PA AG Sues Lead Generator for Allegedly Violating TSR

On November 2, 2022, the Pennsylvania Office of Attorney General filed a lawsuit in federal court alleging that a group of companies offering lead generation services violated the Telemarketing Sales Rule  and Pennsylvania consumer protection law.  Specifically, the OAG alleges two unlawful advertising practices.

The first unlawful ad practice allegation is that the defendants utilized deceptive online advertisements to direct consumers to websites where they would purportedly be tricked into providing contact information and survey responses.  The second unlawful ad practice allegation claims that consumers’ contact information and responses were sold to telemarketers despite numbers being on state of national Do No Call registries.

As stated in the complaint, defendants operate “dozens of websites designed for lead generating” that  advertise “gift cards to popular retailers and digital payments to mobile apps” for answering various survey questions.  According to the OAG, the websites require visitors to provide personal contact information and click a box indicating consent to mouseprint disclosures stating that consumer will  receive prerecorded calls and text messages from marketing partners (the names thereof are disclosed to by a hyperlinked list).  According to the OAG, these sellers’ products and services are oftentimes not related to the promotional offerings whatsoever.

Here, according to the OAG’s complaint, the websites violate state consumer protection law because they “create[] a likelihood of confusion or of misunderstanding” by “failing to include clear and conspicuous disclosures advising consumers that by registering their contact information with defendants they are purportedly consenting to be contacted by multiple third party sellers, whose products and services are wholly unrelated to the promotional offerings.”

The survey questions also purportedly have mouseprint disclosures stating that clicking on answers is indicating that consumers consent to be contacted by marketing partners despite numbers being on DNC registries.

According to the complaint, the disclosures are inadequate because they are obscured by images of the promotional offer.  Importantly, the pleading further alleges that the consent sought to be obtained is insufficient because a DNC waiver requires an agreement between the telemarketer and the consumer.  In other words, the OAG’s novel theory is that an agreement with a lead generator is inadequate because a consumer’s agreement with a seller to receive calls delivering prerecorded messages is nontransferable.

According to the Pennsylvania OAG, from 2018 to 2021, more than 4.2 million Pennsylvania consumers registered their information on one of Defendant’s websites.  The lawsuit alleges that Defendant and its subsidiaries assisted and facilitated millions of violations of federal and state telemarketing laws by:

  1. Trafficking telemarketing calls to consumers who are on the Federal Do Not Call Registry
  2. Delivering telemarketing calls to consumers on the Federal Do Not Call Registry, where the consumers did not give their valid consent to be contacted
  3. Delivering telemarketing calls to consumers with prerecorded messages – also known as robocalls – without proper consumer consent
  4. Engaging in deceptive and misleading business practices, in connection with their lead-generating practices

“If a Pennsylvania resident registers their phone number on the ‘Do-Not-Call’ List, it’s illegal for telemarketers to call them,” Attorney General Josh Shapiro said.  “Every company is obligated to comply with state and federal telemarketing laws, and [Defendant] failed to comply.  These invasive robocalls are a growing problem – [Defendant’s] phony actions cannot be used to obtain consumer’s consent to receive unwanted calls.”

The OAG seeks, without limitation, civil penalties of $1,000 per violation or $3,000 per violation involving a victim older than 60, disgorgement of profits, and a permanent ban on selling the consumer data that was allegedly collected unlawfully.

Richard B. Newman is a FTC defense attorney at Hinch Newman LLP.

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

 

Richard Newman

Richard B. Newman is a nationally recognized FTC advertising compliance, CID investigation and regulatory enforcemetn attorney. He regularly provides advertising counsel and represents clients in high-profile investigations and enforcement proceedings initiated by the Federal Trade Commission, state attorneys general, departments of consumer affairs, and other federal and state agencies with jurisdiction over advertising and marketing practices. Richard is also an ecommerce lawyer and spam defense attorney. His practice additionally focuses upon false advertising defense, data privacy, cybersquatting, intellectual property law and transactional matters relating to the dissemination of national advertising campaigns, including the gamut of affiliate marketing, telemarketing, lead generation, list management and licensing agreements. Richard advises clients on how to minimize the legal risks associated with digital marketing, email marketing, telemarketing, social media influencer campaigns, endorsements and testimonials, negative option marketing models, native advertising, online promotions and comparative advertising,

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About This Blog and Hinch Newman’s Advertising + Marketing Practice

Hinch Newman LLP’s advertising and marketing practice includes successfully resolving some of the highest-profile Federal Trade Commission (FTC) and state attorneys general digital advertising and telemarketing investigations and enforcement actions. The firm possesses superior knowledge and deep legal experience in the areas of advertising, marketing, lead generation, promotions, e-commerce, privacy and intellectual property law. Through these advertising and marketing law updates, Hinch Newman provides commentary, news and analysis on issues and trends concerning developments of interest to digital marketers, including FTC and state attorneys general advertising compliance, civil investigative demands (CIDs), and administrative/judicial process. This blog is sponsored by Hinch Newman LLP.

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