Q: My team and I regularly make cold calls to generate leads. But it is labor and time intensive. I recently talked with a very successful agent who uses some new lead generation technology to automatically dial as many as 80 contacts per hour. Is this type of automated lead generation software safe to use?
A: The short answer is “No”. Some Brokers whose Sales Associates have utilized various forms of automated telephone equipment, such as auto-dialers and robocalls, are now defending class-action lawsuits by consumers who are alleging that these systems violate federal and/or state law.
Lawyers in all 50 states have been actively trolling for people who are upset with the constant barrage of unwanted telephone calls. Although real estate licensees are a relatively new target of class-action claims, the number of these types of lawsuits is rapidly growing because lawyers are looking for “deep pockets” to pick and because most Brokers do not want the adverse publicity that class-action lawsuits generate.
CLASS-ACTION LAWSUITS ARE EXTREMELY EXPENSIVE: Even if Brokers prevail in class-action lawsuits, the legal fees and costs are enormous and generally cannot be recovered from the plaintiffs. Even worse for most Brokers is the harsh reality that there is generally no Errors & Omissions or other insurance coverage for these types of class actions.
Title 47 of the United States Code of Federal Regulations controls the use of automatic telephone dialing systems which is broadly defined as any type of equipment that can generate and/or dial telephone numbers randomly or sequentially. Since 2013, the FCC requires that telemarketers must obtain the consumer’s prior written agreement (“Agreement”) to make pre-recorded telemarketing calls to residential telephone lines or auto-dialed or pre-recorded telemarketing calls to cellular phones. Too often there is no written consent of any kind and that can constitute a violation of federal law.
It is not easy for telemarketers to satisfy the express written consent requirement because the Agreement must fully meet all of the following criteria;
- The Agreement must be signed by the actual person who was called; and
- The Agreement must clearly authorize pre-recorded or autodialed calls to that person; and
- The Agreement must identify the authorized telephone number(s); and
- The Agreement must include a clear and conspicuous Disclosure that warns the person:
- Signing the Agreement authorizes telemarketing calls using an automatic telephone dialing system or an artificial or pre-recorded voice; and
- There is no obligation to sign the Agreement.
In addition, robocalls must have an “opt-out” mechanism that allows the person receiving the calls to opt out of receiving additional calls immediately. That opt-out mechanism must be announced at the outset of the message and be available throughout the duration of the call.
There are additional regulations in California Civil Code Section 1770(a)(22)(A) and the California Public Utilities Code prohibits auto-dialers from placing calls before 9:00 a.m. and after 9:00 p.m.
Fines of $500 for each call negligently made and $1,500 for each willful violation can be imposed. Those relatively small amounts are multiplied by the number of alleged calls that were made. The end result could well be that the total damages awarded by the jury against the Broker could exceed the total commissions earned by the Brokerage.
PRACTICE TIPS:
Our recommendations for real estate licensees are essentially the same as the advice that has been provided by the California Association of REALTORS®:
- The safest risk management approach is to only use humans, rather than machines or computer software, to dial telephone numbers.
- Make certain that the humans are only making calls, sending e-mails and/or texts in a manner that is in full compliance with state and federal DO NOT CONTACT laws by double-checking the Do Not Contact lists and by securing prior consent to contact the consumer; and
- Do not utilize the services of telemarketers unless the service can prove that they are in complete compliance with all federal and state laws and they should provide proof that they have the financial resources to indemnify the brokerage.
For more information, see CAR Legal Q&A “Do-Not-Call, Do-Not-Fax, Do-Not-Email Laws” at
https://www.car.org/riskmanagement/qa/advertising-folder/do-not-call-fax-email/?redirectFrom=login
It is simply not worth relying on the state or federal judiciary to make a determination as to whether any given lead generation system (whether it is a separate machine, additional telephone equipment, computer software or telemarketers) technically does or does not violate state and/or federal law.
This Weekly Practice Tip is for the exclusive use of clients of Broker Risk Management and their agents. It may not be reproduced or distributed without the express written consent of Broker Risk Management. The advice and recommendations contained herein are not necessarily indicative of standards of care in the industry, but rather are intended to suggest good risk management practices.
© Copyright 2017 Broker Risk Management November 10, 2017