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Consumer Credit Regulation: 13.4.8 Special Issues Regarding LTOs for Services

There are several companies engaged in LTO contracts that not only lease to own personal property, but purport to finance the purchase of services as well.181 In these situations, the retailer arranges the financing for services, such as auto repair. The fact that the creditor claims that the financing is a lease does not make it any less nonsensical.

Federal Deception Law: 6.3.4.4 The Meaning of “Sequential”

Another key word in the ATDS definition is “sequential.” The TCPA does not define the term. As discussed below, it could mean any arrangement of a set of numbers in a particular order determined by some rule, or it could be limited to numerical order or even consecutive numerical order.

Federal Deception Law: 6.3.4.5.2 Smartphone issues and the “capacity” argument

The first of the theories discussed in the preceding sections is that a dialer is an ATDS if it has the capacity—even if unused—to generate random or sequential telephone numbers, and to dial those numbers.262 Smartphones probably have the ability to generate random or sequential numbers because this is a built-in functionality of database software that smartphones are likely to use.

Federal Deception Law: 6.3.4.5.3 Smartphone issues and the “footnote 7” argument

As discussed in the preceding sections, the second theory is that a dialer is an ATDS if it generates random or sequential numbers that are not telephone numbers themselves, but that are used to store or produce telephone numbers to be dialed.264 This argument is based on the plain language of the statute and the Supreme Court’s reasoning in footnote 7 of Facebook,265 and does not require a broad interpretation of the term “capacity” in the ATDS definiti

Federal Deception Law: 6.3.4.5.4 Smartphone issues and the “sequential” argument

The third theory is that the term “sequential” in the ATDS definition should be interpreted to include sequences other than numerical order.273 With this understanding of the term, a dialer that uses an algorithm to select telephone numbers from an existing list, and then dials those numbers, is an ATDS. The defendant is unlikely to be able to present a credible claim that smartphones are able to perform this function without the installation of additional software.

Federal Deception Law: 6.3.4.6 Evading the ATDS Definition by Dividing a Dialer’s Functions Among Multiple Devices

An evasion that callers have attempted involves dividing the autodialing function among multiple pieces of equipment. Since the TCPA’s definition of ATDS refers to “equipment”—not a “device”—a system is an ATDS even if one device must work in tandem with another to place calls.274 Moreover, callers cannot evade the definition by dividing ownership of pieces of dialing equipment that work in concert among multiple entities.275

Federal Deception Law: 2.2.4.2 FTC Rule Violation As a State UDAP Violation

Even though the FTC Act itself does not provide a private right of action, an FTC TRR defining unfair or deceptive practices provides guidance in interpreting unfair or deceptive state UDAP statutes—and state UDAP statutes provide strong private remedies. Therefore, violations of an FTC TRR should be privately actionable under state UDAP statutes.

Federal Deception Law: 2.5.3 Interrelation of FTC Cooling-Off Rule and State Law with Truth in Lending Rescission

Another source of consumer cancellation rights is the rescission notice required by the Truth in Lending Act when a creditor takes a non-purchase-money security interest in the debtor’s home.313 The FTC Cooling-Off Rule explicitly states that it does not apply in situations in which the TILA rescission notice is required.314 In fact, mistakenly disclosing a right to cancel under the Cooling-Off Rule or state law may violate the Truth in Lending Act by obscuring or contradicting the notice of the

Federal Deception Law: 2.5.4.2 Effect of Prior Negotiations, Seller Being Invited to the Home

The FTC Cooling-Off Rule applies when the seller visits the buyer’s home in response to an invitation by the buyer.329 However, if a sale is made in the consumer’s home following prior negotiations at the seller’s place of business, the rule does not apply.330 The theory is that, “while such sales are actually consummated in the home, the attributes of the typical door-to-door sale are not present—the consumer has not been duped or otherwise deceived as to the nature of the sales call.”

Federal Deception Law: 2.5.4.5 Mail and Telephone Sales

Transactions conducted and consummated entirely by mail or telephone and without other contact between the buyer and seller prior to delivery of goods or services are explicitly excluded from coverage under the Cooling-Off Rule.346 If there is other contact with the buyer, however, this exception does not apply.347 Note that state telemarketing laws may provide buyers the right to cancel a telephone sale, even though the Cooling-Off Rule does not.348

Federal Deception Law: 2.5.4.6 Leases, Rent-to-Own Transactions, Transactions Under $25 or $130

The FTC’s Cooling-Off Rule explicitly applies to leases and rentals of consumer goods.349 The Cooling-Off Rule’s Statement of Basis and Purpose explains that the rule was drafted to make it clear that leases were covered so that door-to-door sellers could not escape the rule by leasing their goods instead of selling them.350 The rule may thus provide an often overlooked way to challenge “rent-to-own” appliance transactions, particularly if the original order was not taken at the seller’

Federal Deception Law: 2.5.4.7 Consumer Goods and Services; Sales of Real Property, Home Improvements, Securities, and Insurance

The Cooling-Off Rule applies broadly to sales of consumer goods and services.355 It explicitly exempts the sale or rental of real property, the sale of insurance, and the sale of securities.356 However, the rule may apply to transactions in which a consumer engages a real estate broker to sell the consumer’s home or to rent and manage the consumer’s residence during a temporary period of absence.357 Those transactions are sales of services, not sal

Federal Deception Law: 2.5.4.9 What Sellers Are Covered

The Cooling-Off Rule covers sellers who are “engaged in the door-to-door sale of consumer goods or services.”363 On its face, this language does not require that the seller be regularly engaged in that type of transaction, so occasional door-to-door sales by a seller who usually sells from a regular business location should be covered.

Federal Deception Law: 2.5.5.1 Overview

Many of the scope provisions of state cooling-off rules track the FTC Cooling-Off Rule closely. Cases interpreting aspects of state cooling-off laws that parallel the Cooling-Off Rule are discussed in § 2.5.4, supra. However, other state cooling-off laws are broader or narrower in scope than the FTC rule.

Federal Deception Law: 2.5.5.2 Coverage That Is Broader Than the FTC Cooling-Off Rule

In a number of states, the cooling-off legislation covers an even wider range of consumer transactions than the FTC rule. For example, some states exclude only sales under $10 or $15 instead of the FTC’s cap of $25 (increased to $130 as of March 13, 2015 for sales that are subject to the rule but occur in some off-premises location other than the buyer’s home).