U.S. Chamber Comments on PrivacyStar Involvement in TCPA Complaints

An article posted April 1, 2016 on the website for the U.S. Chamber of Commerce Institute for Legal Reform provides some interesting commentary on a well-known consumer rights law firm (Lemberg Law) and alleged practices for obtaining and pursuing TCPA claims. The headline reads:

Lawsuit Alleges Firm Used Smartphone App to Secretly Troll for TCPA Cases

The article discusses allegations in a recent court filing in a counterclaim by a former lawyer of plaintiff’s firm.

Sergei Lemberg and Lemberg Law had initially filed a lawsuit against Tammy Hussin, a former “contract associate” in the law firm.  The original lawsuit charged Hussin with breach of contract, conversion, statutory theft, computer crime, theft of corporate opportunities, unjust enrichment, and violations of the Connecticut Unfair Trade Practices Act and the Uniform Trade Secrets Act.

Hussin filed an answer and counterclaim. The allegations in that counterclaim detail allegedly deceptive tactics she says the firm used to bring in new clients—many of whom had no idea that they were part of a lawsuit.

Industry insiders have been aware of the lawsuit for several months. Lemberg Law has a  posting on its website from November 24, 2015 discussing the lawsuit.

The April 1 Chamber of Commerce article outlines some of the allegations in the counterclaim:

“According to Hussin, the firm made a deal with PrivacyStar, a telephone application that identifies who is calling and why.  The PrivacyStar application allows users to file a complaint with the Federal Trade Commission (FTC) when they receive an unwanted phone call.  The FTC handles the National Do Not Call Registry and users were providing information to potentially stop telemarketing calls.  Hussin claims that PrivacyStar was providing Lemberg with the names and numbers of individuals who used the app to file a complaint.

What the users supposedly did not know is the Lemberg firm was trolling the data to seek out potential, and often unsuspecting, clients for Telephone Consumer Protection Act (TCPA) litigation.

Ironically enough, the lawsuit alleges that the firm—supposedly seeking restitution for individuals inundated by unwanted calls—was itself pestering these app users with more unsolicited calls.

Hussin claims that employees of Lemberg Law would use the purchased data to call up the app users and ask for proof of the unwanted calls.  The employees allegedly did not reveal they worked for a law firm or that they needed the information to pursue litigation on the individual’s behalf. The lawsuit alleges that some app users even thought they were clarifying their complaint with the FTC.  The employee would purportedly send the individual a link that once clicked, unbeknownst to them, would send a request for legal services to Lemberg.

But there’s more. According to the lawsuit, some of the app users were never contacted by the law firm, but employees were instructed to mark them down as “contacted” anyway, including their names in TCPA claims, even though the facts had not been checked nor, apparently, had consent been obtained.”

insideARM Perspective

As with any litigation, allegations in a complaint or counterclaim are just that – allegations. insideARM has no opinion on the truth or accuracy of any of the allegations in either the original lawsuit or the counterclaim.

insideARM recently published an article about PrivacyStar and its impact on Federal Trade Commission complaint data. At the time, we had not had the chance to connect with the company for comment. Since then, we have spoken with a PrivacyStar representative, who was unable to comment on the Lemberg/Hussin case.

TCPA litigation can be very lucrative for attorneys, and in fact has skyrocketed in recent years.

The TCPA was originally designed to put an end to unwanted telemarketing calls. “Robo-calls” and “Robo-callers” are the term-of-art used to define the unwanted calls, and to fan the flames over the firestorm surrounding the calls. Unfortunately, calls made by the ARM industry have been dragged into an overly broad definition of “Robo-calls.”

This lawsuit and counterclaim highlights the infighting between lawyers involved in lucrative TCPA cases. It also suggests that lawyers may go to extreme measure to find potential clients and cases.

The final paragraph in the Chamber article sums it up:

“The allegations against Lemberg Law suggest that, when tens of millions of dollars are up for grabs, plaintiffs’ firms may be willing to take extreme measures to take advantage of the TCPA. If the allegations in this case are true, then mark this one down as the “poster child” example of why action is needed to fix the TCPA.”