by WallPhone

[From your host: This is an epic post about something I know absolutely nothing about, except that I received the calls and marketing materials Wall Phone is writing about—JM]

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“Well, not that. Actually, I have been trying to reach you about the Telephone Consumer Protection Act, TCPA for short. If you’re reading this, someone connected to your company, someone who cares about your company, and someone who cares about their career and livelihood, has been told that your company is violating at least one provision of this Federal law.

“If you don’t listen to them, it would be prudent of them to begin looking for another job. They shouldn’t want to go down with your ship. If they need to maintain some kind of licensure, they also don’t want to lose their credentials for whatever wrongdoing was going on that got them in contact with the person who gave them this webpage.“

Have you ever wondered why those auto warranty calls stopped? It’s because the government has fined the people connected to that advertising campaign more than six and a half million dollars. The fine came with a lifetime ban on any form of telemarketing. What would happen to your company if this kind of fine and ban were to be imposed on you?

“But we don’t make outgoing calls, let alone robocalls!”

And yet you have appeared to have done so. What you thought was a prospective customer told you about this page because they want you to stop harassing them.

“But our company is not harassing them!”

And yet you have appeared to be doing so. And worse, much worse, you appear to have been doing this for years.

“Years?”

Yes.

“But we only recently adopted this marketing partner/strategy!”

And you had better stop. Yesterday. Hopefully your contract has some sort of an enforceable indemnification clause that MIGHT protect you, but it probably won’t. If your marketing agreement does have such a clause, its actual purpose is to pacify any possible reservations at the signing stage of your marketing agreement with them, not the actual true purpose of these contractual things–to avoid the creation of moral hazard.

“Moral hazard” is explained below if you’re not familiar with that term. It’s high time you were.

The reason this indemnification clause on your contract won’t help you is the telemarketing company will be gone when the time comes that you’ll need it. They are betting that by the time it takes for you to figure out that you need to use indemnification, it will be too late. This page is here to help you figure it out sooner, help you recover as much as possible, and make their scam less profitable.

You need to—as soon as possible!—FIRST ask your bank how many of the past payments you made to your marketing partner that you can reverse, THEN ask the marketing partner for refunds. If you think you handling this business with them politely will work, then you have already lost. They will transfer all funds out of their accounts. They will disappear. You’ll lose more than if you IMMEDIATELY reverse as many payments as you can, because they’re not operating in good faith and they’re not intending to refund anything.

You are the victim of a scam. Victim of a crime. It’s literally an organized crime syndicate you are dealing with and they hav done this before, perhaps dozens of times before. They’re counting on you being polite and patient so they have time to disappear, whitewash a new business name on their operations, then start over. They don’t care that they destroyed your agency or business, they have thousands of other prospects they can milk this scam on. They have been doing this for years.

“But why do you want to help my company?”

Oh, I don’t. I want to sue your brains out. Well, technically my lawyers do. I’m already a class representative in multiple class actions. Where the damages are small enough, I have small claims hearings stacked up with my county court to sue other companies. I might still sue your brains out! If you ignore this and this one or any other marketing partner connects you to me again, that suit is even more likely to happen. If I see your organization appear in a lawsuit filed by someone else, I’ll share my recordings with that law firm. Even if it’s not me, if you stay with your marketing partner, or resume business with the future version of them after they shed their current skin, someone like me will definitely sue you.

There are dozens of other people out there just like me filing TCPA lawsuits. Many of them have multiple lawsuits under their belts. There are even people selling step-by-step how-to guides and access to online communities where people share information and trade tips. But those guides aren’t necessary; I’m doing it all myself with free publicly-available information.

At the base level, my motivation is selfish but not greed. I’ve been gainfully employed at the same job for decades, my family is healthy, I’ve got multiple cars completely paid off, my mortgage has less than three years left, my kid has a full ride scholarship, and I’m ahead of average in my 401k. The money that I may receive as compensation is a side-effect of my root desire that my phone again work the way it used to before the illegal telemarketing had started.

Suing your brains out pays handsomely, but I’m hoping this article silences the calls.

“What’s the penalty at stake here?”

I’m more familiar with the consumer side of the fees, but you really need to be afraid of the government. As a consumer, I am able to sue for, at a minimum, $500 per violation, and a single call can rack up three violations. A judge then can treble the penalty if the case is solid enough or he hates telemarketing enough. So that makes a $4,500 per call penalty very possible.

Under the TCPA—remember that the ‘C’ is for “Consumer”—there’s maybe about a page of law for each of those three violations. The government really has stacked the deck in their own favor. They not only also have the same violations they can issue fines for in the TCPA, but also have a much larger Telemarketing Sales Rule, or TSR for short. The TSR law is manytimes larger and is jam packed with all kinds of rules.

Not only does the TSR rulebook dwarf the TCPA rulebook, but the penalties are indexed to inflation, so the dollar amounts have grown to the oddly-specific number of $51,744 per violation.

Remember that extended auto warranty marketing campaign? They actually got off easy. Their fine was 6.5 with six zeros, but estimates are they made a billion calls a month. Their fine for a year should have actually been  larger than an entire country’s GDP.

I don’t care about the TSR though, other than pointing out how unfair it is compared to the weakened protections consumers have. Ask your lawyer how many TSR violations a single call may encompass. I’m quite sure your marketing partner will chalk up at least half a dozen of these types of violations before you ever speak to the prospect they are screening to be transferred to you.

Now it’s Moral Hazard time! A quick summary: 1. Moral Hazard + 2. Perverse Incentives + 3. Market for Lemons = Bad News

1. A moral hazard is the term used to describe a situation among participants where the consequences of a decision are isolated from the person making the decision. That indemnification clause I mentioned earlier normally is designed to shift the consequences of illegal telemarketing from the seller (legally responsible for the calling) to the telemarketer (not legally responsible, but procedurally obligated to make the legal operational decisions).

In the telemarketing field, offshoring outreach activities are a natural and obvious moral hazard. There are very strict laws regarding telemarketing to residential U.S. telephone subscribers. Even if you’re dealing with on-shore telemarketers, the laws are clear that the seller of the product—the buyer of the telemarketer’s services—is liable for ensuring the laws are followed, and even the seller, not the telemarketer actually dialing the calls, is required to purchase the access to the do-not-call database that a telemarketer must use.

Utilizing companies organized outside the jurisdictions of all of consumer law courts and the regulatory reach of the U.S. government pretty clearly isolates the consequences away from the offshore partner and leaves you holding the bag.

2. Perverse incentives are where an actor is rewarded for performing an undesired action. The classic example centers around a cobra problem in India. The government started rewarding citizens who captured and turned in cobras to reduce the deadly snakes’ population. Eventually the wild population of cobras lowered to where the effort to catch one became greater than the effort it would take to breed one illegall, so breeding is exactly what started to happen. The government noticed an obvious increase in large numbers of baby cobras being turned in. They discontinued the incentive. The result was the cobra population exploded as all the captive-bred cobras were released into the streets overnight.

In the telemarketing world, an illegally-called lead is exactly the same as a captive-born baby cobra, much cheaper to obtain than one generated following the requirements of the law. Calling a hundred random phone numbers in your target area code, asking the individual who answer a call their age, if they have a bank account, and if they make their own financial decisions is much cheaper than buying a Facebook ad in that region and hoping a single person enters their phone number into a form and checks the box that means they agree to be called on the landing page. And if the client wants IP addresses and consent records, they’re easy enough to fake. They might even be entered into the consent form by the telemarketing company at the same time they find out the number they called is answering.

3. The Market for Lemons describes the used car market. These markets exist where the product or good being purchased involves some level of complexity that makes it difficult for the buyer to observe the true value of the product, and the seller has advantage of an information asymmetry where they have more knowledge about the product than the buyer. This incentivizes the to conceal known but not easily observed defects in order to sell the product at the same price as a pristine product without defects.

Purchased leads or warm transfers are the lemons. You have no way to identify a good lead or a bad lead until you’ve assumed legal liability for the lead. Even if you require recordings and consent records for each lead, these records can be faked more easily than those generated legally.

“Wait…What does an illegal telemarketer look like?”

In short–whoever placed the call that inspired you to become acquainted with this article is an illegal telemarketer. Full stop.

So your next assignment is to find another, one that does abide by the regulations. I don’t want to reveal to the illegally marketing companies easily-changed facets of what they are doing so they can perfect their scam, so instead I’ll outline what I think a good telemarking company looks like. I can’t personally vouch for this company; I’ve never purchased their products, never consulted with a lawyer about them, never heard of them before writing this guide. You must do all this. Do your own due diligence with checking the quality of leads and calls that may come from them, as you should any other company. This is the company to check out.

“Why do you think they’re legitimate?”

A few things…

1.  30th anniversary banner on the top. I don’t just rely on this alone, I backed it up with independent information. The domain name has been registered since 1997. Oddly they’re using a privacy proxy in the registration, so while this is a red flag, I’ll overlook it in their case due to the numerous other green flags.

2. The site history on the Internet Archive shows they were doing the same business since 1999, and they even still use the same 800-number since the oldest snapshot from  1999 (but now other toll-free numbers may show up in various places).

3. Eastern time contact hours are slightly suspicious as those are easier for India and Pakistani executives to stay up and woo prospects. The company was founded on the west coast, but they indeed have business locations on the east coast, so I’ll let this slide.

4.  Compliance with telemarketing laws isn’t front and center or presented as a “feature” or benefit, and there’s no mention of TCPA. This might not make sense to you at first. Legal compliance is a given, not a benefit. If your teenage son said, “I promise to abide by highway traffic laws!” while asking to borrow the car to drive to the next town over, but didn’t mention city laws you’d be right to be suspicious, and even then you wouldn’t be surprised to find out later that he was racing on that highway.

There are many more laws than just the TCPA at play. There are also the TSR regulations. Most states have their own basket of marketing laws that must be observed before making calls to those states.

5.  I didn’t find the company via scummy marketing. They didn’t call me, they didn’t email me, they didn’t have an annoying banner ad or video ad that I followed. I simply found them by attempting to find another legitimate telemarketing company that I was aware of, and found this company first. The other company I was looking for is known to me from ten years experience in inbound call center work across five different companies. Both that other company and this one also do inbound work for their customers. Doing both types of work means they have stronger relationships with clients and more risk of lost business if the marketing side of their business was to cause harm to a client. This counts enough as a….smallish…green flag.

“OK, what about company X?”

Learn the science of doing due diligence when selecting a vendor. You have to know how to examine their materials and the company’s online reputation, and knowing the red flags to look for. There is also a little-known rule of Federal telemarketing regulations that legitimate telemarketers will ask for, but should nevert be given to an illegal telemarketer. If a marketing partner doesn’t ask for it, you can be certain that they are not intending to follow the law.

“So why don’t you just tell them to stop calling you?“

That’s so cute that you think they’re going to follow the law.

I have a recording of what happened the ninth time in one day I told this company to stop calling me. The robotic script started three times, making it three separate calls, I would leave the first to answer the second, conference them together, then repeat. I talked to this call center so many times that day, the guy I got connected to recognized me!

“They broke the law, now what?”

Intentions don’t matter. Outcomes do. They may have broken the law, but you hired them. You should have known that they isolated themselves from the long arm of the law, but that arm reaches you easily. Lawyers call this vicarious liability. You broke the law, and you need a lawyer.

I’m going to provide the benefit of the doubt that you didn’t intend for your hired marketing partner to violate telemarking law and harass me and many other citizens. Sure, your intentions were good, but the road to hell is paved with good intentions. Your responsibility as an ethical corporate citizen is to have a positive impact on society, not to cause stress and harassment.

It’s essential that you understand there are more negative impacts caused than just annoyance. Your marketing partnership has caused additional harm, and it included harm to your happy customers. You need to consult your lawyer about data breach law regarding every other prospect you spoke with that came to be known to your company via this telemarketing partnership.

At a minimum, you ought to pay the subscription fee of a spam call blocking service for each prospect referred by this marketing partner.

If you paid this company for the lead, they’ve now put that person on a “compliant lead” hotlist. The company will be using it on other product channels and will sell it to other telemarketing companies, and the customer’s information will even find its way to Jamaican Lottery scammers. I know this because it’s happened to me.

If you discussed protected information with that customer such as medical history, they may suddenly find they’re getting a lot of calls asking to have “free” glucose monitors billed to their Medicare. I know this because it happened to me.

If banking information has been shared, you ought to purchase identity theft protection plans for them, and inform every person involved that they ought to keep a close eye on their statements for a period, possibly change their account numbers, and ensure unknown charges don’t appear. I don’t know if this happens. I don’t want to find out if it does, so I always provide false account numbers.

There might be other data breach disclosures you must report to the state. A known criminal enterprise eavesdropping on your calls should be treated as seriously as any criminal organization hiring a hacker to copy the customer data off your computer systems. Talk to a lawyer.

“But they promised they would keep information confidential!”

That’s cute. Was that on the same page of the agreement that also said they’d comply with telemarketing law?

“The incentive to fabricate”: It’s very similar in concept to the Tragedy of the Commons, which describes how a population with shared access to a finite resource will tend to deplete that resource’s value. Time has distorted the incentives and penalties, the government adjusts the fines paid to themselves annually indexed on inflation, but the damages that can be claimed by citizens are fixed to what Congress defined in 1991. Most of the time, these penalties must be assessed by the courts, and thus they cannot be assessed to the overseas telemarketing entities that are outside the jurisdiction of the courts, creating a ripe moral hazard.