Cheng-yi Liu, Esq.
On April 28, 2009, Verizon Wireless (“Verizon”) issued a press release announcing that it had filed yet another lawsuit to stop several companies and telemarketers from placing unsolicited calls to Verizon’s wireless subscribers. The lawsuit is another attempt by Verizon to halt unsolicited calls pitching extended car warranties that have been received by many wireless (as well as wireline) consumers.
Privacy rights have always been a key concern for the American telephone consumer, but these recent lawsuits highlight the growing emphasis on wireless consumer privacy issues that has resulted from ongoing legal and regulatory developments. Some key issues and related areas of concern are further discussed below.
Telemarketing Regulations
The “car warranty scam”, as many have referred to it, involves the use of auto-dialers and a pre-recorded message, which warns consumers that their car warranty is soon expiring and to press “1” in order to speak with a representative. Not surprisingly, this telemarketing practice violates many regulations designed to protect consumer privacy, including regulations specifically tailored to prevent unsolicited telemarketing calls.
The Federal Trade Commission (“FTC”) and the Federal Communications Commission (“FCC”) both have extensive regulations that restrict when and how telemarketers may contact you. First and foremost, federal regulations (both FCC and FTC) prohibit the use of auto-dialers and pre-recorded messages in placing telemarketing calls to a wireless number except for emergency purposes or with the wireless customer’s express consent. Federal regulations also require telemarketers that employ the use of pre-recorded messages to adhere to stringent requirements as to what information is included in that message. The pre-recorded message must initially disclose: 1) the actual business name of the company; 2) that the purpose of the call is to market a product or service; and 3) the nature of the product or service. The pre-recorded message must also offer an automated opt-out mechanism so that, for example, the recipient of the call can press a number to be immediately placed on the seller’s or telemarketer’s company-specific do not call list (which is separate from the National Do Not Call Registry) and end the call.
Many consumers have been frustrated by the fact that the car warranty telemarketers are blatantly violating these regulations; the pre-recorded messages being used by the car warranty telemarketers do not disclose the actual name of the company, nor do the pre-recorded messages clearly disclose the fact that the call is an attempt to sell you services. While the pre-recorded messages claim to offer an opt-out mechanism (by pressing “2”), many consumers have selected this option with no effect, and have continued to receive calls from the same telemarketers. Furthermore, telemarketers are required by law to transmit caller-id information which includes a telephone number where the company can be reached during regular business hours. Not surprisingly, the caller-id telephone numbers transmitted by the car warranty telemarketers are often disconnected numbers that cannot be used to reach the business.
It is clear that the car warranty telemarketers are not in compliance with telemarketing regulations applicable to the use of auto-dialers and pre-recorded messages. It is uncertain, however, whether the recent wave of “car warranty scam” calls are truly related to the sales of extended car warranties, or just another scheme devised by identity thieves to gather credit card and other personal financial information. Whatever the case may be the car warranty telemarketers have placed wireless consumers on high alert with regard to wireless telemarketing requirements and protecting wireless privacy rights.
Protecting Customer Information
A question posed by many consumers - how the car warranty telemarketers obtained their wireless phone number in the first place (which is often followed by a proclamation that they do not even own a car) - raises many other consumer privacy concerns regarding the protection of consumer information. While it is likely that the car warranty telemarketers are merely auto-dialing numbers at random, there is an ever growing concern among consumers that their information (including wireless phone numbers) is not being properly safeguarded from this type of misuse. As consumers search for answers to the question posed above, wireless dealers and agents (along with any other companies that process, store, or otherwise handle any customer information) should be cognizant of applicable laws and regulations that govern the safekeeping of customer information (including wireless numbers, call detail records, and billing information).
Applicable laws and regulations could include those of the FCC, FTC, as well as state agencies. Companies that are not in compliance with these regulations are coming under increasingly intense scrutiny by state and federal regulators, lawmakers, state attorneys general and various consumer protection agencies. For example, in February of this year the FCC issued an Omnibus Notice of Apparent Liability which assessed a $20,000 penalty against hundreds of telecommunications providers for apparently violating the FCC’s Customer Proprietary Network Information (“CPNI”) regulations. The FCC’s CPNI regulations restrict the use and disclosure of customer information, such as call detail and billing records, for marketing purposes. CPNI regulations also require telecommunications service providers (such as wireless carriers) to implement practices and procedures in order to safeguard customer information.
Wireless dealers and agents are not generally subject directly to the FCC’s regulations. However, wireless carriers may require dealers and agents to indirectly comply with CPNI regulations through various contractual provisions included in standard agent agreements. Furthermore, other federal and state consumer protection regulations could also apply to dealers and agents. As the industry reacts to the FCC’s recent CPNI enforcement actions, as well as the increasing concern over wireless privacy issues, dealers and agents are likely to see more stringent requirements (legal, regulatory, as well as contractual) when it comes to handling customer information.
Just this week, New York Senator Charles E. Schumer called upon the FTC to further investigate the source of the car warranty telemarketing calls after having received several of those calls on his own wireless phone. While the immediate concern of many consumers (and lawmakers) receiving unwanted wireless calls is to identify the source companies responsible, it will not be long before the focus turns back to broader concerns regarding the protection of consumer privacy and safeguarding customer information. Accordingly, this would be an appropriate time for all wireless companies, including dealers and agents, to evaluate current practices and procedures related to consumer privacy and customer information.
May 14, 2009
This article is provided for informational purposes only, and is intended neither to provide nor to substitute for legal advice.
| This article was authored by the Law Offices of Thomas K. Crowe, P.C., a Washington D.C.-based specialty law firm serving the communications industry. Specialty services cover agreements with distributors and providers, FCC licenses, USF reporting and disputes, FCC Enforcement Bureau matters, CPNI, CALEA, state licensing, and more. Contact the firm by phone at 202-263-3640, by email at .(JavaScript must be enabled to view this email address), or via the firm’s website, www.tkcrowe.com. |