ViSalus, a multilevel marketing company (MLM) based out of Los Angeles, is in hot water after allegations of a violation against the Telephone Consumer Protection Act (TCPA). The case was seen in court on August 14, 2020, where the judge declared that ViSalus must pay $925-Million dollars for unsolicited robocalls. This is a major win for the TCPA lawyer, who secured approximately 500 dollars per unsolicited call. The ViSalus lawsuit seeks to raise awareness for other corporations who might be involved in the same types of violations of the TCPA.
The original lawsuit was filed in April of 2019, where the $925-million dollar fine was issued. Now, in August 2020, the court rejected Visalus’ argument that they should get a decrease in the fine due to the high volume of calls placed. The judge declared that they must follow through with paying the whole fine, stating that there should be no discount to statutory damage amounts based on the number of times the law was broken.
What is ViSalus?
Visalus produces and sells dietary and nutritional supplements. They are well-known in the diet industry for their 90-day challenges, where individuals set their own goals and choose a program with the chance to win cash prizes. Claims of the offerings of their products include weight reduction, increased energy, increased fitness, and drinks that taste good and satisfy hunger. Their ‘transformation kit’ reportedly costs around 403.92 dollars, which is a steep price for uncertain results. As of recently, the company’s website has been taken down.
This multilevel marketing company functions through individuals who enroll as promoters. The promoters then sell the products within their own network. They make a commission based on which tier (selling level) they meet. Today, MLMs like this are viewed with skepticism by the public.
ViSalus opened up in 1997 and has experienced numerous ups and downs. The 2008 recession almost put the company out of business. It has endured multiple legal issues since its founding from illegal pyramid scheme allegations to using unlawful methods for recruiting promoters.
Now, the business is under fire again after violating the Telephone Consumer Protection Act (TCPA), which is regulated by the Federal Communication Commission. This recent lawsuit may be the end of ViSalus as a whole.
What is TCPA?
The TCPA was passed by the United States Congress in 1991. The act seeks to protect the public by limiting telemarketing calls and any form of automated dialing systems and prerecorded voicemails. The TCPA is also responsible for establishing the national Do-Not-Call registry to reduce the number of unwarranted calls that consumers receive.
Any TCPA violation can have major consequences for the business(es) involved. Wakefield’s attorney, Jonas Jacobson, hopes that the ruling will cause robocallers and telemarketers to think twice before violating the law.
The FCC manages and regulates the TCPA, ensuring that the law stays up to date.
“Commentators routinely discuss the split in authority regarding the TCPA, and the Court’s ruling may put an end to the ongoing debate,”
said Rick Nehora (see: lawyer). The commission has the power to rule and decide which types of calls are considered violations of the TCPA and which are not.
The role of a TCPA lawyer is simply to assist citizens in eliminating illegal and excessive telemarketing calls. They are located across America. As technology advances, businesses are presented with new ways to go around the law using telemarketing calls. The TCPA seeks to put an end to the illegal solicitation.
The ViSalus Lawsuit
In April 2019, Lori Wakefield sued ViSalus on account of herself and others for the TCPA violation. Ms. Wakefield received at least 4 unsolicited calls on behalf of ViSalus. In 2013, she did enroll as a “promoter” (salesperson) for ViSalus but decided to remove her enrollment before ever selling any products. She received the illegal promotional robocalls in 2015. Working with the TCPA lawyer and other past promoters, Wakefield was able to make a strong case against the dietary supplement company.
Members of the jury found that a total of 1,850,436 calls were made to either personal cell phones or residential landlines; all of these calls are classified as TCPA violations. ViSalus argues that the jury’s inability to differentiate between cellular phone calls and residential landline calls is a failure to meet the burden of proof by the Plaintiffs. However, it was declared that they are equally liable for either type.
In 2019, the judge ruled that ViSalus must pay $925-Million dollars. He stated that the large settlement amount was based on nothing more than a simple mathematical equation: $500 per call.
The three day trial ended with ViSalus deciding to challenge the judge’s ruling on the basis that it is “unconstitutionally excessive,” though the $500 per call they were charged was the minimum for statutory damages for the TCPA. ViSalus attorney, Benjamin G. Shatz, described the settlement as a death sentence for the company.
In August 2020, United States District Judge Michael H. Simon refused ViSalus’ request for a decrease in the fine. He ruled that the company only needs to pay $500 per call, saying that that amount would be a sufficient deterrent.
Now, the Federal Communications Commission (FCC), which is responsible for the regulation of interstate and international radio, television, wire, satellite, and cable communications in the United States, issued a ruling to provide clarity on the liability for fax broadcasters under the TCPA. This ruling is considered necessary by many, as some of the phrasings in the original policy are misleading. Different courts across America rule differently on the definition of ‘sender’ in the original wording of the law.
This is not the first major fine issued by the FCC. However, when ViSalus pays the whole $925 million, it will be the largest fine issued in the history of the TCPA.
The ViSalus lawsuit comes as a warning of the consequences of failing to operate within the confines of the law. Any person or business affected by the rulings of the TCPA should be cautious in navigating the nuanced policies. In these fast-changing times, the rules of fax marketing most also adapt quickly. The TCPA wants to encourage businesses to exercise caution before proceeding with any fax broadcasting or telephone marketing.