On November 1, 2016, the Federal Trade Commission (“FTC”) announced its settlement with a “collection of entities” known as Consumer Education Group (“CEG”) for alleged violations of the Telemarketing Sales Rule (the “TSR”). The settlement imposes a $2,339,687.00 penalty against CEG, but due to financial considerations, CEG will only be required to pay $100,000.00. CEG also agreed to discontinue making any telemarketing sales calls in violation of the TSR.
How Did CEG Violate the Telemarketing Sales Rule?
Alleged Violations of Telemarketing Sales Rule
According to the FTC, CEG created websites and landing pages where consumers were prompted to input their personally identifiable information in order to obtain further information relating to products ranging from solar panels to walk-in bathtubs. Upon obtaining the consumer information, CEG placed “robocalls” to those consumers. CEG called over two million consumers whose telephone numbers are registered with the federal Do Not Call Registry. Significantly, “[c]onsumers who received Defendants’ robocalls had not given express written consent to receive robocalls specifically from Defendants.”
Additionally, according to the FTC, “the telemarketing campaign was not to solicit actual sales to consumers but rather designed to collect consumers’ names and phone numbers and sell the information as leads to third party merchants.” According to the FTC’s complaint, “in numerous instances, consumers who filled out and submitted Defendants’ on-line forms received calls concerning goods and services other than the ones for which they filled out the on-line forms.”
Lead generators should take special note of the FTC’s claims against CEG. Simply obtaining consumer information does not necessarily mean that a business may call such consumer using any means. The fact that a consumer agrees to receive further information about a product or service does not mean that they have agreed to receive robocalls or autodialed calls unless the written agreement clearly and conspicuously provides such consent. Given the FTC’s continued vigilance in policing lead generators, it is important for businesses to ensure that their practices are lawful under the TSR, the Telephone Consumer Protection Act, as well as state telemarketing laws.