There have been a few developments worth noting in the robocall regulatory and enforcement arena recently. First, the Federal Communications Commission (FCC) announced last week a massive $120M fine against Adrian Abramovich, a so-called “kingpin” of illegal calls. Second, two states have advanced or proposed their own robocall bills, which affect legal as well as illegal calls.

FCC Fines Kingpin $120M

In March the FCC and the Federal Trade Commission (FTC) held a joint Policy Forum, which is where the FTC said they’ve learned there are kingpins who seem to lord over the bulk of the illegal robocall schemes, and they tend to be located in the United States. Denise Beamer, Senior Assistant Attorney General for the Florida Office of the Attorney General, said “[The kingpins] are known, they are sophisticated, and they are connectors…Going after them really is a deterrent.” She was evidently referring to the building action against Abramovich.

FCC Chairman Ajit Pai released a scathing statement about Abramovich. He said Abramovich did not dispute any of the key facts in the case, but asserted that he had no intent to defraud or cause harm to consumers. Pai commented,

“[I]f [he had no intent to defraud], why did he include fraudulent caller ID information with each and every one of his 96 million robocalls? Friendly visitors don’t wear disguises to mask who they are. And why did the recorded messages indicate that the calls came from well-known travel or hospitality companies such as Marriott, Expedia, Hilton, and TripAdvisor, even though they were attempting to sell vacation packages at destinations unrelated to those named companies?

…Mr. Abramovich also claims that the consumers who received these robocalls were only harmed if the calls lasted for at least five minutes. So he says he should only be penalized for calls that long or longer. With all due respect, this is a ridiculous argument. I haven’t met a single American who likes getting these kinds of robocalls, regardless of length. And in any case, our rules against caller-ID spoofing certainly don’t permit spoofed robocalls so long as they string you along for 4:59 or less.”

Also of note is the statement of FCC Commissioner Michael O’Rielly, who approved in part and dissented in part to the Abramovich Order. He agreed that there was intent to defraud, but said:

“Where I part ways is the claim that he also intended to cause harm to various individuals or businesses. From what I can tell, his intent was to make a buck. More succinctly, he wanted to make as many bucks as possible. I don’t see in the item or have any evidence that he spent time thinking about what might happen to consumers or companies so long as enough calls went through to make his fraudulent venture profitable. I’m even more skeptical that he intended to harm consumers whose numbers were spoofed. He used local numbers to increase answer rates, not to damage the reputation of people associated with those numbers or the underlying businesses subject to fraud. And, I do not subscribe to the notion that “[h]arm has been done whether or not the consumer listens to the robocall message.”

This whole theory is off the mark and completely unnecessary for our purposes, as the Commission can and should proceed on the intent to defraud basis alone to impose the full monetary penalty on Mr. Abramovich. In short, I believe the Commission should impose the penalty on Mr. Abramovich, but we do not need to rely on a circumstantial intent to harm theory to get to that result.” (emphasis added)

States take action

In Massachusetts, the House has given initial approval to a bill filed by a state representative that would ban all robocalls to mobile phones or other electronic devices. The bill defines a robocall as any “automated phone call that uses both a computerized auto-dialer and a computer-delivered pre-recorded message.” Exceptions are made for school and government alerts, and certain calls from healthcare providers. Proposed penalties are steep, at a minimum of $10,000 for each knowing violation and $1,500 for violations involving consumers who are 65 or older. (emphasis added)

In New York, a state senator says he has drafted a bill that would require all callers to get consumer consent before making any non-emergency autodialed call, whether to a cell phone or a landline. The bill would also require that consumers have the right to revoke their consent by “any reasonable means.“ (emphasis added)

insideARM Perspective

If you’ve been following the discussion about efforts to curb illegal and unwanted automated calls to mobile phones, you will not be surprised to read the many unfolding initiatives in this arena. The problem is exasperatingly difficult. Illegal callers – by definition – will not follow any laws, existing or new. This has led to technology-based attempts to fix the problem, which ultimately will require cooperation among hundreds of companies and stakeholders.

Managing other calls, which are legal but may be unwanted, is also a challenge, because stopping these calls can bring unintended consequences. When referring to these unwanted consequences, most point to school or healthcare examples, because, well, who wouldn’t agree with those? But there are other valid examples, such as legitimate debt collection calls. If consumers don’t receive a telemarketing call, the consequence is that they don’t buy whatever was being sold. In the case of debt collection, if they don’t receive or answer a call, the consumer may end up with a negative mark on their credit report, a lawsuit from a creditor, garnished wages, or other negative result. Debts can’t be resolved without communication.

The Massachusetts and New York bills don’t say a debt collector can’t call a consumer; they do propose that companies wouldn’t be able to use an automated dialer to do so. In addition to providing speed and efficiency, autodialers automate compliance. With so many differing (and some conflicting) state and federal regulations surrounding debt collection, it would be impossible for thousands of debt collectors to reliably adhere to all rules on a manual basis.

These are definitely activities to watch.

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