Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: Video Broadcasting Company Settles FTC Charges over Use of Its Services to Send Illegal Robocalls, (May 14, 2013)

By Tobias J. Gillett, J.D., LL.M.

Video broadcasting company Skyy Consulting Inc., doing business as Callfire, has agreed to settle FTC and Department of Justice charges that it transmitted illegal robocalls to consumers in violation of the FTC’s Telemarketing Sales Rule (TSR) (United States of America v. Skyy Consulting Inc., FTC File No. 122 3011, Case No. 13-CV-2136).

According to the FTC and Department of Justice’s complaint, filed in the federal district court in San Francisco, Callfire offers video broadcasting services that permit its clients to use computers and automatic dialers to send prerecorded messages through telephone calls. Callfire allegedly used its services to initiate, or substantially assist others in initiating, telephone calls containing prerecorded messages provided by "telemarketers" within the meaning of the TSR. Callfire knew of the use of its services to deliver those messages, and even promoted its services for that purpose, but did not effectively prevent the delivery of messages prohibited by the TSR.

The complaint asserts that Callfire violated the TSR by providing "substantial assistance or support to sellers or telemarketers whom [Callfire] knew or consciously avoided knowing" were "engaging in or causing others to engage in initiating an outbound telephone call to a person’s telephone number on the National Do Not Call Registry" and "initiating outbound telephone calls that delivered prerecorded messages to induce the purchase or goods or services in violation of the TSR."

The proposed consent order would bar Callfire from initiating illegal robocalls or otherwise violating the TSR, and would require Callfire to review all pre-recorded messages that it delivers within 120 days. Callfire would have to deliver a notice to all current and prospective subscribers that promote the purchase of goods or services or solicit charitable contributions stating that violations of the order would result in termination, obtain acknowledgement from those subscribers and potential subscribers of their receipt of the order, and terminate or refuse service to any subscriber or potential subscriber whose calls would not comply with the order.

The Commission voted 4-0 to authorize the FTC staff to refer the complaint to the Department of Justice, and to approve the proposed consent decree, with Commissioner Maureen K. Ohlhausen issuing a separate concurring statement.

"I would not support imposing liability on a party merely for creating or providing a product or service with legal uses, absent reason to believe that the party knows or consciously avoids knowing that its client is using it to violate the TSR," Ohlhausen stated. "In this matter, however, I support the imposition of liability because CallFire actively encouraged clients to use its robocall service to target large numbers of consumers for marketing purposes, without any inquiry to whether its clients were complying with the TSR."

Companies: Skyy Consulting, Inc.; CallFire

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