New York AG Probes User Agreements at eBay, PayPal on Automated Calls

By Richard NewmanJune 22, 2015

Updated user agreement terms that allow broad latitude to eBay Inc., PayPal, Inc. and their service providers to contact customers with automated phone calls and text messages have prompted an inquiry by New York Attorney General.  The NY OAG Internet Bureau forwarded almost identical correspondence to both companies informing them that the practice set forth in the updated terms raises numerous issues under the Telephone Consumer Protection Act and the Fair Debt Collections Practices Act.

The OAG has questioned “whether the consumer actually consented to such calls in light of its inconspicuous disclosure in a dense 12-page user agreement” and called the practice “inconsistent with consumers' aversion to this invasive form of marketing,” as well as efforts by the Federal Communications Commission and the Federal Trade Commission to limit it.

“Consumer choice and privacy preferences are protected by state and federal laws – including laws that specifically aim to stop companies from using invasive robocalls to promote products to consumers who do not wish to receive them,” the OAG stated.  “The attorney general's office will seek to stop unlawful breaches of privacy and enforce the rules that protect consumers.”

The letters also stated that with no opt-out available, customers have only two choices.  “Customers must accept automated marketing calls, emails and text messages or close their account before June 1, 2015.” “Given eBay's dominant market position, it is unclear whether consumers really have a choice at all.”

The letters requested that the companies provide their justification for the terms and robocalls, as well as details regarding any opt-out process. The OAG also inquired into the privacy status of phone numbers obtained by the companies but not provided by customers.

PayPal’s new robocall policy has also captured the attention of federal regulators. Specifically, the Federal Communications Commission’s enforcement bureau sent a warning to the payment processing company regarding its new terms of service wherein Paypal customers would be giving their consent to receive robocalls and text messages on any number it obtains. Proper express consent must identify the specific telephone number(s) to which the consenting consumer gives his or her consent to be called or texted.

The foregoing clearly illustrates why attempting to obtain prior express written consent to make autodialed, pre-recorded and artificial voice telemarketing calls, including text messages, via TCPA disclosures contained in terms and conditions alone is insufficient.

Relevant regulations also clearly prohibit companies from requiring such consent as a condition of purchasing a product or service. Individuals must be clearly and conspicuously notified of their right to refuse to receive such calls.

Should any question about the consent arise, the seller will bear the burden of demonstrating that a clear and conspicuous disclosure was provided and that unambiguous consent was obtained. If you are engaged in commercial telemarketing campaigns, consult with an experienced telemarketing lawyer to properly structure your “prior express written consent” collection processes.

Information conveyed in this article is provided for informational purposes only and does not constitute, nor should it be relied upon, as legal advice. No person should act or rely on any information in this article without seeking the advice of an attorney. 

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