So the comments on the FCC’s huge NPRM were filed last week and the National Consumer Law Center (NCLC) and Public Knowledge have teamed up to submit a comment that would be absolutely devastating for the performance marketing and lead generation industries.

In short they argue:

1. A telemarketing consent must be directly between the seller and the consumer with no intermediaries (i.e. the lead generation world is dead); and
2. Even as to consents between a single consumer and a seller the lead form has to comply with E-Sign to be valid.

To say that these proposals are scary are an understatement. If adopted lead form sales and warm transfers are dead. Wiped out overnight.

And I cannot emphasize enough how powerful the NCLC and PK are with this Commission– they have been heavily listened to and cited in recent rulings. So anyone who is ignoring these submissions is just burying their head in the sand.

And judging by some of the SHOCKNGLY WEAK comments submitted by certain supposed trade organizations I get the sense folks really REALLY REALLY do not understand just how precarious a situation this is for everybody.

But I do.

So that’s why Margot Saunders– famous senior counsel for the NCLC–and I jumped on a call earlier today to try to look for middle ground here. As I explained to her, I really want to see some meaningful standards put into place here. The lead generation industry is completely out of control–and entirely failed to meaningfully self-police (IMO) prior to R.E.A.C.H.

Want proof? Check out this handy graphic prepared by my friends at Oxford Biochromatics:

Yes that shows 32% fraud on paid desktop submissions.

While the percentage is much lower with respect to mobile submissions, a fraud rate of over 30% on any lead generation channel is just insane.

The lead generation industry has had over a decade to clean this up. And they failed.

The R.E.A.C.H. standards, of course, REQUIRE real fraud detection to assure that this sort of thing comes to an end. R.E.A.C.H. is serious about getting things done–and it is working.

But when we consider that millions of leads sold each month are fraudulent–and tens of millions (at least) unwanted calls follow–it is easy to see why the FCC HAS TO DO SOMETHING with this industry. And it is going to. There is no stopping that.

My only hope is that the good actors–folks in R.E.A.C.H.–will be spared given their demonstrated commitment to putting consumers first.

And that was precisely what I discussed with Margot.

Nobody wants to see tens of thousands of good businesses go under. We need to cut out the thousands of bad actors though. And until industry cauterizes itself the regulators need to do so.

Now make no mistake, Margot was a fierce and strong advocate for her position and she made no concessions. But this was just a first meeting–and a good one. Because some middle ground was found.  More to come on this.

For now though let’s dive into the combined NCLC/PK comment so you know exactly what is at stake.

First, you can read the entire thing for yourself here: National Consumer Law Center.05082023

Out of the gate, the NCLC takes the position that 47 C.F.R. 64.1200(f)(9) already limits consent to a single consumer and a single seller. The provision indeed requires consent that “clearly authorize[] the seller to deliver or cause to be delivered to the person called advertisements or telemarketing messages using an automatic telephone dialing system or an artificial or prerecorded voice, and the telephone number to which the signatory authorizes such advertisements or telemarketing messages to be delivered.”

But there is no language in the CFR that says the agreement must be directly between the consumer and the seller. Indeed the CFR does not even require the agreement to between the consumer and seller at all–just that the seller be disclosed. So the NCLC’s position is just a misread of the CFR–and a pretty obvious one at that.

Indeed, no court has ever read this CFR provision to require a consent be between only a seller and a consumer with no intermediaries. This all makes good sense of course. In the lead generation industry there is always a third-party between the consumer and the seller. Taking away that intermediary would be the death of the industry and for no apparent reason– intermediaries are not the problem here, fraud and constant abusive practices are.

The NCLC’s position respecting a different CFR provision is, however, a closer call.

47 CFR 64.1200(c)(2)(ii) provides that a marketing call to a number on the DNC list doe not violate the TCPA if the caller’s is “evidenced by a signed, written agreement between the consumer and seller which states that the consumer agrees to be contacted by this seller and includes the telephone number to which the calls may be placed.”

Eesh. That’s pretty good.

The problem for the NCLC is twofold, however.

First, an agreement can still exist between the seller and the consumer even if brokered and managed by a third-party agent. So an online disclosure created by party X with authorization by seller Y can still be binding in favor of seller Y (i.e. as an agreement between consumer and Y) so long as party X served as an agent. Of course, this means party Y is suddenly potentially on the hook for X’s activity–seems tough to disclaim agency for one purpose while relying on it for other purposes.

But there’s a simpler answer too.

The DNC provisions only apply to telephone solicitations. Telephone solicitations are–by definition–limited to calls made without express written consent. And PEWC is defined back and (f)(9) above.

In other words, a caller is safe to contact a number on the DNC if either they have the sort of direct contract required by (c)(2)(ii) or the indirect contract authorized by (f)(9). So, the CFR affords callers here both a belt and suspenders, even though the NCLC pretends they are entirely without pants.

But if the regs don’t help the NCLC, they also ask the FCC to look to recent FTC activity and align with them–which these two Commissions enjoy doing. The NCLC characterizes the FTC’s action on the subject as finding “consents cannot be transferred.” But that is not entirely accurate.

Instead what the FTC found was that consent a consent with a seller cannot be transferred to another seller. But that does not mean a single third-party could not obtain consent on behalf of multiple sellers, as is the case in comparison shopping.

In other words, the NCLC’s reliance on the FTC’s action is misplaced–the FTC was simply pointing out that a “deal is a deal” and consent to one is not consent to many. But that does not mean that consent given to many is not independently enforceable. On that topic the FTC is silent.

That brings us to the NCLC’s fourth point– e-Sign.

Now here there is some alignment between R.E.A.C.H. and NCLC.

Margot’s point–as she described it to me–is NOT that a consumer must have a separate e-sign agreement to accept records electronically with a business. Rather just that the form of signature must comply with the e-sign rules that a consumer intend to enter into a formal agreement using an electronic signature.

And let me just say– I agree with this. A consumer MUST know that they are entering into legally operative conduct for the signature to be a signature–they cannot be duped into it (that was the whole point of Berman.)

But the NCLC comment–unfortunately–does not stay true to Margot’s description. At page 28 of their comment the NCLC tells the Commission that website operator must FIRST obtain an e-sign consent BEFORE they can accept an online consent disclosure.

Now I have already explained why this is totally wrong, and it is disappointing to see that argument in there. But it is what it is. I will deal with it in R.E.A.C.H.’s comments (would be nice if others helped out on this point…)

Let me pause here.

If it seems like the entire fate of the lead generation world now hangs in the balance of a battle between R.E.A.C.H., on the one hand, and the NCLC/PK, on the other, its because it mostly does. But everyone else out there also has a voice. And I encourage you to raise it as part of the comment process! You never know what business might ultimately carry the point, the anecdote or the description that really shines through and changes minds over there.

Back to the NCLC’s comment–there last point is that express written consent must actually be in WRITING. No disagreement from me. I have been saying FOR YEARS that oral consents are simply not binding for marketing purposes. I know there are a couple of lawyers out there who have said otherwise–craziness–but I have been perfectly clear on that position, and so expect R.E.A.C.H. to JOIN with the NCLC on that point.

So there you go.

I hope everyone understands the stakes here.

NCLC is asking the FCC:

1. To confirm consent must be directly between one seller and one consumer with no intermediaries; and
2. To confirm a separate e-sign agreement is obtained before a webform consent can be granted.

If these issues are meaningful to you I highly suggest you get engaged here. June 6, 2023 is the deadline for reply comments. And if you are not a member of R.E.A.C.H. I don’t know what you’re waiting for.

I encourage you to read the comments submitted by other trades and compare them to the R.E.A.C.H. comment. They absolutely speak for themselves and tell you the real story. You can see who is out there fighting for the industry and who is out for themselves (and who is going to win and who is going to get left behind.)

Credit though to the brave companies that submitted their own comments. Really really good stuff from so many of you who have decided you couldn’t expect anyone else to carry your water. BRAVE and SMART.

If anyone is left standing after the NPRM there will be a whole new order in this industry. The future is R.E.A.C.H.–and hopefully the NCLC will come along and join us in encouraging the adoption of its AMAZING standards to hep consumers AND keep small businesses in business.