In writing about some of the top cyber-related fines and penalties issued by the US Federal Trade Commission, several were related to a violation of telemarketing laws/do-not-call lists.
Losses related to the Telephone Consumer Protection Act are categorized as cyber in Advisen’s Loss Insight database because many cyber policies seem to include them. The fact most telemarketing calls are generated using computer technology is the reason the some in the insurance industry may have moved to this position, although there appears to be some indications that carriers are moving away from providing coverage within cyber policies for violations of the TCPA.
Sample language from several different cyber insurance policies includes broad privacy coverage. One policy gives coverage for “…violation of any privacy law or consumer data protection law protecting against disclosure of personally identifiable information…”
Another policy reads: “…the unauthorized acquisition, access, use or disclosure of personally identifiable information or confidential corporate information that is held or transmitted in any form…”
Litigation surrounding alleged TCPA violations has increased in recent years, probably due to the possibility of lucrative recoveries. Violations can result in liability of at least $500 for each fax, text or call and attempts to find coverage in commercial general liability policies has seen mixed results.
And these claims are very costly. Fifty percent of cases in the Loss Insight database result in losses of at least $3 million. A quarter of cases result in losses nearing $10 million.
According to Advisen’s Loss Insight database, the services industry is by far charged with the most TCPA violations. Included with this industry is transportation, retail trade, entertainment, and banking—which has seen some of the largest TCPA settlements. The 497 cases in the database involving the services industry more than doubles the industry with the next most TCPA violations: finance, insurance and real estate.
The TCPA is a federal statute but consumers often file lawsuits against alleged violators in state courts. According to the data, the several states listed below are very active in TCPA litigation. Forty-three of the 94 TCPA cases filed in 2014 were filed in California.
Chad Hemenway is Managing Editor of Advisen News. He has more than 15 years of journalist experience at a variety of online, daily, and weekly publications. He has covered P&C insurance news since 2007, and he has experience writing about all P&C lines as well as regulation and litigation. Chad won a Jesse H. Neal Award for Best Single Article in 2014 for his coverage of the insurance implications of traumatic brain injuries and Best News Coverage in 2013 for coverage of Superstorm Sandy. Contact Chad at 212.897.4824 or [email protected].
