The Court Ruling that “May Change Everything” for Lead Generation: Eric J. Troutman on Berman v. Freedom Financial Network

In April, when the Ninth Circuit Court handed down its ruling in the Berman v. Financial Freedom Network case, Eric J. Troutman, one of the country’s leading experts in TCPA compliance and ligation, began sounding the alarm.

Writing in TCPAWorld.com, he said the ruling “MAY CHANGE EVERYTHING.” In the National Law Review, he called it a “five alarm fire” for lead sellers and direct-to-consumer marketers. Talking to Convoso’s own Lisa Leight (VP Marketing), his tone remained unchanged. He described the case as opening a “massive, massive risk” for lead buyers and call centers everywhere.

Watch the video below to see Troutman’s entire conversation with Lisa Leight, which covers all the need-to-know info about this blockbuster case, including:

• The basic facts of the Berman case
• The effects of the case and potential risks for lead gen teams
• The “urgent” actions that lead buyers everywhere need to take

Q&A with Eric Troutman on Berman v. Freedom Financial Network

Too busy to catch the whole interview? Read the highlights from Leight and Troutman’s discussion in the condensed Q&A below.

Lisa Leight: A recent article you put out on TCPAWorld.com starts with the headline, in all caps,“THIS MAY CHANGE EVERYTHING.” It talks about the recent Ninth Circuit Court of Appeals ruling [in Berman v. Freedom Financial Network.] Can you tell us about this case and what it means for those of us in the lead generation industry?

Eric J. Troutman: I’m trying to get out to as many folks as I can at the importance of this ruling. And I’m glad, Lisa, that you brought me on to talk about this. 

So, in the Ninth Circuit decision of Berman, what the court did is it looked at a webform submission, and they looked at the format of a disclosure. The court said the text of the little disclosure was too small to be enforceable. And the button on the page said “Continue.” It didn’t say “Continue and Accept Terms” and it didn’t have an asterisk—it didn’t have anything that led the consumer to understand that when they clicked that button they were accepting the terms. There was nothing that the court could call “legally operative.” 

Because of that, the court found that there was not “reasonably conspicuous” notice to the users. And that’s critically important because, in the eyes of the court, every single person who went on to that website, saw that form, and clicked that button did not provide express written consent and did not provide a binding arbitration agreement. 

This decision is now binding law across numerous western states. And it is very likely to be adopted by other courts of appeal all across the country. It’s really just a critical, critical ruling for people to have in mind.

Lisa Leight: How does this notion of “conspicuous notice” compare to how the FCC defines conspicuous as a requirement?

Eric J. Troutman: When you’re talking about express written consent, the FCC requires a very high level of notice to a consumer. The disclosure has to be conspicuously present, not just “reasonably” conspicuous.

So, now we’ve actually got two different standards. They both use the word “conspicuous,” but in a slightly different way. The Ninth Circuit Court is actually looking at a lower standard.

In the Berman case, what the court said is: “You had small language, plus the button didn’t tell the consumer that by clicking that button, they were going to be accepting terms. And because of that, not even the lower standard of “conspicuous” was met. 

The problem here, of course, is that there’s no standards. Nobody out there knows what is the required size of font that you have to have. How much contrast does there have to be between that language and the background?

Lisa Leight: Is there any guidance anywhere on that—on the dos and don’ts of design for terms and disclosures?

Eric J. Troutman: The Ninth Circuit Court of Appeals gave us one example of what would be acceptable. It didn’t say you have to do this, but it said that if the button had said “Continue and Accept Terms,” that would have been sufficient to alert the consumer that they were, in fact, adopting terms. Now, that’s a high standard. I do not believe that that is what the law technically requires.

However, to your point, Lisa, there are no standards, right? There’s no guidance that you can look to, other than things that very sophisticated attorneys try to glean from other pieces of law and rules from different courts.

So, for instance, I can tell you with confidence that if you’re using black font against a white background, you’re using something like 10 or 12 point font that’s above the button and your button says something like “Click Here to Accept Terms,” or has an asterisk that leads back to the disclosure—that is going to be enforceable. But short of something that’s very stark and very clear to that consumer, we’re living in a gray area. Which is why I keep saying that we need some standards here.

Lisa Leight: I know that you’re active in the Consumer Consent Council, which is part of PACE. What is that organization doing to help establish standards within the industry?

I love those guys. They’ve been kind of quiet on this front so far. I reached out to them as soon as the Berman ruling came out. I said, we need to do something here. They haven’t gotten back to me, so I assume they’re working on something simultaneously. 

So, I’m actually working with a number of lead buyers—large organizations, Fortune 10s and Fortune 50s that buy quite a number of leads. We’re creating something called Responsible Entities Against Customer Harassment (REACH). There is some momentum there toward setting standards, or even certain requirements that these companies will be looking for before they will buy a lead, so that we can get rid of issues such as Berman.

Because the folks that had the website in Berman, I don’t think they’re bad actors. I think they thought they were complying with the law, and the folks that bought that lead probably thought the same thing. 

So, I’m telling you, there are thousands of websites out there, and millions of leads that are not going to be enforceable because of Berman. It’s just this hidden nuclear bomb that’s sitting out there. And that’s why I’m saying this is a really big deal. People need to pay attention.

Lisa Leight: If you’re advising a client that does outbound outreach and buys leads from multiple sources, what do they need to do if they’ve got a problem with several sources that wouldn’t withstand the Berman challenge?

If you’re a lead buyer, and you’re making a bunch of phone calls right now from a trusted lead source, you’ve got to be asking yourself, have I looked at these websites recently? Have I taken an inventory of the publisher to see what kinds of disclosures they offer? 

And this is the thing: Even though I love ActiveProspect and I love Jornaya, third-party verification cannot solve this problem. Because this is a problem with the format of the website, not just the content of the disclosure—how it’s being presented, how big it is, etc. The ActiveProspect’s and Jornaya’s don’t solve that for you. 

So, if you’re a lead buyer, just because you have this third-party verification, that doesn’t mean you’re safe. You still need to do the hard work of digging in, looking at that website, and understanding if this is going to meet that level of conspicuousness that the Berman ruling is requiring.

At a minimum, you’ve got to go to your aggregators, the sources that are giving you leads, and you’ve got to say, I want assurances from you that your network of publishers is meeting the heightened Berman requirements. 

To me, though, you should go further. You should say to that aggregator, I want to see a list of your publishers, I want to see a list of the URLs, I want to look at these websites. Don’t pass the buck. Don’t let some vendor manager do this for you. You’ve got to do this. It’s a massive, massive risk to your institution. I’m not saying shut off all of your phone calls until you do it. But this is big. It’s an urgent thing. You should be doing this with urgency.

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