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Be Careful Who You Call

Many businesses utilize the phone for soliciting business. Just as email marketing is regulated by the CAN-SPAM Act, phone solicitations are are subject to state and federal laws designed to protect consumers.  L4SB has already seen a number of businesses sued this year for making unsolicited calls.  This article discusses what your business can do to comply with the two laws the regulate phone calls to New Mexicans: the federal Telephone Consumer Protection Act, and the New Mexico Unfair Practices Act.

The Telephone Consumer Protection Act

The Telephone Consumer Protection Act (“TCPA”) is a federal law governing telephone solicitations and advertisements.  The TCPA prohibits a variety of different practices.  We will only consider the ones most applicable to small businesses here.  Some of the violations under the TCPA include:

  • Making phone solicitations to residences before 8 a.m. or after 9 p.m.
  • Using an artificial voice or recording to make solicitations to residences
  • Sending unsolicited fax advertisements
  • Calling a person on the Do Not Call registry more than once in any 12-month period
  • Circumventing Caller ID

The TCPA does not apply to calls made with permission, calls made when there is an existing business relationship, or calls made by tax-exempt non-profits.  In addition to the statute, the FTC has issued a number of regulations on the TCPA.  Businesses making phone call solicitations should consider getting legal advice to ensure they comply with the laws and regulations.

Persons who have received calls in violation of the TCPA can sue the caller. Generally, the TCPA allows plaintiffs to seek actual damages or $500 per call (more for circumventing caller ID).  Plaintiffs can get triple damages for “willful” violations.  Because of the relatively high fine per call, this can be a powerful cause of action–in one case, a company settled a TCPA class action lawsuit for over $70 million dollars.

The New Mexico Unfair Practices Act

Automated telephone calls are also regulated by the New Mexico Unfair Practices Act. Section 57-12-22 prohibits the following types of phone calls for soliciting goods or services:

  • Automated calls using recorded messages, except to persons with whom there is an existing business relationship
  • Solicitations that do not disclose the name of the sponsor and the purpose of the call within 15 seconds
  • Calls that misrepresent a solicitation as a “courtesy call,” “public service information call,” or other similar euphemism
  • Calls that misrepresent a solicitation as research or a survey
  • Solicitation calls that do not inform consumers of certain costs or terms prior to customer commitment
  • Solicitation calls received before 9:00 a.m. or after 9:00 p.m.
  • Certain types of calls made by automated dialing equipment
  • Calls in which credit card information is requested before the purchaser expresses a desire to pay with a credit card
  • Calls to numbers that have been listed on the national Do Not Call registry for at least 3 months prior to the call
  • Calls that use a method to block or circumvent Caller ID

The Unfair Practices Act is not a criminal statute; persons seeking relief for unwanted calls that violate the statute must file a lawsuit.  The UPA allows plaintiffs to recover $100 ($300 for willful violations) or actual damages, whichever is greater.  It is unclear whether a plaintiff can obtain the minimum damages for each call, and what is sufficient to qualify as a loss of money or property–something the plaintiff must prove in order to obtain damages.  The UPA also allows for injunctive relieve, attorney fees, and, in some cases, triple damages.  While the statutory damages are less, the ability to recover attorney fees is a significant threat.

It Could Happen To You

Lawsuits under the TCPA or the UPA for unsolicited phone calls are more common than you might think.  At least one person in New Mexico has filed over twenty of these cases so far in 2016:

  • Sid Childress v. Solarcity Corp., D-101-CV-2016-02579 (11/03/2016)
  • Sid Childress v. Taurus Processing, Inc., D-101-CV-2016-02371 (10/10/2016)
  • Sid Childress v. Business Union Financial, LLC, D-101-CV-2016-02373 (10/10/2016)
  • Sid Childress v. Scott Crocket, D-101-CV-2016-02238 (9/23/2016)
  • Sid Childress v. RSOP Holdings Delaware LLC, D-101-CV-2016-01915 (8/9/2016)
  • Sid Childress v. Frank Macri, D-101-CV-2016-01877 (8/4/2016)
  • Sid Childress v. Pine Acre Holdings, LLC, D-101-CV-2016-01852 (8/2/2016)
  • Sid Childress v. Paradigm Funding Group, LLC, D-101-CV-2016-01833 (8/1/2016)
  • Sid Childress v. Edirex Media LLC, D-101-CV-2016-01785 (7/26/2016)
  • Sid Childress v. NuTigr LLC, D-101-CV-2016-01801 (7/26/2016)
  • Sid Childress v. Fora Financial LLC, D-101-CV-2016-01777 (7/23/2016)
  • Sid Childress v. Western Capital Financial Services, LLC, D-101-CV-2016-01772 (7/21/2016)
  • Sid Childress v. Daniel Crenshaw, D-101-CV-2016-01405 (6/13/2016)
  • Sid Childress v. Jerry Maurer, D-101-CV-2016-01406 (6/13/2016)
  • Sid Childress v. Digital Age Marketing Group, Inc., D-101-CV-2016-01002 (4/13/2016)
  • Sid Childress v. Kelly Shapley, D-101-CV-2016-00977 (4/11/2016)
  • Sid Childress v. ProAdvance Group, Inc., D-101-CV-2016-00947 (4/7/2016)
  • Sid Childress v. First Premier Funding LLC, D-101-CV-2016-00949 (4/7/2016)
  • Sid Childress v. Seek Capital, LLC, D-101-CV-2016-00890 (4/5/2016)
  • Sid Childress v. Internet Local Listings Inc., D-101-CV-2016-00679 (3/14/2016)
  • Sid Childress v. Oakwood Financial Services, LLC, D-101-CV-2016-00672 (3/12/2016)

Despite apparently being on the National Do Not Call Registry, Mr. Childress receives an astonishing number of automated phone solicitations.  Mr. Childress is a Santa Fe attorney who files these cases on behalf of himself.  The complaints usually allege violations of both the TCPA and New Mexico’s UPA, seeking statutory damages, triple damages, and attorney fees (often demanding as much as $500,000 and, in one case, $1,000,000).  Although Mr. Childress almost certainly cannot serve both as the attorney and a named plaintiff, the complaints also usually seek class certification.  Many of the cases name the business owners as defendants, not just the company making the calls, alleging that the corporate veil should be pierced.

Despite the large number of cases filed by Mr. Childress, there has been very little actual litigation.  Frequently, the claims are settled after the complaint is filed.  There is no way to know what the settlements amounts are.  Less frequently, Mr. Childress has obtained default judgments against defendants who elected not to answer.  This is particularly troubling given that Mr. Childress appears to be naming owners in their individual capacity, alleging the corporate veil should be pierced.  This is a high standard that is difficult to prove; however, when defendants do not respond to the lawsuit, they can easily become personally liable for claims that probably could have been limited to the corporation.

Seek Advice to Avoid Violating the TCPA or the Unfair Practices Act

The TCPA and Unfair Practices Act are complicated, and contain a number of potentially expensive traps for businesses making phone solicitations.  Consider talking to a lawyer before your business starts utilizing phone solicitations to make sure you are in compliance.  If you have been sued for violating either of these laws, don’t ignore it!  If you have any questions, we’re always here to help.

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