FTC Reminds Marketers About Lead Generation and Data Privacy Obligations

DNC Violations, Inconspicuous Disclosures and Substantial Assistance Liability

The Federal Trade Commission recently announced that it has charged a telemarketing operation and its owners with making millions of illegal, unsolicited calls about educational programs to consumers that submitted their contact information to websites promising help with job searches, public benefits and other unrelated programs.

According to the complaint, corporate and individuals defendants obtain consumers’ phone numbers from websites that claim to help consumers apply for jobs, health insurance, unemployment benefits, Medicaid coverage or other forms of assistance. Instead of offering these services, the FTC alleges that defendants and their affiliates call consumers to market vocational or post-secondary education programs.

“Telemarketers have a duty to ensure that they are not placing calls to people on the National Do-Not-Call Registry,” said Federal Trade Commission attorney Andrew Smith, Director of the Bureau of Consumer Protection, “And they cannot rely on affiliate websites that use fine print and other deceptive tactics to lure consumers.”

According to the Commission, the job and benefits websites allegedly use different tactics, like small print, to hide their telemarketing purpose. For example, in the exhibit below, the web page states, “Jobs In Your Area” and “Thousands of Government Jobs In Your Area Are Looking to Hire Immediately,” and includes the misleading seals of several federal government agencies. At the bottom of the page is a block of small text that the agency considers illegible without substantial magnification. It states that clicking the “submit” button to request information about government jobs provides “consent” to receive telemarketing calls about various subjects unrelated to obtaining a government job.

The complaint also alleges that the defendants have purchased leads from “FindFamilyResources.com,” a website offering to provide information about Temporary Assistance to Needy Families (TANF), welfare benefits, and unemployment insurance. The below exhibit depicts a landing page that tells consumers they may “Learn More About Benefits Assistance” by submitting contact information in the boxes provided onscreen. The “yes” or “no” checkbox asking for consent to receive telemarketing calls is placed directly under an unrelated question about residency and age.

Federal regulatory agencies require that lead generators account for FTC data privacy legal requirements and clearly, conspicuously and accurate inform consumers about how their information will be used. The failure to do so can result in marketers having to defend a CID or a lawsuit by FTC attorneys.

Here, the defendants are charged with violating the Telemarketing Sales Rule by initiating over five million unsolicited outbound telemarketing calls to numbers on the Do Not Call Registry since 2013, and by providing substantial assistance to other telemarketers who placed calls to numbers on the Do Not Call Registry.

The complaint was filed in the U.S. District Court for the Northern District of Illinois in March 2019 after being referred back to the FTC by the U.S. Department of Justice.

Deceptive Made-in-USA Claims

The FTC continues to aggressively pursue marketers that fail to properly qualify U.S. origin claims. Most recently, a marketer agreed to pay a $110,000 penalty for allegedly deceptive Made-in-USA advertisements in violation of a 2017 administrative order.

According to the agency, the marketer made false claims that wholly imported product systems were made in the United States. As part of the settlement, the defendants have admitted previous false claims that the products it sells are “designed and crafted in USA,” among other claims.

“People should be able to trust a company’s claim that its products are made in the United States,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection. “This company is paying the price of abusing that trust and violating an FTC order.”

The FTC’s 2017 complaint against the company alleged that the company deceived consumers with false, misleading, or unsupported claims that its products and parts are “Built in USA,” In fact, according to the complaint, the products either are wholly imported or are made using a significant amount of inputs from overseas.

In addition to the civil penalty, the proposed order contains an admission of liability and requires the defendants to notify affected consumers about the case.

Contact an FTC defense lawyer if you are have received a civil investigative demand (CID), have been named as a defendant in a regulatory enforcement action, or to discuss the FTC’s Enforcement Policy Statement on U.S. Origin Claims.

Richard B. Newman is an Internet marketing attorney at Hinch Newman LLP. Follow him on Twitter @FTCLawDefense.

Information conveyed herein is for informational purposes only and does not constitute, nor should it be relied upon, as legal advice. Attorney advertising.

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