In Wengle v. DialAmerica Marketing, Inc. (decided on September 22, 2015 in the Eastern District of Michigan), a for-profit telemarketer escaped liability under the Telephone Consumer Protection Act (TCPA) by falling within the federal law's nonprofit exemption. The lawsuit arose when the plaintiff received a call from telemarketer DialAmerica even though her number appeared on the national Do Not Call list.
The key to the summary judgment ruling was the way the telemarketing campaign was structured. DialAmerica maintained a program through which it sold magazine subscriptions in partnership with charitable organizations like the Special Olympics. DialAmerica did the actual calling, but when consumers purchased a subscription, they did so directly from the Special Olympics, and made payments directly to the Special Olympics. DialAmerica received its fees from the Special Olympics later.
The TCPA has a nonprofit exemption but the exemption does not apply when for-profit companies [like DialAmerica] solicit the purchase and receive the funds directly from consumers. The exemption does not apply even if some of the proceeds are donated by the telemarketer to the nonprofit.
However, DialAmerica's program was saved from TCPA liability by the following detail: when a consumer purchased a magazine on the DialAmerica call, the resulting contract and business relationship was between the consumer and Special Olympics, not between the consumer and DialAmerica. The bill for the consumer's purchase is "sent out in the name of the charity," not in DialAmerica's name, wrote the judge. After the money was deposited into a charity's bank account, the money was then transferred to DialAmerica for processing. The judge found this fact to be outcome determinative.
According to the ruling, DialAmerica’s calls were made for the Special Olympics' benefit, in the Special Olympics' interest, and as the Special Olympics common-law agent. Thus, even though DialAmerica profited from the calls, the calls were deemed to have been made "on behalf of" the Special Olympics, not DialAmerica. The phone calls to Wengle therefore qualified for the TCPA's nonprofit exemption. For this reason, the court granted DialAmerica's summary judgment motion.
Takeaway: seemingly minor details of charitable telemarketing fundraising can be extremely important if the program is challenged in court. If you are attempting to qualify for a TCPA exemption, be sure to consult an attorney experienced in this area of the law. The full text of the ruling can be reviewed here.
PartnerScott has focused on complex commercial litigation and arbitration involving advertising and marketing law, class action defense, administrative investigations, contractual disputes, consumer fraud, and business ...