23 March 2023

CBD Company Sued For DNC Law Violations

Klein Moynihan Turco LLP


Klein Moynihan Turco LLP (KMT) maintains an extensive practice, with an international client base, in the rapidly developing fields of Internet, telemarketing and mobile marketing law, sweepstakes and promotions law, gambling, fantasy sports and gaming law, data and consumer privacy law, intellectual property law and general corporate law.
On March 9, 2023, Limitless X Inc. ("Limitless") was sued in the Eastern District of New York for allegedly violating the National Do Not Call ("DNC") law.
United States Consumer Protection
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On March 9, 2023, Limitless X Inc. ("Limitless") was sued in the Eastern District of New York for allegedly violating the National Do Not Call ("DNC") law. The DNC registry was enacted by the Federal Trade Commission ("FTC"), with the help of the Federal Communications Commission ("FCC"), under the authority granted to it by the Telephone Consumer Protection Act ("TCPA"). The TCPA was enacted by Congress in 1991 to protect consumers against the receipt of certain unsolicited telemarketing calls. The TCPA generally prohibits companies from placing telemarketing calls to consumers who have registered their telephone numbers on the National DNC list.

In Grant v. Limitless X, Inc., the class action complaint alleges that Limitless sent approximately 100 text messages to a residential cell phone number marketing CBD products. Because the cell phone number was registered on the National DNC list and Limitless had not obtained the named plaintiff's consent to be contacted (nor did it meet one of the DNC exceptions), each alleged text was sent in violation of the DNC law. The TCPA allows for class members to recover damages of $500 to $1,500 per violation. In the wake of the Supreme Court's landmark decision in Facebook v. Duguid, telemarketing plaintiffs are relying less on alleged violations of the TCPA's autodialer provisions and more on DNC claims. It is important that companies engaged in nationwide marketing comply with the DNC law and the TCPA.

Key Provisions and Exceptions to the DNC Law

If a consumer's telephone number is registered on the National DNC Registry, telemarketing companies are generally prohibited from contacting the consumer. Under the TCPA, the telemarketer is liable for statutory damages in the amount of $500 per call (excluding the first call). If the court finds that the violation of the DNC law was willful, it may award the recipient of the unwanted call up to $1,500 per call. The telemarketer can also be fined up to $43,792 per violation of the DNC provisions of the Telemarketing Sales Rule ("TSR").

These protections are generally afforded to all consumers that register their telephone numbers on the federal DNC list. However, the DNC law penalty provisions do not apply to telemarketers who have an established business relationship with the consumer.

Under DNC law, a company has an established business relationship with a consumer if: (a) the consumer has entered into a transaction with the seller within the previous 18 months, or (b) the consumer inquired about the seller's goods/services within the previous three months. Notwithstanding the foregoing, a consumer may revoke his/her consent to receiving telemarketing communications from a given seller at any time.

Why is Grant v. Limitless Important to Your Business?

Mr. Grant alleges that he registered his cell phone number on the National DNC Registry on April 25, 2021. He further alleges that, from December 2021 and through 2022, he received approximately 100 text messages from Limitless promoting CBD products. At no time, Mr. Grant alleges, did he ever provide consent to receive these marketing communications. This means that before putative class claims are weighed in, Limitless could be liable for up to 100 violations of the DNC law. Even at the statutory minimum of $500 per violation, Limitless faces an enormous potential judgment.

Companies that engage in telemarketing should maintain proper DNC law compliance procedures. Unless an exemption applies, telemarketers should subscribe for access to the National DNC Registry, pay all necessary fees, and scrub potential called party numbers against the list.

Similar Blog Posts:

The Telemarketer's Guide To Do-Not-Call Compliance

TCPA Text Class Action Against Wolf of Wall Street Dismissed

Duguid v. Facebook, Footnote 7: TCPA Landscape Significantly Altered by Ninth Circuit Decision

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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