SO IT GOES: Lead Buyer Out of ATDS Claim But Hooked on DNC and Texas Registration Claim in TCPA Class Action
Pretty common factual scenario.
Lead generator makes outbound calls and talks to consumer.
Consumer either pretends to be interested or actually is interested and then is transferred to a lead buyer who can actually provide the good or service the consumer wants.
But then consumer sues lead buyer for making the illegal call–even though the lead buyer did not make the call at all and likely had no idea the call was illegal.
It happens literally every day in TCPAWorld and it remains the biggest problem/risk with buying third-party leads.
Well in Ortega v. Ditommaso 2025 WL 440278 (W.D. Tx. Feb 6, 2025) a lead buyer walked away from a piece of a TCPA case–defeating the ATDS component.
In Ortega a call center run by Meridian Services, LLC allegedly contacted plaintiff to try to sell a business loan. Plaintiff stayed on the line and pretended to be interested to find out who was calling. As a result the call was transferred to Ditommaso, Inc. who tried to sell a loan.
Plaintiff sued Meridian and Ditomasso for the calls alleging they were made using an ATDS and violated his DNC rights since they were made without consent.
Ditomasso moved to dismiss and the court threw out part of the case.
As to the ATDS component the court adopted the narrow ATDS definition accepted in the Second and Ninth Circuit’s and determined that because there were no allegations establishing the calls were placed at random an ATDS was not used. (Careful with this folks because some courts apply a different standard.) Regardless, nice win for the defense on this piece.
Next Defendant asked the court to toss the case because only one call was placed to the Plaintiff and the follow up texts were only sent because he stated he was interested in the product. But the evidence of the flow of calls and texts was not on the face of the complaint so the court would not consider it and denied the motion on that basis.
The Court also found the vicarious liability allegations were sufficient because Meridian was alleged to be an agent of Ditomasso for purposes of making the calls.
The Court also determined Ditomasso could be vicariously liable for the Texas Business and Commerce Code § 302.101 violation–even though it was not itself required to register as a marketer in the state.
So, some good, some bad. But better than nothing.
Take aways here:
Buying third-party leads is dangerous;
Make sure you are working with only registered marketers in Texas;
Some courts will toss ATDS claims if calls are made from a list– but not all;
You cannot introduce evidence of consent at the pleadings stage (unless you are challenging standing, which Defendant did not do.)
SEC Grants Further Relief From Including Personally Identifiable Information in CAT Reporting
On February 10, the Securities and Exchange Commission (SEC) granted relief exempting industry members from reporting a natural person’s name, address, and year of birth to the Consolidated Audit Trail (CAT). Industry members must still report transformed social security numbers (SSNs) or individual taxpayer identification numbers (ITINs) for natural persons and, to the extent applicable, Larger Trader IDs (LTIDs) and Legal Entity Identifiers (LEIs). This exemptive relief builds on the SEC’s 2020 relief that exempted industry members from reporting actual SSNs/ITINs and full birth dates to CAT (but then requiring year-of-birth reporting) and developed the system for transforming SSNs/ITINs, which are then used to generate CAT Customer-ID (CCIDs).
The SEC’s relief acknowledges the ongoing concerns of industry members and trade associations that the wholesale collection of customer information created cybersecurity risks, as such sensitive customer information was vulnerable to hacking by cybercriminals. Particularly when such customer information could be paired with the full inventory of historical securities transactions effected by that customer maintained in the CAT transaction database, cybercriminals could further use compromised information to impersonate customers or regulators, take over or otherwise compromise customer accounts, or otherwise engage in fraud or other bad acts affecting customers or the markets. The SEC’s action largely tracks a recommendation from FINRA President and CEO Robert Cook last month (https://www.finra.org/media-center/blog/cat-should-be-modified-to-cease-collecting-personal-information-on-retail-investors), perhaps anticipating inevitable CAT reform by a Republican-led Commission.
Regulators will still be able to obtain customer-specific information regarding individual transactions, but they will have to do so by requesting do so by requesting such information from broker-dealers through Bluesheet and other regulatory requests. Both the SEC’s exemptive order and FINRA’s proposal highlighted reverting to such a “request-response” system.
The SEC’s exemptive order is available at https://www.sec.gov/files/rules/sro/nms/2025/34-102386.pdf.
NYDFS Fines PayPal $2 Million for Cybersecurity Failures
On January 23, 2025, the New York Department of Financial Services (“NYDFS”) announced a $2 million civil fine against PayPal, Inc. (“PayPal”) for alleged cybersecurity failures that resulted in the unauthorized exposure of customers’ personal information.
According to the consent order, in December 2022, a PayPal security analyst identified an online post describing a security gap that allowed unauthorized parties to access Forms 1099-K available on PayPal’s online platform. The forms contained PayPal customers’ unredacted personal information, including names, dates of birth and full Social Security numbers. One day after the analyst identified the issue, PayPal’s cybersecurity team noticed activity indicative of threat actors using credential stuffing to gain access to the personal information contained in the forms.
According to NYDFS, the data became exposed when PayPal changed its data flows to make the forms available to more customers. NYDFS alleged that PayPal failed to adequately train the engineering team implementing this change to implement the company’s policies and procedures designed to protect personal information with respect to the updated data flows. NYDFS also alleged that PayPal’s failure to mandate multi-factor authentication for customer accounts contributed to the unauthorized parties’ ability to access the forms.
NYDFS charged PayPal with violations of the NYDFS Cybersecurity Regulation, including the failure to provide sufficient cybersecurity training to personnel and to maintain adequate cybersecurity policies designed to protect nonpublic information, resulting in a $2 million fine against the company. The consent order notes that PayPal had cooperated with NYDFS’s investigation and implemented several corrective measures, including mandating multi-factor authentication and conducting enhanced training programs for its cybersecurity personnel and engineers.
EuGH zur Zukunft der (Datenschutz-)Betriebsvereinbarungen: Was ändert sich?
Der Europäische Gerichtshof (EuGH) hat festgestellt, dass Kollektivvereinbarungen (wie bspw. Betriebsvereinbarungen) nur dann eine rechtliche Grundlage für die Verarbeitung von Beschäftigtendaten darstellen können, wenn sie strenge Kriterien erfüllen. Wir stellen Ihnen die EuGH-Entscheidung vom 19. Dezember 2024 (Aktenzeichen C-65/23) im Folgenden genauer dar.
Warum ist das wichtig?
Das Urteil betrifft eine der großen Fragen im Beschäftigtendatenschutz der letzten Jahre: Nach Art. 88 DSGVO, § 26 Abs. 4 können personenbezogene Daten von Beschäftigten auch auf Grundlage von Kollektivvereinbarungen (z.B. Betriebsvereinbarungen) verarbeitet werden. Unklar war bisher jedoch, ob und ggf. welcher Spielraum den Betriebsparteien bei der Gestaltung der Betriebsvereinbarung (und damit der Verarbeitung personenbezogener Daten) zusteht. Kann relativ frei auf spezifische Besonderheiten des Unternehmens eingegangen werden oder ist lediglich eine Konkretisierung der DSGVO-Vorschriften möglich, sodas der Handlungsspielraum der Betriebsparteien bei Erstellung von Betriebsvereinbarungen nur sehr begrenzt wäre?
Was sagt der EuGH?
Betriebsvereinbarungen sollen keine Umgehung der Verpflichtungen des Verantwortlichen oder gar des Auftragsverarbeiters bezwecken oder bewirken können. Anderenfalls wäre das Ziel der DSGVO, ein hohes Schutzniveau für die Beschäftigten im Fall der Verarbeitung ihrer personenbezogenen Daten im Beschäftigungskontext sicherzustellen, beeinträchtigt. Daraus folgt für den EuGH:
Ja, Betriebsvereinbarungen und Kollektivvereinbarungen können eine Rechtsgrundlage für die Verarbeitung personenbezogener Daten darstellen.
Es ist ein „Ja, aber“, denn: Der Spielraum ist sehr begrenzt, auch Betriebsvereinbarungen, so der EuGH, müssen die allgemeinen Anforderungen der Art. 5, Art. 6 Abs. 1 sowie Art. 9 Abs. 1, 2 der DSGVO erfüllen. Das bedeutet u.a., dass immer auch eine allgemeine Rechtsgrundlage nach Art. 6 Abs. 1 S. 1 DSGVO gegeben sein muss.
Insbesondere gilt dies auch für die Einhaltung des Kriteriums der Erforderlichkeit der Verarbeitung. Betriebsparteien haben einen eng umgrenzten Verhandlungsspielraum. Betriebsvereinbarungen dürfen gerade nicht dazu führen, dass die Voraussetzung der Erforderlichkeit weniger streng angewandt wird oder gar darauf verzichtet wird.
Allerdings: Die Betriebsparteien kennen ihren Betrieb, die Mitarbeiterinnen und Mitarbeiter und deren Aufgaben sowie die spezifischen Herausforderungen, die sich im Unternehmen stellen. Sie verfügen also über eine grundsätzlich gute Expertise für die Beurteilung, ob eine Verarbeitung von Beschäftigtendaten in einem konkreten beruflichen Kontext „erforderlich“ im Sinne der DSGVO ist. Insoweit besteht allerdings auch eine umfassende gerichtliche Kontrolle, um die Einhaltung aller Voraussetzungen und Grenzen der DSGVO zu gewährleisten.
Was sollten Sie jetzt beachten?
Klar ist jetzt: Betriebsvereinbarungen sind für sich genommen keine eigenständige Rechtsgrundlage. Sie können stets nur zusammen mit einer der Rechtsgrundlagen des Art. 6 Abs. 1 S. 1 DSGVO die Verarbeitung von Beschäftigtendaten regeln. Daher sollte bei Neuverhandlungen und Überarbeitungen von (bestehenden) Betriebsvereinbarungen immer ausdrücklich aufgenommen werden, welche DSGVO-Rechtsgrundlage die Betriebsparteien für anwendbar halten. Aufgrund des Urteils des EuGH ist auch die Erforderlichkeit der Verarbeitung von Beschäftigtendaten kritisch zu hinterfragen. Die Erwägungen der Betriebsparteien, weshalb sie die Verarbeitung für erforderlich halten, sollten sich ebenfalls in der Betriebsvereinbarung wiederfinden.
Schließlich sollte auch die „Bürokratie“ rund um die Betriebsvereinbarung nicht vergessen werden. Sofern a) in den Datenschutzinformationen für Beschäftigte und b) im Verarbeitungsverzeichnis bisher allein die Betriebsvereinbarung als Rechtsgrundlage genannt ist, muss dies konsequenterweise um die zusätzliche allgemeine DSGVO-Rechtsgrundlage (z.B. Begründung, Durchführung oder Beendigung eines Arbeitsvertrages oder Wahrung berechtigter Interessen) ergänzt werden.
New Direct Mail Laws: California, Here We Come
With the all the preparation around 1:1 consent, a lot of marketers planned on moving away from telephone solicitations to direct mail assuming it was a safer choice with less restrictions.
And, generally, it is.
Except in California.
Ah, California with your beaches and your perfect weather and your strong consumer protection laws. As of January 1, 2025, there is a new restriction on “solicitations” for “consumer financial product or service” made by physical mail in California.
Per the new rule, which stemmed from State Bill 1096, physical mail solicitations must include “in at least 16-point bold type on the front of an envelope” the following language:
“THIS IS AN ADVERTISEMENT. YOU ARE NOT REQUIRED TO MAKE ANY PAYMENT OR TAKE ANY OTHER ACTION IN RESPONSE TO THIS OFFER.”
OOF, Buzz.
What is a “consumer financial product or service”? What is a “solicitation”?
A consumer financial product or service uses the California Financial Code definition of “consumer financial product or services” which broadly defines it, in pertinent part, as: “A financial product or service that is delivered, offered, or provided for use by consumers primarily for personal, family, or household purposes.”
Therefore, this is a pretty expansive definition.
A solicitation is “any advertisement or marketing communication through writing or graphics that is directed to, or likely to give the impression of being directed to, an individually identified person, residence, or business location.”
But, it does not include mass advertisements such as catalogs, websites, or broadcast messages. It also does not include “communication via…mail..that was initiated by a consumer.” Or credit solicitations that fit the disclosure requirements under the Fair Credit Reporting Act for credit solicitations using a consumer’s credit file.
Those are pretty broad exceptions.
Essentially, completely unsolicited blind mailings are covered by this new rule if they are for a “consumer financial product or service”. For instance, if you wanted to send a mailing to everyone in a certain zip code about mortgages, then that would likely be covered.
While direct mail can be “easier” to comply with for consumer outreach, there are pitfalls. Companies that are new to direct mail should not ignore the compliance responsibilities around direct mail.
Operating Social Casino-Style Applications Continues to be Costly in Washington State
In the latest string of gambling cases involving social casino-style apps out of Washington state, a federal jury has awarded a class of players nearly $25 million for injuries arising from the use of two of High 5 Game’s mobile applications: High 5 Casino and High 5 Vegas.
The award comes after a U.S. District Court judge ruled last June that the two apps amount to illegal gambling under Washington law. Continuing a line of cases that started with the Ninth Circuit’s landmark decision in Kater v. Churchill Downs Inc., and the resultant $155 million settlement, the ruling stems from the specific statutory definition of “gambling” in Washington state, which broadly define “things of value” to include an extension of play. Following the Kater decision, courts applying Washington law have relied on this broad definition to reject defendants’ assertions that the activities do not fall within the purview of the state’s gambling statutes because the virtual currencies used in these social casino-style apps do not constitute “things of value,” as they are only usable within the particular platform or gameplay and cannot be exchanged for real currency.
Putting it into Practice: Businesses operating social casino-style applications or platforms should strongly consider excluding players from Washington state, as Kater and its progeny suggest that the statutory interpretation of the gambling statutes applied to such apps appears well-settled. Additionally, business should be aware that there are at least a handful of other states with similar “extension of play” langauge in their gambling statutes, and while the case law may not be as well-developed in these states, there is a risk that courts in those jurisdictions will take a similar position to that of Washington.
CFPB Shaken Up While Courts Address Consumer Fraud Obligations Under EFTA and Convenience Fees
The new administration continues to shake up the financial services regulatory environment. The CFPB’s new acting director indicated over the weekend that the agency will not take its next draw of funding from the Federal Reserve, noting the CFPB’s current balance as being more than sufficient. Its acting director has separately told staff to “stand down” from doing work, which has prompted lawsuits by staff. In the short term, the CFPB has already moved to stay multiple pending actions that were filed under the prior administration. Whether the CFPB will resume pursuit of the Rohit Chopra agenda remains to be seen. Notably, in the final two weeks under Chopra’s lead, the CFPB, perhaps seeing the writing on the wall in terms of the Bureau’s funding and direction or even its existence, issued a report calling for the states to pursue initiatives of the agency. See Strengthening State-Level Consumer Protections, CFPB (Jan. 14, 2025).
Some state attorneys general have not needed CFPB prompting. Attorney Letitia James, the AG in New York, is currently pursuing an enforcement action seeking to apply the Electronic Fund Transfer Act (EFTA) to consumer wire transfers. It has generally been accepted that wire transfers are governed by Article 4 of the UCC and are exempt from the EFTA. In its suit, the New York AG nonetheless alleges that consumer wire transfers, which are becoming more prevalent, are subject to the EFTA and therefore banks and credit unions should be liable for fraudulent wire transfers. The defendant in that case filed a motion to dismiss, but the US District Court for the Southern District of New York denied it. In a 62-page order, the Court concluded it would be incompatible with the text and history of the EFTA to find that it did not apply to consumer-initiated wire transfers.
In another recent case, Booze v. Ocwen, the 11th Circuit held that it is a violation of the Fair Debt Collection Practices Act (FDCPA) to collect fees for loan payments (so called “convenience fees”) unless they are expressly provided for in the loan documents. The defendant in that case had contracted with a third party to process payments by phone or online and was charging customers for the privilege of making payments via the intermediary. The Booze decision follows an earlier decision out of the Fourth Circuit, Alexander v. Carrington Mortgage, and a CFPB advisory opinion issued in 2022. Even if the CFPB is not around to enforce its advisory opinion, banks and credit unions that charge convenience fees should be wary of doing so because there are now two federal circuit courts of appeal that have found they violate the FDCPA.
Top Tips for Companies to Prepare for an Immigration Visit
Here are our top tips to assist companies and institutions in preparing for visits by immigration officials. The second Trump administration has set robust enforcement of the immigration laws as a top-level priority. On January 20, 2025, President Trump issued an executive order that directed all executive branch departments and agencies to “employ all lawful means” to ensure “total and efficient” enforcement of federal immigration laws. As an initial step, the Department of Homeland Security (DHS) terminated its prior “sensitive location” policy that prevented immigration enforcement activities in or near areas such as schools, medical facilities, places of worship, social service centers, daycare centers, or shelters without agency headquarters approval or exigent circumstances. In commenting on the new policy, the DHS spokesperson stated, “Criminals will no longer be able to hide in America’s schools and churches to avoid arrest. The Trump Administration will not tie the hands of our brave law enforcement, and instead trusts them to use common sense.” While we have not heard any confirmed reports of enforcement in these spaces since the rescinding of the Biden-era guidance, it would be prudent for businesses to be prepared and have a lawful response plan for visits from immigration authorities, including local police authorities, U.S. Immigration and Customs Enforcement (ICE), U.S. Customs and Border Protection (CBP), and other agencies empowered to enforce the immigration laws.
Review Your Policies. Keep in mind that immigration authorities are specialized law enforcement. Many companies already will have policies in place that instruct employees how to respond generally to inquiries by law enforcement. Therefore, companies should ensure employees are properly trained on company policies concerning how to interact with ICE or other immigration enforcement agents. If your company does not have such a policy and is in a category of spaces no longer protected as “sensitive locations,” now may be the time to study and potentially adopt appropriate policies. Companies should consider appointing “liaisons,” or other point persons at each company location, who are specially trained and authorized to interact with law enforcement. This will ensure consistency of process and help relieve stress of others who may be directly impacted by these immigration encounters.
Identify Public versus Private Areas. Companies should decide whether they want to have policies or procedures indicating a clear delineation between their public and private spaces. Immigration agents generally do not need permission to enter public areas of a business. Public spaces are general areas that are accessible not only to clients, staff, patients, or students but are accessible and available to the general public. These can include parking lots, waiting areas, hallways, lobbies, or entrances. Areas that are not open and accessible to the public are generally considered private areas, where law enforcement is accordingly not permitted without legal authority. To go beyond these public spaces into private areas, enforcement agents may need to show a warrant (more on this below), not only to apprehend a person but also to enter and search any non-public spaces of a business absent permission from the business. Given that the previous guidance prevented enforcement near protected areas without agency headquarters approval or exigent circumstances, enforcement agents likely will take advantage of accessing public spaces before seeking access to private spaces. Businesses should consider whether they wish to specifically designate public and private areas to help manage engagement with law enforcement.
Review the Warrant. If the enforcement agent is seeking access to a private space and the company decides not to consent voluntarily to such access, then an employee will need to ask to see the warrant; if the agent presents a warrant, the best place to start is to read the scope and wording of the warrant. There are several different types of warrants that can be used in immigration enforcement situations, so a lawyer or trained layperson may need to review the warrant to know what type of warrant the enforcement officer is presenting to gain access. (Samples are included at the end of this piece.)
Judicial Warrant: This is a formal written order, issued by a judicial officer, that authorizes law enforcement to make an arrest or conduct a search. This is issued by a court — typically a federal court — so you will see something like “U.S. District Court” at the top of the warrant and a signature from a judge or magistrate judge at the bottom. Pay close attention to whether the warrant allows for (1) just an arrest of a person named in the warrant, (2) a search for items on the identified person’s body, or (3) a search of a location for listed items or persons. An arrest warrant does not give law enforcement permission to enter a particular private space but does permit the agent to arrest someone listed in the warrant. A search warrant, by contrast, permits the specified enforcement agency to search a specified area (including public and private spaces) for papers, data, property, or persons and seize such listed items or identified persons. Companies should be observant during law enforcement activities on their premises, and carefully and thoroughly document law enforcement actions at all times while they are on company premises.
Administrative Warrant: An administrative warrant authorizes a law enforcement officer from a federal agency, such as ICE or CBP, to make an arrest or remove/deport someone from the country, depending on the type of administrative warrant utilized. This type of warrant is issued by a federal agency, such as ICE, not a court, and can therefore be signed by an “immigration judge” or “immigration official.” Importantly, this warrant does not authorize a search of a private area. Practically speaking, an administrative warrant does not allow agents to enter a private area to apprehend a person named in the warrant or to search an area or seize private property or information, even if the agents reasonably believe the person to be located in that area. Absent changes to the law, administrative warrants cannot be used to search premises.
“Blackie’s” Warrant: This judicial warrant, named after the case Blackie’s House of Beef v. Castillo, is a specific type of judicial warrant that does not always name or even describe the person or people sought. A Blackie’s warrant is a civil search warrant issued by a magistrate judge, which authorizes immigration agents to enter private premises for the purpose of enforcing the civil/administration provisions of law relating to exclusion and deportation. While this warrant has fallen out of favor in many jurisdictions, we may begin to see more of its use going forward. Again, this warrant may provide legal authority for enforcement agents to search a private space, without the owner’s consent, for persons unlawfully in the United States.
Consider Privacy Laws. To the extent the company is a covered entity or business associate subject to the Health Insurance Portability and Accountability Act (HIPAA), or a similar entity subject to state laws, the company will need to review a law enforcement request to ensure compliance with applicable privacy laws. Protected health information can be disclosed under HIPAA and state law in limited circumstances. HIPAA permits (but does not require) disclosing protected health information in compliance with, and as limited by the relevant requirements of, a court order or court-ordered warrant, a subpoena, or a summons. HIPAA also permits disclosure pursuant to administrative requests for which response is required by law, including an administrative subpoena or summons, a civil or an authorized investigative demand, or similar process authorized under law provided all of the following are true: (1) the information sought is relevant and material to the law enforcement agency, (2) requested information is specific and limited in scope as reasonably practicable, and (3) de-identified information could not be reasonably used. There also are federal and state privacy protections in place for certain sensitive types of health information. State law can be more restrictive, so make sure your policies on responding to law enforcement take into account any relevant state law(s). The company’s existing policies and procedures should address the production of this type of information in response to law enforcement requests.
Triage. The company should request from law enforcement a reasonable amount of time to review and perform an initial assessment of the warrant, to appropriately escalate to legal counsel or a point person as needed. If it is something new or unfamiliar, seek advice from legal counsel, who should carefully review the warrant to determine the company’s obligations in interacting with law enforcement. Provide training to staff and leadership to ensure they read any paperwork provided and triage the situation. Again, appointing “liaisons” at each worksite who are specially trained and designated with authority to interact with enforcement agencies may be advisable.
Avoid Obstructing Law Enforcement. Importantly, employees should avoid obstructing law enforcement’s activities. Even if such activities appear to go beyond the scope of the warrant, interfering is not helpful and can risk criminal charges. Legal remedies for law enforcement overstepping, including unlawful searches and seizures, can be addressed later in the process. Interfering with law enforcement while they are onsite often will serve only to escalate the situation.
The immigration landscape is quickly changing under the Trump administration, but preparing for potential enforcement in advance and training employees on these issues can help your company know how best to respond to unfamiliar situations. Constitutional law provides companies with important protections from unreasonable searches and seizures by law enforcement, so consultation with legal counsel to understand those rights and obligations is critical to ensuring compliance with the law.
Please contact a member of Foley’s Immigration, Government Enforcement or Labor & Employment teams with questions for help preparing for immigration enforcement action on site or for further information about the federal government’s new immigration-related policies.
Samples of Warrants
Judicial Warrant for a search:
Judicial Warrant for an arrest only:
Administrative Warrant (Warrant of Removal/Deportation)
Administrative Warrant (Warrant for Arrest)
CHASING THE AMBULANCE CHASER?: TCPA Suit Against Accident Law Firm Shows Sharks Can Eat Each Other After All
This one will be fun for folks.
A personal injury law firm in Florida is being sued in a TCPA class action based on calls apparently made by a lead generator hoping to drum up work for the law firm.
The complaint alleges FRIEDLAND & ASSOCIATES, P.A. d/b/a Accident Claims called Plaintiff more than 130 times despite his number being on the DNC list and despite his requests to stop calling.
Fiedland moved to dismiss the suit but in Helmuth v. Friedland 2025 WL 442477 (S.D. Fl. Feb. 10, 2025) the Court denied the motion finding the complaint was properly pleaded.
Diving in a bit, the court found allegations Defendant “encouraged Plaintiff to engage the legal services” of Friedland and provided Plaintiff’s number to Defendant Friedland, which proceeded to call Plaintiff offering its legal services” were enough to show the calls were made at the law firms direction and subject to its control.
Next Friedland argued complaint should be dismissed because it does not identify the phone numbers the calls came from and does not state when the opt-out occurred in relation to the 130 alleged calls. The Court determined, however, that neither allegation was required given the large number of calls at issue– the court essentially inferred that the calls continued after a reasonable time elapsed.
The Court also refused to dismiss the willful damage request determining a jury might decide Friedland’s conduct was knowing or willful.
Indeed the Court refused to even throw out the injunctive relief claim determining that given over 100 calls were made to the guy there was a likelihood of future injury.
My goodness.
A complete loss for a law firm in a TCPA suit.
Can’t say I like to see it. But I don’t hate it either.
April 11, 2025 Is Coming!: Reminder On New FCC Revocation Rules [Video]
But at a high level, come April 11, 2025 you will need to break up all messaging and voice calling across your enterprise into three tiers: i) marketing; ii) informational; iii) exempted.
Come April 11, 2025 a stop response will require ALL communications requiring the same or greater level of consent to cease based on these tiers.
So a “stop” to a marketing message will require all calls and texts requiring PEWC or PIEP to cease;
A “stop” to an informational/transaction call will require all calls and texts requiring any level of express consent to cease;
A “stop” to an exempt message—such as a fraud alert—will require all messages of any kind using regulated technology to cease.
This is a very large change from the current rules.
There is a small opportunity to “clarify” with the consumer what they intended with their opt out request, but it cannot be used as a rebuttal and if the consumer does not respond you have to apply the rubric above.
Not good.
Also unlike the FCC’s one-to-one rule THERE IS NO LEGAL CHALLENGE to this rule and there has been no effort by anybody to stay it (although R.E.A.C.H. is considering such an effort.)
Biggest change in telecom this year folks. Hope you’re all ready.
“THE ULTIMATE CONSEQUENCE”: Small Businesses Fold as FCC Moves to Require Notification of Carrier Call Blocking– But Takes No Action on Real Problems
So the FCC plans to vote next month on a rule requiring carriers to advise callers when their calls have been blocked based on “reasonable analytics.”
On the one hand that’s fine, I guess. But the carriers should NEVER have been allowed to block calls without notification to begin with. That’s just insane.
And the fact we will all need to wait another year before Sip code 603+ to be in use is cold comfort.
But, slightly better than nothing I suppose.
What we really need is IMMEDIATE action on the R.E.A.C.H. petition to STOP illegal call/sms blocking and mislabeling— and to dismantle TCR. This is URGENT.
Every day I am hearing from another small business telling me that call and text blocking– particularly text blocking– is threatening to (or is–wait or it) putting them out of business. TCR is most of the problem, but the aggregators and carriers — including phantom voicemails the carriers are apparently using to “block” calls while still charging for the traffic– blocking on the basis of content is a massive problem.
So let’s back up and remind everyone of what’s at stake.
There are actually two separate issues, but they fall into the same basic concept of carriers blocking communications.
First, is carrier VOICE call blocking based on “reasonable analytics.” This was first authorized back in 2018 and there have now been a ton of revisions to a safeharbor created to allow carriers to violate section 201 of the Communications Act–which basically requires carriers to act as “common carriers” and connect all phone traffic.
As already noted, carriers have been allowed to block calls for years now based on an unspecific black box of requirements that, as far as I can tell, have resulted in BILLIONS of LEGAL AND CONSTITUTIONAL phone calls being blocked essentially at the FCC’s invitation with ZERO recourse.
I talked to a client YESTERDAY so was having so much trouble getting calls to go through he bought his own carrier operator. Plus he has to cycle through thousands of DIDs a day to avoid his numbers being labeled. As he tells me: “If you call more than 20 times a day from a DID they label you as spam. More than 40 they label you as scam.”
The carriers figure if you are calling at volume then your phone number must be important to your business. As soon as they know that they figure you will pay them to white label your number and they will block and label you until they pay up.
DISGUSTING.
Requiring the carriers to advise you (finally) when they block is step one–this should have been done years ago, of course– but so what if there’s no required redress?
And there isn’t.
Because the FCC has never said what can and cannot be blocked to begin with. That’s part of what the R.E.A.C.H. petition is trying to fix.
But that’s just the first problem and probably the smaller of the two.
The second problem is SMS blocking, and this is even more painful and the FCC has intentionally made it harder for businesses to address. And you REALLY need to understand this part– because it is nuts.
Also back in 2018 the FCC clarified that SMS isn’t a telecommunication service it is an “information service.” Because, you see, SMS isn’t a communication function its a storage function. You’re not talking to someone else when you send a message you’re just transferring a data set.
Crazy, absurd, tortured logic– and one of the worst rulings to come out of the FCC at that time.
The classification of SMS as a Title III information service was done specifically to allow carriers to block SMS. It was believed at the time that the carriers had successfully deployed SMS blocking already and the FCC didn’t want to upset the apple cart by stripping text blocking authority away from the carriers.
But they did.
By removing the requirement of the carriers to faithfully transmit all SMS messages it allowed the carriers to determine their own terms of use on content providers (people sending text messages) including declaring that certain content just wouldn’t be allowed on their networks.
Total violation of the First Amendment. A licensing scheme of the highest order.
It gets worse.
The carriers have conspired (anti-trust?) to only accept traffic registered through a company called The Campaign Registry. TCR is foreign owned and has both tremendous power and visibility in the telecom ecosystem right now.
TCR literally has the ability to prevent any business or political campaign from sending high volume text messages. And it is using that power to silence people based on CONTENT. And the aggregators are afraid of TCR rejections so they are not even submitting campaigns to TCR to begin with (just like they are blocking SMS and calls that they think the carriers won’t like.)
Just yesterday I was told of a campaign that an aggregator would not even submit to TCR for approval because the political message was “polarizing and considered offensive [to some].”
Prior restraints on free political speech are literally actively ongoing. It is a massive problem.
How big of a problem?
How about a small business that just shut down because it could not get 10DLC access. In the words of the owner:
To give you some background, we ran our business for five successful years using P2P texting – a model that allowed us to deliver highly responsive and personalized service. Our customer service was second to none, and we consistently met the high expectations of our clients. However, the introduction of 10DLC upended everything.
Here’s what happened…
Regulatory Impact:The 10DLC regulations brought with them a burdensome, protracted registration process. We were initially advised by our provider that unregistered traffic would soon be phased out (multiple times over the course of 2 years), prompting us to urge our clients to register promptly. Unfortunately, this promise was repeatedly reversed. Each time we were told to push for registration with an imminent cutoff, the timeline shifted unexpectedly. These delays were not trivial – they were lengthy enough to derail critical campaigns, especially for political clients with tight election deadlines.
Client Impact:The prolonged and unpredictable registration procedures forced our clients into a corner. Many of our smaller clients, who relied on our nimble P2P texting to engage with voters, found themselves unable to complete registration in time, rendering them unable to run their campaigns effectively. Worse yet, several larger clients, seeking more stable and predictable service, migrated to vendors who seemed to have insider information or more streamlined processes in place. The impact on our reputation was severe, despite our best efforts to support our clients every step of the way.
The Ultimate Consequence:After years of success, these cumulative issues made it impossible for us to maintain our business model. We prided ourselves on agility and excellent customer service, but the excruciating delays and inconsistent guidance around 10DLC left us with no viable path forward. This week, we made the difficult decision to close our doors.
Done.
Small business vaporized.
By a process that was never legal to begin with.
Its nuts.
And here’s the worst part– it doesn’t work. In fact, SMS spam has gotten WORSE since TCR took over its little role as censorship king of America.
Now how is that possible?
Before there was very little SMS spam. The FCC takes the reigns off the carriers and they put a foreign-owned company in charge of network access and now there is a ton of SMS spam.
Hmmmmm.
I wonder why that is?
Dear FCC:
I know you have A TON going on– and thank you very much for your efforts staying one-to-one–but we need a public comment period on the R.E.A.C.H. petition to stop all of this right away.
Thank you.
A New Era: Trump 2.0 Highlights for Privacy and AI
Since the Trump 2.0 administration commenced, the U.S. federal government has experienced some major policy shifts. Several Biden-Harris administration era regulations are now eliminated or on a 60-day hold while under review. States and other organizations have filed lawsuits to stay implementation of certain Trump 2.0 initiatives (i.e., the funding freezes, deferred resignation offer, birthright citizenship, among others).
Below is a summary of some of the federal ‘de-regulation’ related to privacy and AI that we are following:
The January Freeze: COPPA Rule Amendments
Issued on inauguration day, January 20, 2025, the Executive Order titled “Regulatory Freeze Pending Review” (Regulatory Freeze EO) directed federal agencies to not propose or issue any new rule and to withdraw any rule sent to the Office of the Federal Register but not published as final in the Federal Register.
The Federal Trade Commission (FTC) finalized amendments to the Children’s Online Privacy Protection Rule (COPPA Rule Amendments) on January 16, 2025. The COPPA Rule Amendments were submitted to but not published in the Federal Register prior to January 20, 2025. Accordingly, while approved as final from the FTC’s perspective, the COPPA Rule Amendments remain a proposed rule with no effective date or compliance date. The Regulatory Freeze EO directs the FTC to “withdraw” the COPPA Rule Amendments until “a department or agency head appointed or designated by the President after noon on January 20, 2025, reviews and approves the rule.”
Also on January 20th, President Trump appointed FTC Commissioner Andrew Ferguson as FTC Chairman. While still in his role as a Commissioner, Chairman Ferguson voted in favor of the COPPA Rule Amendments but also cited “three major problems” in his concurring statement, which are:
Requiring operators to disclose and receive parental consent about the specific third parties to which the operators will disclose children’s personal information. Then-Commissioner Ferguson noted that not all additions or changes to the identities of third parties should require new parental consent. He suggested that the FTC “could have mitigated this issue” by clarifying that a “change is material for purposes of requiring new consent only when facts unique to the new third party, or the quantity of the new third parties, would make a reasonable parent believe that the privacy and security of their child’s data is being placed at materially greater risk.”
Prohibiting indefinite retention of children’s personal information. The COPPA Rule allows for retention of children’s personal information “as long as is reasonably necessary to fulfill the purpose for which the information was collected.” (§ 312.10). Then-Commissioner Ferguson criticized the addition of the prohibition on indefinite retention because it “is likely to generate outcomes hostile to users,” providing the example that “adults might be surprised to find their digital diary entries, photographs, and emails from their childhood erased from existence.” He wrote that, because the term indefinite is not defined, operators “can comply with the Final Rule by declaring that they will retain data for no longer than two hundred years […] And if ‘indefinite’ is not meant to be taken literally, then it is unclear how the requirement is any different than the existing requirement to keep the information no longer than necessary to fulfill the purpose for which it was collected.”
“Missed opportunity” to clarify that the Amended COPPA Rule is “not an obstacle to the use of children’s personal information solely for the purpose of age verification.” Commissioner Ferguson noted that the COPPA Rule Amendments “should have added an exception for the collection of children’s personal information for the sole purpose of age verification, along with a requirement that such information be promptly deleted once that purpose is fulfilled.”
Other notable changes in the COPPA Rule Amendments that were not part of the concurring statement include:
An official definition for “mixed audience”. While the concept of a mixed audience online service is covered in the COPPA Rule (see the FTC’s COPPA FAQs, Section D, Question 4), the COPPA Rule Amendments add a defined term for “mixed audience website or online service”. It means an online service that is directed to children within the meaning of COPPA but “that does not target children as its primary audience, and does not collect personal information from any visitor, other than for the limited purposes set forth in § 312.5(c), prior to collecting age information or using another means that is reasonably calculated, in light of available technology, to determine whether the visitor is a child.”
Expanded Data Security Requirements. The COPPA Rule requires “reasonable procedures to protect the confidentiality, security, and integrity of personal information collected from children.” (§ 312.8) The COPPA Rule Amendments provide minimum requirements for this reasonableness standard, including a written information security program that contains many of the same safeguards required under state cybersecurity laws, i.e., an accountable person, risk assessments, testing and monitoring and vendor due diligence.
Not-So-Final: Sensitive Personal Data Transfers and Negative Options
On December 30, 2024, the U.S. Department of Justice released a Final Rule titled “Preventing Access to U.S. Sensitive Personal Data and Government Related Data by Counties or Concern or Covered Persons” (DOJ Rules). President Biden’s Executive Order 14117 (EO 14117, dated February 28, 2024) directed the DOJ to issue the DOJ Rules. The DOJ Rules were published in the Federal Register on January 8, 2025.
In brief, the DOJ Rules apply to “U.S. persons,” which means U.S. citizens, national or lawful permanent residents, qualified refugees, entities organized under U.S. law or persons “in the U.S.” (§ 202.256). Subject to certain exemptions (§ 202.501 to § 202.511), U.S. persons are prohibited or restricted from knowingly engaging in a “covered data transaction,” which means a sales or licensing of “bulk sensitive personal data” or “United States Government-related data,” a vendor agreement, employment agreement, or investment agreement (§ 202.210), that involves access by a “country of concern” (§ 202.209) or “covered person” (§ 202.211.) (Counties of concern are China, Cuba, Iran, North Korea, Russia and Venezuela (§ 202.209).)
The DOJ Rules are effective on April 8, 2025. But, as a final rule published in the Federal Register prior to January 20th, the Regulatory Freeze EO requests that federal agencies “consider” postponing the effective date and opening a comment period for interested parties.
Even before the Regulatory Freeze EO was released, the DOJ had announced its intention to “continue to robustly engage with stakeholders to determine whether additional time for implementation is necessary and appropriate” during the 90 days between the DOJ Rules’ publication in the Federal Register and the effective date. Unlike many other Biden-era Executive Orders, EO 14117 was not rescinded on Inauguration Day. Whether the exclusion of EO 14117 means that the DOJ Rules will survive the regulatory freeze is unclear.
Another final rule subject to the regulatory freeze: FTC’s “Rule Concerning Recurring Subscriptions and Other Negative Option Programs” (Final Negative Option Rule), which was published in the Federal Register as final on November 15, 2024.
Parts of the Final Negative Option Rule were effective January 14, 2025, but businesses have until May 14, 2025, to comply with certain sections Final Negative Option Rule, i.e., § 425.4 (disclosures’ form, content and placement), § 425.5 (consent) and § 425.6 (simple cancellation mechanism).
Commissioner Holyoake wrote a dissent (89 FR 90540) to the Final Negative Option Rule, citing procedural issues and the failure to “define with specificity” the acts or practices that are unfair or deceptive and whether these practices are “prevalent.” FTC Chair Ferguson joined, which may indicate the parts of the Final Negative Option Rule that the FTC will revisit or replace. (More about the Final Negative Option Rule is available here).
A third rule – Personal Financial Data Rights Rule (PFDR Rule) – was published as final on November 8, 2024, and effective January 17, 2025 – three days before the Regulatory Freeze EO was issued. On February 3, 2025, the federal agency that issued the PFDR Rule – the Consumer Financial Protection Bureau (CFPB) – announced that Treasury Secretary Scott Bessent took over as acting head and ordered the CFPB to halt all activities. Subsequently, Democrats in Congress expressed concern in a February 7th letter to Acting Director Bessant. That same day, Russell Vought, the newly sworn-in Director of the Office of Management and Budget (OMB) and an architect of The Heritage Foundation’s Project 2025, reportedly replaced Secretary Bessant as acting head of the CFPB and echoed Secretary Bessant’s orders to the CFPB staff. In a social media post, Director Voight announced that the CFPB “will not be taking its next draw of unappropriated funding because it is not ‘reasonably necessary’ to carry out its duties. The Bureau’s current balance of $711.6 million is in fact excessive in the current fiscal environment.”
The CFPB website at https://www.consumerfinance.gov/ currently displays a “404: Page Not Found Error” and the CFPB offices were closed to CFPB staff and taken over by the Department of Government Efficiency (headed by Elon Musk) as of February 9, 2025.
The Congressional Review Act (CRA) (codified at 5 U.S.C. §§801- 808) also is a consideration for these final rules. If a final rule is deemed a “major rule” (5 U.S.C. §804) by the OMB, the CRA provides for a special congressional procedure to overturn the rule during a so-called look-back period. The OMB deemed each of the Negative Option Final Rule, the DOJ Rules and the PFDR Rule as a major rule.
The Senate Parliamentarian has determined that the CRA’s lookback period began on August 16, 2024, for rules submitted in the second session of the 118th Congress, which ended on January 3, 2025. Republican lawmakers already have indicated that they intend to use the CRA procedure to target as many as the Biden-Harris administration rules as possible.
The Big Shift in Artificial Intelligence Policy
President Biden’s Executive Order 14110 of October 30, 2023, titled “Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence”, focused on “governing the development and use of AI safely and responsibly,” was rescinded by Trump’s Executive Order 14148 (“Initial Rescissions of Harmful Executive Orders and Actions”) and replaced by Executive Order 14179 (“Removing Barriers to American Leadership in Artificial Intelligence”) (Trump AI Executive Order) on January 23, 2025.
The Biden administration focused broadly on eight overarching principles for AI development: safety and security; privacy; managing AI bias and civil rights; consumer, patient and student protection; worker support; privacy; innovation and competition; worker support; international AI leadership; and federal use of AI. (Read more here.) By contrast, the Trump AI Executive Order is centered on deregulation and the promotion of AI innovation as a means of maintaining U.S. global dominance. (Read more here.)
The January Shakeup: The Data Privacy Framework
Like the CFPB and other U.S. federal government staffing changes as well as the controversial Deferred Resignation Program, President Trump fired three of the four members of the Privacy and Civil Liberties Oversight Board (PCLOB), including Chair Sharon Bradford Franklin, who was three years into her six-year term, Professor Edward Felton, and Travis LeBlanc, who served in the Obama administration.
By statute, the PCLOB can have up to five members appointed by the President and confirmed by the Senate. Three members constitute quorum and only three members of the PCLOB can be members of the same political party. As of January 31, 2025, only one PCLOB member – Beth Williams, who served in the first Trump administration, – remains at the PCLOB.
The PCLOB appointee removals are symbolically and practically significant to the future of the EU-U.S. Data Privacy Framework (DPF). The agreement between the European Commission and the U.S. that created the DPF (DPF Agreement) relies on a multi-layer mechanism for non-U.S. individuals to obtain review and redress of their allegations that their personal data collected through U.S. Signals Intelligence was unlawfully handled by the United States. As part of the negotiations for the DPF Agreement, President Biden issued Executive Order on Enhancing Safeguards for United States Signals Intelligence Activities (EO 14086), directing federal agencies to address concerns – including redress mechanisms – relating to bulk digital surveillance by U.S. law enforcement and intelligence agencies. (These concerns underpinned objections from EU regulators to the DPF’s predecessors. (Learn more about DPF generally here.)
The PCLOB, which was created in 2004 to advise the federal government on civil liberties matters in connection with U.S. anti-terrorism laws, advised on the creation of the DPF’s redress mechanism. Even though the DPF Agreement was not voted into law by Congress and EO 14086 could be overturned by another President, the redress mechanism in the DPF Agreement was pivotal in demonstrating to the European Commissions that EU citizens could receive protection for their personal data that is essentially equivalent to EU data protection law.
While the U.S. federal government is amid structural changes initiated by Trump 2.0, businesses looking to prepare for and advance compliance efforts are faced with the difficult decision about whether to continue on with compliance efforts under the final rules described above or to stand down until the dust settles in Washington. For example, should a DPF-certified business revisit other cross-border transfer mechanisms now in case the DPF does not survive legal challenges? Meanwhile, state legislatures continue to fill the void. So far this year, many states have already teed up new or amended privacy laws and new AI laws. Since neither a new federal AI law nor a new federal consumer privacy law seem to be top of mind for the Administration, business can for now continue on with state law and federal sectoral law compliance efforts.
Krista Setera and Mary Aldrich contributed to this article.