Tuesday, November 24, 2020

Lead Generation Platform Developer TCPA Liability Considerations

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Richard B. Newmanhttp://www.hinchnewman.com
Richard B. Newman is an Internet Lawyer at Hinch Newman LLP focusing on advertising law, Internet marketing compliance, regulatory defense and digital media matters. His practice involves conducting legal compliance reviews of advertising campaigns across all media channels, regularly representing clients in high-profile investigative proceedings and enforcement actions brought by the Federal Trade Commission and state attorneys general throughout the country, advertising and marketing litigation, advising on email and telemarketing best practice protocol implementation, counseling on eCommerce guidelines and promotional marketing programs, and negotiating and drafting legal agreements.

As previously blogged about here, software developers that are engaged to design lead generation management platforms for third-party use in conjunction with direct marketing campaigns, specifically, telemarketing, should be aware of a number of factors related to potential liability for the actions or inactions of their clients.

Consider that platform providers can potentially be held liable for Telephone Consumer Protection Act violations committed by platform users where the former “knowingly” allows clients to use the technology for unlawful purposes.  Importantly, in a 2015 order, the Federal Communications Commission stated that initiating a telephone call can apply to either the person or entity that takes the steps necessary to physically place a telephone call or the person or entity that is “so involved in the placing of a specific telephone call as to be deemed to have initiated it.”

The absence of actual knowledge, however, may not necessarily be a defense for platform developers.  For example, consider what a developer “should” reasonably know, and how active a role a developer plays in the creation, control, initiation and/or dissemination of promotional content (e.g., telephone calls).  Responsibility for the specifications, requirements and/or deliverables of the software may also be deemed relevant by a court when assessing whether platform provider liability is triggered.

Whether a platform developer can be held liable for providing the software used for direct marketing purposes is not always a black and white analysis.  Certainly, the totality of the specific facts and circumstances, including, the right to control and role in the underlying transmission, are relevant when assessing the identity of the “caller,” and legal responsibility for ensuring TCPA and Telemarketing Sales Rule compliance.

Applying the factors in the 2015 FCC order, the FCC and FTC have found dialing platform providers directly liable for violations of the TCPA and TSR. 

Recently, the FTC ordered a dialing platform provider to pay $75,000 and review all pre-recorded calls and to terminate relationships with clients that were using the dialing platform to make illegal calls. The court determined that the platform provider provided “substantial assistance” to clients that were using the technology to initiate unlawful telephone calls and that it r consciously avoided knowing that the platform was being used in an unlawful manner. 

In another recent decision, the FCC fined a dialing platform provider approximately $2.8M for permitting telemarketers to utilize its software to make robocalls to mobile phones without lawfully required consent.  This decision is particularly noteworthy because the fact that customers were required to agree to terms that included an obligation to comply with applicable legal regulations was not deemed exculpatory.

The 2015 FCC ruling makes clear that “a provider of auto-dialing services cannot blithely sit back and blame his customers for any TCPA violations that result from their use of his service.”

It is not difficult to imagine regulatory agencies and plaintiffs’ attorneys pursuing similar third-party accountability remedial approaches in the context of other forms of direct marketing.  Providers that simply assume they are passive conduits and immune from liability under the TCPA, the TSR or other applicable legal regulations when negotiating contracts, engaging in the development process and maintaining involvement in promotional campaigns may unknowingly be exposing themselves to extraordinary liability. 

Consult with experienced FTC defense lawyer to discuss liability mitigating steps designed to ensure platform users are not operating in a non-compliant manner, including, but not limited to, utilizing responsible and professionally drafted contracts; designing and implementing reasonable customer screening, vetting and due diligence protocols; implementing an appropriate certification process; and ensuring that appropriate remedial action is taken in the event unlawful conduct is known or reasonably should be known.

Richard B. Newman is an advertising and marketing practices attorney at Hinch Newman LLP. You can follow him on Twitter @FTC Defense Lawyer.

Informational purposes only. Not legal advice. May be considered advertising material.

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