FTC Issues Challenge to Public: Write a Program to End Robocalling in America

On October 18, 2012, the Federal Trade Commission hosted a robocall summit to address the current state of the law and to reinforce the FTC’s commitment to enforcing those laws. Additionally, FTC Bureau of Consumer Protection Director David Vladeck announced a formal challenge to end illegal robocalling in the United States by offering a $50,000 prize to whoever can design a program to screen out illegal robocalls by January 17, 2013.

“Robocalls” are automated phone calls made to consumers that use a computerized autodialer to place the call and a computer to deliver a prerecorded message. If the recording is a sales message (not a call from the consumer’s healthcare provider or a charity), and the consumer has not given written permission to get calls from the calling company, the call is illegal. If the recording is purely informational and does not deliver a sales message, and is made to a landline telephone, the robocall is likely legal under federal law. Examples of permissible robocalls include those delivering messages about school closings, weather alerts, and emergency notifications.

Private organizations and companies are permitted to place robocalls under federal law as long as they do not contain a sales message — for example, automatic calls reminding consumers of upcoming appointments are generally permissible, as are political calls. Robocalls made to cell phone numbers without the consumer’s consent are always prohibited, because the consumer may have to pay to receive the call. Additionally, states may implement more restrictive practices than federal law permits.  The FTC has prepared a business alert  that explains what is legal and what is illegal in this area.

As technology has developed, illegal robocallers have kept pace by developing new ways to thwart the system. Increasingly, robocallers have employed caller ID spoofing to make it appear that the number is coming from a different source, either by using a phony number or name. This can mislead customers as to the source of the call, and it also makes it more difficult to trace the call to its source in order to pursue enforcement action against the caller.

Recognizing that the most effective tool against illegal computerized robocalling is more advanced technology, Vladeck announced a $50,000 award to anyone (with some restrictions) who can develop a solution to reduce the number of illegal robocalls by automatically blocking illegal calls, while letting permissible robocalls through to consumers.  Vladeck said at the summit, “We think this will be an effective approach in the case of robocalls because the winner of our challenge will become a national hero.”

We applaud the FTC’s effort to fix this problem and its emphasis on a solution that would still permit the many legal robocalls placed by legitimate businesses for permissible purposes. Those businesses should be sure to protect themselves from unnecessary enforcement action by carefully following the FTC guidelines on robocalling. This will serve both to protect the business from unnecessary legal trouble, and to prevent negative customer experiences.

Ifrah Law is a leading white-collar criminal defense firm that specializes in e-commerce.

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