The State of Illinois recently amended its telemarketing laws to create an additional incentive for consumers to file state actions as opposed to federal Telephone Consumer Protection Act (TCPA) claims. Governor Quinn recently signed into law Public Act 98-0546, which amended the Automatic Telephone Dialers Act (Autodialer Act) and the Restricted Call Registry Act (Illinois Do-Not-Call Act) to provide for statutory damages in the amount of $500 per violation. The laws went into effect upon the Governor’s signature, August 26, 2013. The two major changes to these laws involve: (1) statutory damages available for violations; and (2) recordkeeping requirements. These and other recent actions by federal telemarketing regulators highlight the importance of vendor compliance management as a tool to mitigate telemarketing risks.
The Autodialer Act prohibits the use of an “autodialer” except as in accordance with the Act. The Illinois law defines an “autodialer” as “any telephone dialing or accessing device, machine, computer or system capable of storing telephone numbers which is programmed to sequentially or randomly access the stored telephone numbers in order to automatically connect a telephone with a recorded message.” The Act exempts a number of calls from its scope including, among others: (1) “calls made in response to an express request of the person called;” and (2) “calls made to any person with whom the telephone solicitor has a prior or existing business relationship.” The Act also provides for more restrictive calling times than those provided under federal law, prohibiting calls between 9:00pm and 9:00am. The Illinois Do-Not-Call Act is the Illinois-specific do-not-call list for telemarketers.
Under prior law, damages for violations of Illinois telemarketing laws were limited to actual damages, which were subject to being trebled if conduct warranted. The new laws now provide for statutory damages in the amount of $500 per violation. With the potential of class action litigation under Illinois civil procedure, these laws now provide a similar incentive to enforcement as the federal TCPA.
In addition, the new laws contain onerous recordkeeping requirements. The Autodialer Act now requires those operating an autodialer to maintain a list of all telephone numbers called, and to maintain records to sufficiently document any exemption claimed. Likewise, the Illinois Do-Not-Call Act now requires that “[a] person who makes or causes to be made calls to communicate a commercial message subject to this Act shall maintain a list of all telephone numbers called,” as well as records to document any exemption claimed.
It is noteworthy that the scope of the Illinois Do-Not-Call Act’s recordkeeping requirement applies to both those persons that make calls and those persons on whose behalf the calls are made. This last point is critical from a compliance management perspective.
The Federal Communications Commission (FCC) recently issued an opinion that highlights the importance of vendor compliance management as a tool to mitigate telemarketing compliance risk. The FCC’s declaratory ruling discussed when a company may be liable under the TCPA and FCC telemarketing and autodialing rules for violations committed by a third-party vendor authorized to sell its goods or services. According to the FCC, companies may be liable for non-compliant conduct by third parties marketing their goods or services based on “general common law” agency-related principles, which includes apparent authority and ratification as bases for vicarious liability.
Few areas of the law present a greater compliance challenge for today’s companies than telemarketing laws. Between the TCPA, the FCC’s implementing regulations, the FTC’s Telemarketing Sales Rule and the various applicable state statutes, it is extremely difficult for businesses to cover all their bases and properly document their policies. Beyond that, companies need to be careful in walking the extremely fine line between ensuring that vendors understand that they need to comply with all laws, but not crossing over into control territory where defendants can be held vicariously liable for the actions of their vendors. The new Autodialer Act and the Illinois Do-Not-Call Act have just made the road even more difficult – and treacherous. Engaging competent counsel—before the first telemarketing call is placed—is highly advisable.