Today, we’re diving into a crucial topic that’s making waves in the lead generation industry: the Federal Communication Commission’s (FCC) decision to close the lead generator loophole. To provide some insight, I had a conversation with John Henson from Troutman Amin. Here’s a summary of what we discussed.

The Current Status

As of mid-June, we are six months away from the implementation date of the new FCC rule aimed at closing the lead generator loophole. Despite some industry rumblings suggesting potential delays or significant alterations, John Henson believes the rule will remain substantially similar to its current form when it goes live in January.

The Rulemaking Process

John highlighted that while there’s ongoing chatter about possible changes, the FCC has not made any public announcements indicating such intentions. The final rule, as it stands, appears to be the rule we should prepare for. The FCC has shown a clear intention to allow the industry ample time to adjust to the new regulations, minimizing the likelihood of abrupt changes as the implementation date approaches.

Political Considerations

With the presidential election just four and a half months away, some wonder if the election outcome could impact the rule’s implementation. John noted that the final rule date is set for seven days after Inauguration Day. Given the timing, it is unlikely to be a week-one priority for either administration. Therefore, companies should not delay their compliance preparations based on the election results.

Key Takeaways

1. Timeline: The new rule is set to go live in January, and significant changes are unlikely.
2. Preparation: The industry should continue preparing for the rule as currently written.
3. Election Impact: The upcoming presidential election is not expected to affect the rule’s implementation timeline.

Final Thoughts

As John Henson pointed out, the lead generation industry must stay proactive. Waiting until November to make necessary adjustments could prove detrimental. The FCC’s commitment to providing sufficient lead time underscores the importance of starting preparations now.

Claims

The lawsuit centers on Twilio’s alleged role in originating illegal robocall traffic and transmitting unlawful text messages. Despite numerous notifications from the plaintiff, Twilio purportedly continued to send automated messages and calls without consent, using phone numbers registered to the company. These communications, which solicited various services, were allegedly sent through Twilio’s cloud-based platform, which automates the transmission of text messages and calls en masse.

The complaint details several key allegations against Twilio:

1. Illegal Robocalls and Text Messages: Twilio is accused of making hundreds of calls and sending numerous text messages to the plaintiff’s cell phone in violation of the TCPA. The company allegedly used automated systems to send these communications without obtaining prior express consent from the recipient.
2. Failure to Honor Do Not Call Registry: Despite the plaintiff’s phone number being registered on the Do Not Call Registry and repeated requests to stop the calls, Twilio allegedly ignored these notifications and continued its unsolicited communication practices.
3. Misrepresentation of Affiliation: The complaint also highlights instances where Twilio’s messages falsely implied affiliations with legitimate businesses, adding to the deceptive nature of the communications.
4. Involvement in Telemarketing Practices: Twilio’s automated platform, which enables the sending of bulk messages and calls, was central to the company’s alleged telemarketing practices. The plaintiff asserts that Twilio’s system automatically generates and dials numbers, constructs the messages, and sends them, making Twilio directly responsible for the TCPA violations.
5. Knowledge and Willful Conduct: The lawsuit claims that Twilio was fully aware of the illegal activities and did nothing to stop them, thereby acting knowingly and willfully in violation of the TCPA. The plaintiff allegedly communicated with an attorney and paralegal at the company and asked them to stop communicating with him.

The plaintiff seeks statutory damages, equitable relief to halt Twilio’s illegal conduct, and compensation for the invasion of privacy, harassment, and disruption caused by the unsolicited communications.

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The plaintiff has accused the defendants of violating the TCPA. The realtor allegedly made multiple unsolicited calls to the plaintiff’s cell phone, which was registered on the National Do Not Call Registry. The calls featured prerecorded voice messages. The case hinges on whether the realtor acted as an agent of the company or as an independent contractor. The difference is crucial, as agency establishes liability for the company under the TCPA.

The company moved to dismiss the case, arguing lack of personal jurisdiction and improper venue, insisting that the realtor acted independently. However, the plaintiff countered that the company had control over the realtor’s activities, providing her with training and lead generation tools to make the calls. The plaintiff alleged that the company trains its realtors to use lead generation services to find the phone numbers of individuals who previously listed their homes on the market but did not sell their homes.

Judge Andrew P. Gordon of the District Court for the District of Nevada decided that more evidence was needed to determine whether the court had personal jurisdiction over the company, which could hinge on the nature of its relationship with the realtor.

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The Background: The complaint is actually pretty short and sweet. It alleges that the defendants submitted claims for dental services provided to patients that were referred by a patient recruiter who was paid a fee of $110 per patient.

• The kickbacks constituted false or fraudulent claims that were submitted to Medicaid between 2018 and 2020.
• The practices were registered providers under the Connecticut Medical Assistance Program, which includes Connecticut’s Medicaid program.
• As a result of the defendants’ actions, the state and the federal government paid for dental services allegedly provided to patients that it would not have paid for had they known the defendants were paid an incentive for the referrals.

The Claims: The complaint accuses the defendants of violating the federal False Claims Act as well as the Connecticut False Claims Act, as well as a number of other claims, such as unjust enrichment, and breach of contract.

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The Background: The plaintiff allegedly received 56 calls from six different companies between July 2021 and February 2023. The plaintiff filed suit, alleging the defendants violated numerous provisions of the TCPA, including using an autodialer, using an artificial or pre-recorded message, falsifying Caller ID, and more.

The plaintiff alleged that Family First Insurance is an Insurance Marketing Organization that sold leads and access to automated telephone dialing systems to help agents reach potential customers. Three of the other defendants — United of Omaha Life Insurance, Americo Financial Life, and Great Western Life — allegedly sell insurance products offered by Family First. Those three companies are allegedly aware that Family First allegedly engages in illegal telemarketing practices and still gave the company’s agents access to their systems and permission to use their trademarks.

• The plaintiff also named six individual defendants who are agents of Family First.
• The plaintiff alleged that Family First uses an ATDS to make its calls and that he received hundreds of calls. The plaintiff uses false, but unique identifying information to identify the source of subsequent illegal calls.

The Ruling: Family First attempted to argue that the plaintiff’s status as a professional plaintiff who invites calls for the purpose of filing lawsuits means he does not have standing to pursue this lawsuit. But Judge Mark A. Goldsmith of the District Court of the Eastern District of Michigan, determined the plaintiff does have standing because there is nothing in the constitution that exempts individuals from standing. In fact, doing so would require determining at which point a litigant becomes a professional plaintiff.

Judge Goldsmith goes into great detail on each of the 13 counts and which of the offending phone calls are subject to each count and makes a ruling on each. The only count to survive the motion to dismiss against all defendants was the first count — the use of an ATDS.

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The Background: The plaintiff put his name on the defendant’s Do Not Call list before July 2020. The owners of two agencies hired a company that subcontracted with another company that placed the calls at issue — five in total.

• The two agencies were allowed to initiate their own marketing campaigns and were allowed to use non-contracted telemarketers as long as those telemarketers followed the defendant’s Do Not Call policy.
• The owner of Transfer Kings, the company hired by the two agencies, did not tell either that he had subcontracted the work out to another company, a lead generator called Atlantic Telemarketing.
• The defendant “strongly suggests” that the plaintiff entered his phone number and a pseudonym on a website that ended up being included in a list that was purchased by Transfer Kings or Atlantic Telemarketing. Whomever entered the name and phone number on the website had to consent to being contacted.
• Of the five calls, the plaintiff answered none of them, but on two occasions called the number back. The plaintiff said his name was Michael Johnson.
• The plaintiff admitted to using pseudonyms as a means of getting information about who was calling to get the calls to stop.

The Ruling: The defendant was unable to submit evidence to prove how it came to possess the plaintiff’s phone number, which means it could not disprove the plaintiff’s argument that he never gave written consent to be contacted, ruled Judge Joan B. Gottschall of the District Court for the Northern District of Illinois.

• Judge Gottschall then went into detail explaining why the defendant should be held vicariously liable for the calls in question.
• “Accordingly, the undisputed material summary judgment evidence establishes that: (1) Gilmond and Fleming were Allstate’s agents with actual authority to hire telemarketing vendors and appoint them as subagents; (2) they appointed Transfer Kings as a subagent; and (3) Transfer Kings appointed Atlantic as its subagent,” she wrote.

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The AGs allege that John Spiller II, who was a co-owner of Rising Eagle Capital Group, has formed new telecommunication companies and has continued to facilitate illegal and scam robocalls. The AGs are asking the judge to impose a complete ban from the telecommunications industry on Spiller.

“This guy is a recidivist robocaller and a notorious name in the robocall industry,” said Dave Yost, the Attorney General for the state of Ohio, in a statement. “It’s time to sever his phone lines for good.”

Spiller has used aliases and falsified business records in various states and with the Federal Communications Commission to continue operating, according to the AGs.

The AGs of Arkansas, Indiana, Michigan, Missouri, North Carolina, North Dakota and Texas joined the motion to find Spiller in contempt.

Spiller was sued in 2020 and reached a consent decree in 2023 that imposed a judgment of $122 million against him and his business partner. But because neither had the means to repay the judgment, both were instead permanently banned from initiating or facilitating any robocalls, working for or with companies that make robocalls, or engaging in any telemarketing activities.

Along with the ban, the AGs are seeking to have the full $122 million judgment reinstated and Spiller ordered to repay it.

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Companies can either comply with the FCC’s STIR/SHAKEN protocols or submit a robocall mitigation plan to the FCC that outlined specific steps the company was taking to avoid originating illegal robocall traffic.

BPO Innovate submitted a document detailing the steps it had taken to avoid originating illegal robocall traffic, but the FCC found the plan deficient because it did not identify any specific reasonable steps that company had taken to avoid originating illegal robocall traffic. The company was given 14 days to correct the deficiencies, but the FCC never heard back from the company. The certification was deemed to be deficient because BPO Innovate never responded to traceback requests and the plan it submitted “includes no description of any reasonable steps the Company has taken to avoid originating illegal robocall traffic,” the FCC said in its order removing the company from the database.

Earlier this year, the FCC again reached out to the company and ordered it to correct the deficiencies, but again the company did not provide a response to the FCC.

BPO Innovate is the 14th company that the FCC has removed from the Robocall Mitigation Database. The company will remain out of the database until it demonstrates to the FCC that it has addressed and resolved all of its deficiencies.

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The Background: The plaintiff applied for a loan via the defendant’s website in 2017. As part of the application process, the plaintiff was presented with a screen that indicated he had read, understood, and consented to the language outlines in a number of policies and agreements, including the defendant’s Electronic Communications Policy and the Arbitration Agreement. All of the agreements were hyperlinked in blue font to the full text. The plaintiff checked a box that was labeled, “I Agree” and subsequently applied for the loan.

• The defendant sent the plaintiff two text messages — one in 2022 and one in 2023 — each attempting to sell financial services. The plaintiff had registered his phone number with the national Do Not Call registry and claims he did not provide consent or invite the text messages from the defendant and did not engage in any transactions with the defendant in the previous 18 months.

The Ruling: The plaintiff’s main argument is that he did not consent to receiving the text messages in question, but to Judge Sharon Johnson Coleman of the District Court for the Northern District of Illinois, that was not the issue. The issue is whether the plaintiff’s claims fall within the scope of the arbitration agreement he consented to when he applied for the loan.

• The arbitration agreement indicated the plaintiff would arbitrate “any claim, dispute or controversy arising out of or related to .. (ii) [his] submission of information to SoFi in connection with any non-mortgage loan offered by SoFi [or] . (v) the disclosures provided to [him] by SoFi in connection with any non-mortgage loan offered by SoFi?”
• Had the plaintiff read the agreements, he would have noticed there was a provision that indicated individuals could change their TCPA preferences and could revoke consent by doing so on the defendant’s website. “Strong or weak, [the plaintiff’s] claims fall within the scope of the Agreement,” Judge Coleman wrote.
• The plaintiff has filed a notice of appeal in the case.

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Scott Rhodes, who lives in Idaho and Montana, accused of making unlawful robocalls to consumers in a number of states. The calls displaced inaccurate Caller IDs, indicating they were local numbers, which induced recipients to answer the calls and listen to recorded messages. The messages were highly inflammatory and disturbing, according to prosecutors, and were directed at specific communities. One example was a spoofed robocall to hundreds of residents in an Iowa town in the aftermath of a woman’s murder.

The Federal Communications Commission traced the calls to Rhodes and imposed a $9.9 million penalty against him in January 2021. Later that year, the Justice Department sued Rhodes to recover the penalty and obtain an injunction. In October of last year, prosecutors moved for summary judgment, which was awarded last week, ordering Rhodes to repay the full amount of the fine.

“When persistent and malicious robocallers break the law, it takes strong partnerships like this one to bring them to justice,” said Chairwoman Jessica Rosenworcel of the FCC in a statement. “I thank the Justice Department team, in conjunction with FCC lawyers, for vigorously pursuing this penalty. I especially want to thank FCC investigators for tracking down this robocaller and building such a strong case. Our agency will continue to relentlessly pursue these unwanted robocalls and build on our multi-faceted collaborative approach with law enforcement agencies at home, as well as the growing partnerships we’re fostering with our counterparts abroad, so that we can quickly and effectively neutralize bad actors.”