The Dangerous, Double-Edged Sword Of Fraudulent Leads

July 1, 2023
Andrew Cove

Fraudulent leads can be especially catastrophic for telemarketing companies, but it is critical to understand that they can be devastating for almost any business. Due to consumer protection laws—many of which we have discussed at length in previous blogs—using fraudulent leads can put a business in a position where they are inadvertently in violation of the law. Aside from the reputational damage to your business, they also can result in significant fines and legal actions. As a business owner, you must understand that you can be held legally liable for any damages that result from the fraud, even if the information was given to you by a third party. 

This is something that is known as vicarious liability, which we will discuss more thoroughly next month. Simply put, it can make you and your business responsible for another party’s actions or failures because of your business relationship. 

Where Did the Lead Come From?

Because of the Telephone Consumer Protection Act (TCPA), companies are often restricted from making phone calls or texts without prior express written consent. Without that consent, your business cannot send advertising or telemarketing messages with an autodialer, an artificial, pre-recorded voice, or to those on the National or state Do Not Call Lists .  

Many business owners may cavalierly dismiss that requirement because they think they understand the TCPA and have several ways of documenting consent. That documentation is critical if the consumer later claims lack of consent and files a lawsuit. 

There are also third-part services that business owners use to do so. These can create a record of the consumer going to the website, filling out a form, clicking certain boxes, and showing where the cursor goes on the screen. One can thereby have a short video clip evidencing every single lead. If the business gets sued, the company can then give its attorney information, including that data, which can detail the consumer’s consent. These services will even record the consumer’s IP address, which can be strong evidence to support a defense against a plaintiff who claims they never opted into receiving marketing texts or phone calls. 

Here’s Where This Gets Challenging 

Although these services capture IP addresses, that doesn’t always suffice to prove that the person who filled out the information was who they said they were. 

For example, imagine that if one person (“A”) deliberately asks another person in another state to go to a public computer and fill out the consent form using A’s information. Clearly, this would be fraud and may subject these parties to criminal charges, but it can create a false trail that is not always easy to uncover. And yet when the business, which has a documented consent form, contacts A, it falls into a trap and may well be sued as a result. 

In a situation like this, the company has followed the law to the best of its knowledge, yet it may spend over $10,000 in discovery alone to fight the lawsuit, may be forced to spend far more to defend itself through trial and can conceivably lose the suit altogether unless it’s legal team can connect the dots.  

An Unending Challenge 

Cove Law, P.A., has represented telemarketing companies for decades, but many of the challenges they face also concern of the average small business owner. If you have further legal questions about the TCPA, telemarketing compliance, or related litigation, contact our office and schedule a free consultation.

Andrew Cove
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