FTC Extracts Settlement from Home Loan Telemarketers for Do-Not-Call Violations
Posted by Ronald London
The Federal Trade Commission announced that it has reached a settlement with mortgage services company USA Home Loans Inc., and its telemarketer USA First Investment Group, Inc., over alleged violations of the agency’s Telemarketing Sales Rule (“TSR”) relating to calls made to individuals on the National Do-Not-Call Registry (“NDNCR”). The two companies and their principals agreed to more than $500,000 in civil penalties, all of which are suspended except for $53,000 to be paid by USA Home Loans, and to an injunction prohibiting them from engaging in future violations of the NDNCR rules. The settlement resolves allegations that the companies called consumers whose telephone numbers appear on the NDNCR, and that they placed the calls without paying the required annual fees for NDNCR access.
According to a complaint filed by the Department of Justice in federal court in Maryland (where both entities and the principals are located), USA First Investment purchased consumer lead lists from third party sources and used them to place calls on USA Homes Loans’ behalf. USA First Investment first placed calls to consumers on the lead lists to determine if they were interested in and qualified for USA Home Loans’ services. USA First Investment then provided the qualified leads to USA Home Loans, who in turn called the interested consumers to offer mortgage products and services, including origination and refinancing loans for their homes.
The settlement serves as a potent reminder of two potential pitfalls when it comes to NDNCR compliance (though it is unclear how big a role each played in this particular case given the sparseness with which the FTC laid out the facts in the complaint and in its press release announcing the settlement). First, the fact that USA First Investment was working from lead lists purchased from third party vendors reinforces that, though it was not clear whether this occurred here, a company acquiring such lists may not rely solely on a vendor’s claims that they had been scrubbed against the NDNCR. Second, while it is unclear from what the FTC materials reveal how much of a sales message was included in USA First Investment’s pre-screening calls, the FTC must have considered them part of a plan, program or campaign to sell goods or services, even though there was no effort to make a sale during the screening call itself, and the call may well have had minimal or no sales elements. This underscores that even calls that do not seek to close a sale, collect any form of payment, or otherwise ask the call recipient to take any action, still may trigger NDNCR liability if they are part of a larger pattern of activity geared toward making a sale.
