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October 26, 2015

Junk Communications How the TCPA and CAN-SPAM laws choke advertising

This article originally ran in the October 2015 issue of AVN magazine. Click here to see the digital edition. Every time a new mode of communicating is invented, marketers try to figure out a way to utilize it for advertising. The printing press brought leaflets and mass mailings; airplanes brought skywriting and banners; and so on. Advertising via the internet, telephone, fax machines and cellphones are the topic of this month’s column. There is a whole organization devoted to this: the Direct Marketing Association (DMA), which according to its rhetoric “is the world’s leading independent organization for data-driven marketers.” It sends lobbyists to Washington and state capitals to enforce the “rights” of its members, such as what happened in a 1992 episode of Seinfeld:“Hi. Would you be interested in switching over to TMI Long Distance service?”“Oh, gee, I can’t talk right now. Why don’t you give me your home number and I’ll call you later.”“Uh, sorry, we’re not allowed to do that.”“Oh, I guess you don’t want people calling you at home.”“No.”“Well, now you know how I feel.”Actually, Congress was a step ahead of Jerry in the enactment of the Telephone Consumer Protection Act of 1991 (TCPA), 47 U.S.C. §227. However, obviously the DMA was able to beat back these regulations for decades, given that telephone solicitation had been in place for many decades before then.The TCPA addresses more than just Jerry Seinfeld’s cold call. Between the mid-1980s and the early 1990s, fax machines went from a luxury item available only to the most advanced businesses to a virtual necessity; mobile phones followed the same timetable; and so did personal computers. Relatively inexpensive personal computers could operate as automatic dialers and as fax-sending machines. While cold calls to hard-wired phones were a nuisance—especially so-called “robo-calls”—faxes and calls to mobile phones were different; they cost money to the recipients. Fax machines used up ink and paper (which then was often expensive thermal paper), and inbound cell phone calls cost a buck a minute back then.The TCPA addressed all of that, adding mobile-phone text messages after they became popular.But the DMA’s bonanza came with email. Sending junk faxes was slow, even when from computer-generated faxes; robo-calls could make multiple calls at once, although not that many. But even in the early days of email, computers could send out hundreds of thousands of emails in a day.States addressed email spam in a number of ways, over the objection of the DMA. Finally, after everyone was fed up with spam, especially porn spam, Congress enacted the CAN-SPAM Act in 2003 (Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003), 15 U.S.C. §7701, et seq. It preempted most state anti-spam laws, and enacted a harsh set of regulations about commercial emails.Warning: The TCPA and the CAN-SPAM Act each have been subject to amendments and a dizzying array of regulations. If you take anything away from this article, know that all of this is profoundly too complex to navigate without the assistance of an attorney who has experience in these areas. Not just these channels of marketing, but almost any kind of advertising, is subject to extensive regulations of the Federal Trade Commission, which can ruin you if you screw up.So, as it stands, the federal government now regulates most of the effective, high-tech methods of bombarding citizens with advertising. Junk mail regulates itself. It is expensive to print and, even with the post office’s bulk-mail discount, to send. And postal customers have reached the point that they put a wastebasket next to their mailboxes.So, what are these regulations; and what woe can betide a violator? It depends.CAN-SPAM includes a thicket of regulations about commercial emails. The first issue is the definition of a commercial email. CAN-SPAM, you see, applies only to commercial messages, as is the case with the TCPA. So, for example, suppose an email quotes the King James Bible about the Sabbath, editorializes extensively about why everyone should celebrate it, and then adds a sponsored advertisement for a chain of stores owned by god-fearing Christians who, because of their beliefs, close on Sundays? That’s okay.CAN-SPAM goes on to require the now-familiar “unsubscribe” function; makes exceptions for businesses sending emails to existing customers; and prohibits “harvesting” of email addresses by way of spiders (aka webcrawlers).  When it comes to advertisements including porn, CAN-SPAM effectively prohibits it.TCPA regulates a multitude of sins. First, it creates the familiar “do not call registry.” So, Jerry Seinfeld theoretically could have avoided his intrusive call by registration, although not until 2005. The irony is that it applies only to consumers. So, if you have a business that is bombarded with cold calls, you suffer the cost of lost time answering them. Second, it prohibits robo-calls and junk faxes. But once again, the robo-call prohibition applies only to calls to consumers, so businesses are not helped in that vein. Third, while it does not altogether prohibit cold calls to consumers, it prohibits those calls between 9 p.m. and 8 a.m. Finally, it altogether prohibits junk faxes and commercial solicitations to cell phones, via voice or text message. It also has regulations dealing with auto-dialers and other minutia of the telemarketing industry.The admonition about garnering the assistance of an attorney before venturing into high-tech marketing (or any marketing) comes to life when reviewing the consequences of violating one of these laws. They can be dire.Enforcement of CAN-SPAM generally is the province of the Federal Trade Commission. It can sue for civil penalties of up to $11,000 per non-complying email, and has collected millions under that license. CAN-SPAM does not create a private right of damages, although in California one is created under the state’s unfair competition law.TCPA is another kettle of fish. While government enforcement is available, it provides a private right of action with statutory damages of $500 per violation; $1,500 if the violation was willful.Now, if you know what a class action is, it may have dawned on you that a TCPA claim would be excellent fodder for one. In a recent article, one analyst (Mary Gail Gearns, Esq., 2015 WL 4967446 partner in the international mega-law firm of Morgan Lewis & Bockius LLP) noted:“Consumer protection statutes with near-strict liability standards and statutory damages have been longtime favorites of the plaintiffs’ class action bar. One federal statute that has become increasingly popular is the Telephone Consumer Protection Act (TCPA), which, among other things, provides a private right of action for consumers who receive ‘robocalls’ without supplying express prior consent to receive such calls. Use of the TCPA is favored because violations are relatively easy to prove and statutory damages of $500 per violation (and up to $1,500 per willful violation) are easy to calculate.”Stay tuned. Next month, this column will talk about class actions, which can be a menace. Clyde DeWitt is a Las Vegas and Los Angeles attorney, whose practice has been focused on adult entertainment since 1980. He can be reached at ClydeDeWitt@earthlink.net. More information can be found at ClydeDeWitt.com. This column is not a substitute for personal legal advice. Rather, it is to alert readers to legal issues warranting advice from your personal attorney.

 
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