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Telemarketing Tips: What We Can Learn From Caribbean Cruise Lines’ Excursion With The FTC
April 2, 2015

Telemarketing Tips: What We Can Learn From Caribbean Cruise Lines’ Excursion With The FTC

By: Michelle Cohen

 

The FTC’s “Do Not Call” and “robocall” rules do not apply to political survey calls.  So, if Hillary Clinton sought to “voice blast” a survey about international issues, she could do so without violating the Telemarketing Sales Rule (“TSR”).  (Though under FCC rules she would have an issue calling wireless numbers).  However, companies may not telemarket under the guise of exempt political calls.  Caribbean Cruise Lines (CCL) and several other companies working with CCL recently learned this lesson the hard way. The FTC and a dozen state attorneys general sued CCL and others for offering cruises and vacation “add ons” following purported political calls.  CCL settled, agreeing to pay $500,000 of a $7.2 million dollar penalty, and to comply with multiple compliance mechanisms.

CCL and the other defendants implemented an extensive calling campaign involving 12 to 15 million calls per day for approximately ten months offering a political survey.  However, the survey calls invited consumers to “press one” to receive a “free” two-day cruise to the Bahamas (port taxes would apply).  A live telemarketer working on behalf of CCL then offered consumers pre-cruise hotels, excursions, and other value packages.

While political calls remain exempt under the TSR’s robocall and Do Not Call provisions, if a caller offers a good, product or service during an otherwise exempt call, an “upsell” has occurred and the call is now telemarketing.  FTC rules prohibit robocalls to telemarket except with prior express consent.  Thus, the FTC asserted that CCL violated the TSR’s robocall provision since the called parties had not consented to the recorded sales calls.  While the calls started as political survey calls, they were actually standard telemarketing, subject to all TSR telemarketing rules.  The FTC also alleged violations of the Do Not Call rules, the caller identification rules, and the “company-specific Do Not Call requirements,” among other violations.

In addition to the reminder about “upsells” or “mixed messages,” this action highlights several important TSR enforcement lessons:

bulletThe FTC and State Attorneys General work closely in telemarketing enforcement – in this action, ten state attorneys general joined the FTC’s action.

bulletMany of the State AGs involved tend to be those most active in telemarketing litigation– Florida, Indiana, Mississippi, North Carolina, Ohio, and Washington State.

bulletThe FTC does not require a company to actually make the prohibited calls. An enforcement action will lie where a company paid or directed others to make calls in violation of the TSR.

bulletThe TSR also bars third parties from providing “substantial assistance” to others who violate the rule. Here, the FTC’s complaint charged a group of five companies and their individual owner with assisting and facilitating the illegal cruise calls, by providing robocallers with telephone numbers to use in the caller ID field, to hide the robocallers’ identities.

bulletAs part of its settlements, the FTC may impose a variety of remedies, including requiring the seller (here, CCL) to monitor its lead generators.

bulletThe FTC may also bar the seller from purchasing leads from a lead generator who is determined by the seller to obtain leads through unlawful TSR calling.

bulletThe FTC will carefully review, and proceed against companies who violate other TSR provisions, including caller ID requirements, scrubbing of the federal Do Not Call database, and the company-specific Do Not Call list.

bulletA settlement often requires ongoing recordkeeping. Here, the FTC required CCL to create records for ten years (and retain each one for 5 years), including records of consumer complaints and documentation of all lead generators.

bulletThe FTC and state AGs may proceed against individuals as well as companies.

bulletMany states have their own “do not call” laws, caller ID requirements and TSR-similar rules which can be used to bolster claims and penalties.

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            While it should not come as a surprise that a “mixed message” call must comply with the TSR, the recent joint case against CCL and others serves as a potent reminder that the FTC and state attorneys general continue to monitor robocalling and other mass telemarketing campaigns. Further, the enforcers will use the full panoply of legal requirements and enforcement mechanisms to address telemarketing violations.  The seller, the telemarketer, the lead generator, the caller ID provider, and any other party providing substantial assistance may find themselves at the receiving end of a call from the FTC if they fail to follow each of the TSR’s obligations or engage in activities that the TSR prohibits.