The McCurley v Royal Seas TCPA case is the stuff of legend.
Bad legends. Like ghosts in dungeons. Or Morbius.
It was the first certification ruling looking at calls to purported fraudulent leads. And the defense counsel ended up engaging in unethical conduct that resulted in sanctions.
Yet somehow the Defendant pulled off a “miraculous” win with a summary judgment victory–the court finding that the cruise company was not liable for the acts of the company it paid to generate warm transfer phone calls.
But that just changed on appeal when the Ninth Circuit realized consumers had likely endured over 20MM robocalls so that a cruise company could sell 560 tickets.
So some background here.
Sellers of products–like cruises–will often pay companies (called lead generators) to generate inbound phone calls for them. The lead generator will do…stuff… to get consumers on the phone, and then transfer interested consumers to the seller of the product.
Here the lead generator was a company called Propsects. And the “stuff” they were supposed to do was run websites like http://www.diabeteshealth.info and http://www.yourautohealthlifeinsurance-
.com. These websites supposedly had consent forms allowing Prospects to call consumes who accepted the disclosures to sell Royal Seas’ cruises. Once the consumer was on the phone and expressed interest Prospects would then transfer the call to Royal Seas.
Supposedly using this process Prospects generated calls for Royal Seas. Tons of calls. Millions of calls over a two year period.
Now if this seems odd to you, it is.
In the first place, what do websites about insurance and diabetes have to do with cruises?
Set that aside, do millions of people really visit these websites? And do millions of people really agree to be contacted about cruises on these sites? And do millions of people then stay on the line to be transferred to a cruise company?
While the answer to these questions might be some form of yes–not impossible–consider the final piece to the puzzle: only 560 people actually bought cruises from all of these millions of calls.
That folks is why we have a robocall problem in this country. And that folks is why there is so much interest in R.E.A.C.H.–when a lead generator has to make 35,710 calls to make one sale something is very wrong.
And this was not lost on the Ninth Circuit Court of Appeals.
In a new opinion out yesterday the appellate court found that the lower court got it wrong. The opinion is found here McCurley
The Ninth Circuit found that on the facts described above–all of which Royal Seas knew about–a jury could conclude that it knowingly ratified illegal conduct by the lead generator. Critically for lead buyers the Court cast doubt on the claims that millions of people had really gone onto these obscure websites:
Royal Seas also knew that it received 2.1 million warm-transferred calls from Prospects between January 2017 and June 2018. Royal Seas knew that TCPA compliance required each call to be to an individual who had previously “agreed” to be called by Royal Seas by clicking “next” after submitting personal contact information and seeing a consent box on websites such as http://www.diabeteshealth.info and http://www.yourautohealthlifeinsurance- .com. Royal Seas knew that the calls Prospects placed to individuals who had allegedly consented by checking forms on the website http://www.diabeteshealth.info generated 80,081 warm transfers to Royal Seas in 2017. The plaintiffs submitted expert testimony that this number of transfers, which was only a subset of the calls Prospects placed, from this lead-generation website during this period is implausible at best.
Again, keep in mind 2.1MM warm transfers likely means that 10 or 20 times that many calls were made to get that many people on the phone. So upwards of 20MM calls were likely made as part of this campaign.
And as I teased above, the number of sales here was miniscule:
Royal Seas also knew that of the 560 customers whom Prospects warm- transferred and who made purchases from Royal Seas, 13 percent had phone numbers that did not match the customer consent data that Prospects had provided to Royal Seas, and 31 percent did not have a matching phone number and last name.
The court’s point here is that the data supplied by prospects wasn’t accurate.
But my point here is that only 560 sales occurred–again on 20MM calls.
This is not ok people.
It is little wonder that the Ninth Circuit sent the case back for the jury to consider. The Court determined that a jury may find Royal Cruise ratified–ie knowingly accepted–the benefit of Prospects’ calls while turning a blind eye to the “implausible” call volumes these folks were generating.
Since the case was previously certified Royal Cruise is now looking at a trial for MINIMUM $1BB.
All for 560 sales.
I don’t know what to say.
I’m a defense lawyer. And I love my clients. They take compliance seriously. And despite their massive footprints, they face only relatively rare suit–and most of those are meritless. This is because they operate in a lawful and compliant manner–looking to only connect with consumers who actually want their products.
Direct to consumer marketing CAN BE DONE in a legal way that helps consumers
But as McCurley seems to demonstrate it can also be done in horrendous fashion. And Americans are far too familiar with this sort of misconduct. It is coloring policy in this nation–from the FCC seeking more authority to combat robocalls from Congress to a slew of new state law prohibitions.
And its only going to get worse if the lead generation industry doesnt up its game. RIGHT NOW.
Also, a word to the wise–if you’re a lead buyer make sure that the volume of calls and data leads a generator/aggregator is providing you is consistent with their apparent market footprint, the quality of their ad spend and URLs. if you’re getting millions of calls from “bobsleadshack.com” you better ask yourself why. Your contracts won’t save you, as MCCurley now establishes.
I’ll continue preaching. But please help spread this gospel.