Aww the beautiful TCPAWorld. Always so full of interesting quicks and traps for the unwary.
Here’s one– a company making calls on behalf of a non-profit can be liable for violating the DNC rules, even though the CFR appears to say otherwise.
That’s the holding in Pinn v. Consumer Credit Counseling Foundation, Inc. 2023 WL 21278, Case No. 22-cv-04048-DMR (N.D. Cal. Jan. 3, 2023) and it merits a careful read by folks making non-profit calls.
In Pinn a company apparently bought some data leads from DMS and proceeded to make outbound calls in an effort to enroll folks in a program offered by a non-profit.
The Plaintiff claimed the calls were made without valid consent–fake lead or lying plaintiff or wrong number or non-opt in data?– and sued for violation of the DNC rules.
The Defendant argued the calls could not violate the DNC rules because they were made on behalf of a non-profit. Here’s what the CFR says:
The term telephone solicitation… does not include a call or message:
(iii) By or on behalf of a tax-exempt nonprofit organization.
Despite this pretty convincing language, the Court determined that the caller can still face suit. The issue is that the supposed “non-profit” may simply be a front for “for profit” services:
The FAC plausibly alleges that the call at issue involved a for-profit entity and was not solely to promote CCCF’s own products or services. The FAC alleges that federal and state laws regulate businesses that “offer[ ] to ‘improv[e] any consumer’s credit record, credit history, or credit rating’ or related services,” and that such laws exempt nonprofit organizations from the regulations. FAC ¶¶ 22, 23. It alleges that the IRS has previously “identified individuals and businesses that are involved in a scheme to create [counseling services] as a front for related for-profit businesses.” Id. at ¶ 23 (alteration in original). Such for-profit businesses include debt consolidation loans, “educational materials” associated with nonprofit credit counseling services, and processing fees related to “debt management plans created by the non-profit debt counseling services.”
So because the calls were really –according to the complaint–made to sell for-profit services in a bait and switch tactic, the Court found that the caller could be liable for the calls despite the non-profit status of the entity offering the debt relief program the caller was offering.
Just another thing to watch out for TCPAWorld. Just because an outfit has tax exempt status that does not mean that all calls made on its behalf are necessarily exempt (even though that’s what the reg seems to say!)