being permanently enjoined from transmitting, or assisting others in transmitting, any unauthorized or unsolicited commercial electronic text messages to mobile telephones or other wireless devices. The defendant must also – for the next twenty years – submit a sworn notice to the FTC whenever he, for example, changes his residence or changes his role in any business.

The defendant also agreed to a suspended judgment of $185,041.26, which amount represented the money that had been made in connection with the alleged scam. Only $10,000.00 of that amount was actually paid, however. The defendant provided the FTC with sworn financial records demonstrating an inability to pay the total amount, so the FTC agreed to suspend the judgment (with the exception of the $10,000.00 payment directly to the FTC).

This settlement is only a small part of the FTC’s massive crackdown on commercial text message spam.

If you are interested in learning more about this topic or need to review your marketing practices, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.

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New FCC 911 Requirement May Be Coming Soon

January 16, 2014 by David Klein

Closing in on his third month as Federal Communications Commission (“FCC”) Chairman, Tom Wheeler made clear in a blog post on the FCC website that one of his main priorities is to ensure that telecommunications service providers supply their customers with the most up-to-date emergency service technologies.

911 Text Requirements

While the FCC chairman spoke generally about the increasing role that technology plays in the telecommunications industry, he focused significantly on the increasing use of text messaging. As a result of this trend, Mr. Wheeler made clear that United States consumers expect to have the capability to obtain 911 services via text messaging in the case of emergency. Mr. Wheeler concluded that “[t]his is not an unreasonable expectation – consumers should have the ability to reach 911 by all commonly accepted means of communication.”

Currently the FCC does not require that telecommunications service providers supply customers with emergency 911 text messaging capabilities. However, Mr. Wheeler indicated in his blog post that this might change in the near future. Mr. Wheeler applauded several major telecommunications companies (AT&T, Verizon Wireless, Sprint and T-Mobile) for preemptively providing their customers with a means of accessing 911 services via text messaging, but emphasized that numerous telecommunications providers do not provide any such emergency text messaging capabilities and will likely not in the near future, unless required to by the FCC.

To that end, Mr. Wheeler stated that the FCC “will consider a Policy Statement that sets forth our expectations with respect to text-to-911 for all text providers operating in this space, as well as a Notice to extend text-to-911 to all text service providers. Companies that offer texting services, but do not currently provide 911 access will have an opportunity to participate in this proceeding.” The “proceeding” that Mr. Wheeler is referencing is set to be held on January 30, 2014.

If you are interested in learning more about this topic, please e-mail us at info@kleinmoynihan.com or call us at (212) 246-0900.

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TCPA Class Action Certified Against Retailer that Sent Text Messages to VIP Customers

November 27, 2013 by David Klein

In an Illinois federal action that has been heavily litigated for over a year and has gone through several named plaintiffs, a magistrate judge recently recommended that the putative class be certified against a popular Chicago retailer, Akira, which was charged with violating the Telephone Consumer Protection Act (“TCPA”) for using an automated telephone dialing system to send text message marketing to its customers.

Can We Get a New Plaintiff? Anyone, Anyone?

The first named plaintiff in the case turned out to be a partner in the law firm that filed the lawsuit. Rather than the law firm getting disqualified as counsel (and losing out on the potential windfall of attorneys’ fees through a settlement with the defendant or a victory at trial), the law firm sent an email blast to the class seeking a replacement plaintiff (a questionable strategy in and of itself). The replacement plaintiff turned out to be someone who never even received the subject text messages. After she dropped out of the case, she was replaced by the latest (and current) named plaintiff who, according to the magistrate judge, apparently is an adequate class representative, despite the fact that the defendant may be able to establish that she actually consented to receive marketing text messages when she signed up for a customer VIP card to receive shopping discounts.

Class Certification and its Ramifications

In certifying the class, the magistrate judge noted that class certification is “normal” in TCPA litigation because main questions are common to all recipients of mass texts, calls or faxes. Nevertheless, the judge pointed out that in certain cases, where the defendant is able to prove that a large number of the putative class consented to be contacted through their mobile phones, class certification would be improper. The defendant here only produced evidence of consent regarding the latest plaintiff which, questionably, the judge deemed insufficient to displace her as class representative.

Settlement often follows a court’s favorable decision on class certification. However, since this decision came in the form of a magistrate judge’s “report and recommendation” to the actual judge trying the case, it will be interesting to see whether Akira files its written objections next week. If it does, the judge will make a de novo determination on the motion. Since the judge already has given plaintiff’s counsel numerous opportunities to keep the case alive, it is doubtful that the judge will do anything other than adopt the magistrate judge’s decision. Most likely, this case will soon end in settlement.

If you are interested in learning more about this topic or need to review your marketing practices, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.

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Mobile Marketing Company Settles Cramming Allegations for $10+ Million

November 22, 2013 by David Klein

As part of the increased regulatory focus on the mobile marketing space, the Federal Trade Commission (FTC) brought suit against Wise Media, LLC, and its officers individually, alleging mobile telephone bill “cramming” in violation of the FTC Act and other applicable laws. For those that are unfamiliar with the term, “cramming” is the act of placing unauthorized charges on a consumer’s telephone bill – in the case of Wise Media, it involved placing charges on consumers’ mobile telephone bills. In order to avoid going to court and risk even greater liability, Wise Media decided to settle with the FTC.

Details of Alleged Cramming

According to the FTC complaint, Wise Media allegedly billed consumers for “premium services” delivered via text message, including horoscopes, relationship advice and other information. The FTC further alleged that consumers were charged a monthly, recurring fee of $9.99 without knowingly signing up for the service.

The FTC claims that Wise Media and its personnel have taken advantage of the fact that consumers may not expect their mobile phone bills to contain charges from third parties. As a result, the FTC alleges that many consumers did not notice or understand Wise Media’s charges, and thus made uninformed decisions to pay the bills. Furthermore, the FTC alleges that to the extent that consumers did notice the charges, the process of obtaining refunds from Wise Media was difficult and often unsuccessful.

Wise Media Settlement Terms

The proposed settlement order contains the following requirements that Wise Media and its officers must abide by:

Permanently refrain from placing any charges on consumers’ telephone bills or assisting anyone else in doing so;
Cease using any other method to charge consumers for goods or services without ensuring that the consumers are aware of the terms of the purchase and have expressly agreed to be charged;
Pay a judgment of $10,965,638, which is partially suspended due to Wise Media’s inability to pay the full amount;
Wise Media’s officer, Brian Buckley, must surrender most of his personal assets along with any remaining assets of Wise Media, valued in excess of $500,000; and
Wise Media’s other officer, Winston Deloney, along with another defendant who knowingly received ill-gotten gains from Wise Media, Concrete Marketing Research, LLC, must collectively pay a penalty fee of $175,817.

The complaint against Wise Media is part of a larger trend of regulatory action within the mobile marketing space. In light of this action, and the general regulatory trend, mobile service providers that bill for services by and through consumers’ mobile telephone bills should immediately review their marketing practices (and those of their affiliates) and consumer disclosures in order to ensure compliance with applicable law and FTC consent decrees. Entities that fail to comply with applicable law in this vertical could find themselves facing regulatory action from the FTC, which could result in significant fines and penalties.

The material contained herein is provided for informational purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.

If you are interested in learning more about this topic or need to review your mobile billing practices, affiliate marketing agreements and/or update your consumer disclosures, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.

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