FTC
Enters World of Wireless Marketing
with
Lawsuit Against Sender of
Unauthorized
Text Messages
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On
February 22, 2011, the Federal Trade Commission (FTC) filed suit in a U.S.
District Court in California against an operation that allegedly sent
millions of unauthorized text and email messages, including many messages
that deceptively advertised a mortgage modification website designed to
impersonate or suggest an affiliation with a U.S. government agency.
The FTC alleged that these acts constituted unfair trade and deceptive
practices in violation of Section 5 of the FTC Act and violations of the
Controlling the Assault of Non-Solicited Pornography and Marketing Act of
2003 (CAN-SPAM Act) for failure to include a functioning opt-out mechanism
and valid physical postal address in commercial emails. A Temporary
Restraining Order against the defendant was granted on March 4, 2011. As
described more fully in the complaint,
Phillip A. Flora allegedly sent millions of unauthorized and unsolicited text
messages to mobile and other consumer wireless devices advertising mortgage
loan modification programs and debt services through a website named Loanmod-gov.net.
Although not affiliated with any U.S. government agency, this website
promoted itself as providing “Official Home Loan Modification and Audit
Assistance Information” beneath a graphic of an American flag.
Consumers were instructed to complete an electronic form on the website with
information about their mortgages and advised that Loanmod-gov.net would then
perform a “Forensic Loan Audit” and an advisor would contact them.
Flora sold the information provided by consumers, including wireless
telephone numbers, to third party marketing
companies through online advertisements promoting the consumer information as
“debt settlement leads.” Flora also promoted the sale of the text message
leads database through commercial email messages, in violation of the
CAN-SPAM Act. This
case demonstrates a new willingness by the FTC to exercise its authority over
wireless communications, but it also suggests some limitations in FTC
regulatory activity. Although the FTC asserts that many recipients of
the text messages had wireless telephone numbers registered on the Do Not
Call (DNC) Registry maintained by the FTC, the complaint did not
allege violations of its Telemarketing Sales Rule, which governs the DNC
Registry; the FTC has been aggressive in its enforcement of its rules
pertaining to the DNC in the past, and the absence of a DNC-related count may
suggest that the FTC does not believe that, under these circumstances, it has
the authority to regulate text messaging under the Telemarketing Sales
Rule, which pertains to telemarketing in general. If that is the case,
it suggests that the FCC, which shares authority over the DNC with the FTC,
has the exclusive federal authority to bring an enforcement action for
sending unsolicited text messages and sending messages to wireless telephone
numbers registered on the DNC Registry. It
should be remembered that State Attorneys General also have the authority to
enforce the Telephone Consumer Protection Act (TCPA) and the CAN-SPAM
Act. State telemarketing laws are not necessarily pre-empted by federal
law – in fact, some state laws can be more restrictive than federal law – and
numerous states maintain their own DNC registries. The TCPA also creates
a private right of action and there are many class action lawsuits pending
against text message spam. For these reasons, we caution our clients to
ensure that their text messaging campaigns strictly comply with all federal
and state laws. March 18, 2011 |
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This memorandum is intended only as a general discussion of these issues and should not be regarded as legal advice. We would be pleased to provide additional details or advice about specific situations if desired. Copyright © 2011, Lerman Senter PLLC 2000 K Street NW,
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