Does a consumer’s submission of a phone number to a lead website count as consent to be called by the businesses that buy the lead?

Not by itself. Under the TSR the written agreement must “clearly evidence [the call recipient’s] authorization that calls made by or on behalf of a specific party may be placed to that person, and shall include the telephone number to which the calls may be placed and the signature of that person.” In Day Pacer the FTC argued that consumers did not provide express written agreement merely by submitting their telephone numbers to the websites from which the defendants purchased the numbers. The district court agreed with that position and held that the defendants produced no evidence that any call recipient had provided the express written agreement needed to avoid liability.

Can a mortgage lead or comparison platform be paid by lenders?

Yes, if the platform neutrally uses and neutrally presents information and no other facts call its RESPA section 8 compliance into question. The CFPB treats that payment as payment for compensable services, “and thus would be compliant with RESPA section 8, assuming no other facts were present that would call such RESPA section 8 compliance into question.” RESPA section 8 does not require a particular numerical threshold of options, but in general, presenting more comparison options rather than fewer makes it less likely that the operator is steering the consumer.

Does disclosing that placement is paid fix a steering problem on a mortgage lead platform?

No, not for RESPA section 8: “a disclosure does not cure what would otherwise be a RESPA section 8(a) or 8(b) violation.” The CFPB reasoned that a disclosure would not, absent other facts, turn a directed action that has the effect of affirmatively influencing into one that does not.

Does the TSR apply when the consumer calls the business after submitting a lead form?

Generally yes. The FTC told the Eleventh Circuit in its Simple Health brief that the TSR applies to both outbound telemarketing (calls initiated by the telemarketer) and inbound telemarketing (calls initiated by a customer). The rule does list exceptions for certain customer-initiated calls, but the FTC said those merely confirm the general rule that such calls are subject to the TSR.

Does a merchant answer for what its affiliates do to generate traffic and leads?

The FTC alleged so where the merchant approved the affiliates’ advertisements and paid commissions on them. In the Geniux complaint it alleged that the defendants approved advertisements for affiliate marketers’ use and paid commissions for sales that they attributed to those advertisements. The same complaint alleged that the defendants had the authority to control whether the products were advertised through sham news websites. A proposed order in a separate matter required the settling defendants to deny approval of non-compliant affiliate marketing materials and to pay nothing for them, “including any payments for leads, ‘click-throughs,’ or sales resulting therefrom.”

Lead GenerationLegal test

Lead generation

Q: Can a business that buys leads rely on its lead vendors for compliance?

Not safely. In a statement about for-profit schools, Commissioner Chopra noted that the FTC has brought actions against both lead generators and those who purchase leads, which he said sends a clear message that schools cannot outsource fraud to third parties with impunity. The Day Pacer court made the same point about paying others to call: it held that paying partners to make calls in violation of the do-not-call rule was itself a TSR violation.

Q: Can a lead seller use consumers’ credit scores to price or filter leads?

Not on the FTC’s view in the ITMedia complaint, which alleged that obtaining or using a credit score or other consumer report to filter, price, market, or evaluate leads for marketing is not a permissible purpose under Section 604 of the FCRA. A seller that resells such information must also have reasonable procedures limiting the resale to a purpose for which the report may be furnished under Section 604.

Berkeley Robinson, Managing Attorney at Robinson Law Firm PLLC

Author

Berkeley Robinson, Esq.

Managing Attorney, Robinson Law Firm PLLC

Berkeley has served as the go-to counsel for many scaling businesses in a transactional and litigation management capacity. Before becoming an attorney, Berkeley grew sales teams, ran online marketing campaigns, and did everything else an entrepreneur does—and still does today as the founder of two online businesses.

Definition

Lead generation is used in more than one setting, and its meaning depends on the context. In consumer protection, it means collecting consumers’ contact and interest information, known as leads, and selling or passing it to a business that wants those consumers as customers. Source: FTC v. Day Pacer, Brief for Respondents A lead can be contact information or a live call transfer bought from a third-party site. Source: FTC v. Benefytt Technologies, Inc., No. 22-cv-1794 (M.D. Fla.), Complaint

Key legal rules

Lead generation is a practice rather than a claim, so no single rule governs it. Which rules apply depends on how the lead is collected, sold, and called, and the main ones are these:

For mortgage and other settlement-service leads, when a comparison platform operator non-neutrally uses or presents information and that has the effect of steering the consumer to use, or otherwise affirmatively influences the selection of, a settlement service provider, the operator is making a referral. Source: CFPB, RESPA Advisory Opinion on Online Mortgage Comparison Shopping Tools, § I.C.1.a
Section 604(f)(1) of the FCRA prohibits using or obtaining a consumer report for any purpose unless it is for a purpose authorized under Section 604. Source: FTC v. ITMedia Solutions LLC, Complaint for Civil Penalties, Permanent Injunction, and Other Relief (Jan. 5, 2022)
A person who procures consumer reports in order to resell them, or information in them, must “establish and comply with reasonable procedures designed to ensure that the report (or information) is resold by the person only for a purpose for which the report may be furnished under Section 604.” Source: FTC v. ITMedia Solutions LLC, Complaint for Civil Penalties, Permanent Injunction, and Other Relief (Jan. 5, 2022)
Misrepresentations or deceptive omissions of material fact are deceptive acts or practices prohibited by Section 5(a) of the FTC Act. Source: FTC v. ITMedia Solutions LLC, Complaint for Civil Penalties, Permanent Injunction, and Other Relief (Jan. 5, 2022)
Under 16 C.F.R. § 310.3(b), it is a TSR violation for any person to provide substantial assistance or support to any seller or telemarketer when that person knows or consciously avoids knowing that the seller or telemarketer is engaged in any practice that violates Sections 310.3(a), (c) or (d), or 310.4 of the TSR. Source: FTC Complaint (Stratics Networks Inc., Atlas Marketing Partners, Inc., and others), ¶¶ 30, 37 (citing 16 C.F.R. §§ 310.4(b)(1)(iii)(B), 310.3(b))
Whether a call is telemarketing depends not on whether an offer to sell is made during the call but on whether the call is part of a “plan, program, or campaign which is conducted to induce the purchase of goods or services,” so calls placed to generate leads for a seller can fall within the TSR. Source: FTC v. Day Pacer, Brief for Respondents, Argument § I

For the sake of space, this page lists only the primary rules related to this term that most businesses should follow. More may apply to your situation, and your unique facts affect how they apply.

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Why these rules exist

The FTC has observed that consumer leads sometimes contain sensitive personal and financial information that may travel through multiple online marketing entities before connecting with the desired businesses. Source: FTC, Privacy and Data Security Update 2015 (Attachment B to FTC Privacy Shield Letter) A consumer who types data into the first website usually cannot see the later buyers, so the rules attach at the two points the consumer can neither see nor control: what the collecting site promises, and what the buyer does with the lead afterward, including how it is priced, routed, and called. In the live-transfer setting, the FTC alleged in its Innovative Partners complaint that the handoff is so seamless that consumers typically do not realize their calls have been transferred to a different entity. Source: FTC v. Innovative Partners LP, Complaint

For mortgage and other settlement-service leads the purpose is stated directly. Among the statutory purposes of RESPA is the “elimination of kickbacks or referral fees that tend to increase unnecessarily the costs of certain settlement services.” Source: CFPB, RESPA Advisory Opinion on Online Mortgage Comparison Shopping Tools (interpretive rule) Regulation X provides that a RESPA section 8 violation can occur even if the consumer’s settlement costs do not increase. Source: CFPB, RESPA Advisory Opinion on Online Mortgage Comparison Shopping Tools (interpretive rule) The CFPB issued its guidance on lead platforms as an interpretive rule, and by operation of RESPA section 19(b), no provision of RESPA or of State law imposing liability applies to an act done or omitted in good faith in conformity with that interpretive rule. Source: CFPB, RESPA Advisory Opinion on Online Mortgage Comparison Shopping Tools, Part II (Regulatory Matters)

Enforcement also reaches the businesses that buy leads, not only the sites that generate them. As Commissioner Chopra put it in a statement about for-profit schools, the FTC has brought actions against both lead generators and those who purchase leads, which sends a clear message that schools cannot outsource fraud to third parties with impunity. Source: Statement of Commissioner Rohit Chopra, n.20 The concern is not new: the same statement recounts that the Commission’s investigation of the for-profit school sector found deceptive lead generation among the common illegal tactics. Source: Statement of Commissioner Rohit Chopra, History of FTC Efforts in the For-Profit Sector

Enforcement examples

FTC v. Simple Health Plans LLC (health insurance lead generation websites)

FTC v. Simple Health Plans LLC, Memorandum in Support of Plaintiff’s Motion for an Ex Parte Temporary Restraining Order (Nov. 2, 2018)

The FTC told the court that Simple Health advertised primarily through a network of deceptive lead generation websites that falsely claimed the company specialized in affordable, comprehensive health insurance from reputable carriers, was affiliated with the Blue Cross Blue Shield Association and AARP, and was an expert on and provider of government-sponsored insurance, including ACA and Medicare plans. Source: FTC v. Simple Health Plans, LLC, Memorandum in Support of Plaintiff’s Motion for an Ex Parte Temporary Restraining Order (Nov. 2, 2018) The company owned some of those sites itself and also paid third parties for leads. Source: FTC v. Simple Health Plans, LLC, Memorandum in Support of Plaintiff’s Motion for an Ex Parte Temporary Restraining Order (Nov. 2, 2018) To receive a call, a consumer had to submit a form with contact information and information about any preexisting medical conditions, such as HIV, diabetes, cancer, and mental illness. Source: FTC v. Simple Health Plans, LLC, Memorandum in Support of Plaintiff’s Motion for an Ex Parte Temporary Restraining Order (Nov. 2, 2018)

Outcome. On May 14, 2019, the court granted the FTC’s motion for a preliminary injunction, finding it likely that the FTC would prevail on its claims against Simple Health and Dorfman. Source: FTC v. Benefytt Technologies, Inc., No. 22-cv-1794 (M.D. Fla.), Complaint The FTC’s later complaint against Benefytt, a company that sold products through such distributors, alleged that Benefytt and its distributors continued to use deceptively generated leads to market and sell Benefytt products after the Simple Health allegations. Source: FTC v. Benefytt Technologies, Inc., No. 22-cv-1794 (M.D. Fla.), Complaint ¶ 44

FTC v. Day Pacer (education lead generation by telephone)

FTC v. Day Pacer, Brief for Respondents; Order for Permanent Injunction and Other Relief

From 2007 until at least 2016, Day Pacer operated a lead-generation business that placed or facilitated millions of calls to phone numbers on the Do-Not-Call Registry. Source: FTC v. Day Pacer, Brief for Respondents It purchased consumer phone numbers from the operators of websites offering information about job opportunities and public benefits. Source: FTC v. Day Pacer, Brief for Respondents, Factual Background It never subscribed to the Registry, never scrubbed its call lists against it, and understood that the partners it paid to make additional calls did not scrub either. Source: FTC v. Day Pacer, Brief for Respondents, Factual Background

Outcome. The district court held that the defendants produced no evidence that any call recipients had provided the express written agreement necessary to avoid liability. Source: FTC v. Day Pacer, Brief for Respondents, Proceedings Below It also held that Day Pacer violated the TSR by paying its partners to make calls in violation of the do-not-call rule. Source: FTC v. Day Pacer, Brief for Respondents, Proceedings Below The court awarded $28.7 million in civil penalties and held all defendants jointly and severally liable. Source: FTC v. Day Pacer, Brief for Respondents, Proceedings Below

FTC v. Grand Bahama Cruise Line, LLC (“free” cruise telemarketing built on purchased leads)

FTC v. Grand Bahama Cruise Line, LLC, No. 6:20-cv-52 (M.D. Fla.), Complaint (Jan. 10, 2020)

The complaint alleged that Royal Bahama and GBCL purchased sales leads, a way to identify consumers interested in a cruise, from lead generators that placed survey robocalls to consumers. Source: Complaint, FTC v. Grand Bahama Cruise Line, LLC (Jan. 10, 2020) It also alleged that a defendant admitted to the FTC that the buyers did not scrub their sales leads to remove numbers listed on the DNC Registry. Source: Complaint, FTC v. Grand Bahama Cruise Line, LLC (Jan. 10, 2020)

Outcome. The complaint charged the buyers themselves with TSR violations, alleging that they initiated or caused the robocall lead generators to initiate prerecorded calls to persons who had not signed an express written agreement authorizing them. Source: Complaint, FTC v. Grand Bahama Cruise Line, LLC (Jan. 10, 2020)

FTC v. ITMedia Solutions LLC (online loan application leads)

FTC v. ITMedia Solutions LLC, Complaint for Civil Penalties, Permanent Injunction, and Other Relief (Jan. 5, 2022); Concurring Statement of Commissioner Christine S. Wilson, File No. 1723017 (Dec. 16, 2021)

The complaint alleged that ITMedia told consumers their loan applications would be circulated to a “trusted network of lenders,” but in reality distributed and sold the information as leads to a variety of entities without regard to whether they were lenders or used the data to make loans. Source: FTC v. ITMedia Solutions LLC, Complaint for Civil Penalties, Permanent Injunction, and Other Relief (Jan. 5, 2022) It also alleged that obtaining or using a credit score or other consumer report to filter, price, market, or evaluate leads for marketing is not a permissible purpose under Section 604 of the FCRA. Source: FTC v. ITMedia Solutions LLC, Complaint for Civil Penalties, Permanent Injunction, and Other Relief (Jan. 5, 2022)

Outcome. A settlement resolved the FTC’s allegations that ITMedia, its affiliated companies, and several individual defendants engaged in lead generation activities that violated the FTC Act and the Fair Credit Reporting Act. Source: Concurring Statement of Commissioner Christine S. Wilson, FTC v. ITMedia Solutions, File No. 1723017 (Dec. 16, 2021)

In re HomeAdvisor, Inc. (home-services leads sold to contractors)

In re HomeAdvisor, Inc., Docket No. 9407, Oral Argument Transcript (July 21, 2022)

HomeAdvisor sells leads, consumer contact information that service providers like plumbers and electricians can use to identify potential clients, and generates them primarily from its own website and from third-party lead generators. Source: In re HomeAdvisor, Inc., Docket No. 9407, Oral Argument Transcript (July 21, 2022) Complaint described the first type of deceptive claim as lead quality claims: that the leads were homeowners ready to hire on projects matching the provider’s task and location preferences, and that the source of the leads was people who had sought out HomeAdvisor’s help in finding a service provider. Source: In re HomeAdvisor, Inc., Docket No. 9407, Oral Argument Transcript (July 21, 2022)

Outcome. Complaint moved for summary decision on three types of deceptive claims that, it argued, HomeAdvisor had systematically made to service providers. Source: In re HomeAdvisor, Inc., Docket No. 9407, Oral Argument Transcript (July 21, 2022) HomeAdvisor’s counsel argued that summary decision was inappropriate because every material fact was contested and the subject of conflicting evidence. Source: In re HomeAdvisor, Inc., Docket No. 9407, Oral Argument Transcript (July 21, 2022)

Exposure

A lead business can lose both money and the freedom to operate. In Day Pacer, the district court awarded $28.7 million in civil penalties and held all defendants jointly and severally liable. Source: FTC v. Day Pacer, Brief for Respondents, Proceedings Below The court held that a penalty of $6.88 per unlawful call fell well within the range for the difficult-to-quantify harm from TSR violations. Source: FTC v. Day Pacer, Brief of the Federal Trade Commission The order in that matter also permanently restrained the Day Pacer defendants from participating in telemarketing or assisting others engaged in telemarketing, whether directly or through an intermediary. Source: FTC v. Day Pacer, Order for Permanent Injunction and Other Relief It also required them to create certain records for 20 years after entry and retain each for 5 years. Source: FTC v. Day Pacer, Order for Permanent Injunction and Other Relief, § IV (Recordkeeping)

Settlements elsewhere show the scale. According to the FTC’s Innovative Partners complaint, MediaAlpha paid $45 million in August 2025 to settle the FTC’s allegations that it lured consumers seeking comprehensive health insurance with misleading domain names and advertisements and then sold their information to telemarketers who typically did not offer that insurance. Source: FTC v. Innovative Partners LP, Complaint For lead sellers that use credit data, the ITMedia complaint cited Section 621(a)(2)(A) of the FCRA, as adjusted by 16 C.F.R. § 1.98(m), as authorizing monetary civil penalties of not more than $4,111 for each knowing violation that constitutes a pattern or practice of violations. Source: FTC v. ITMedia Solutions LLC, Complaint for Civil Penalties, Permanent Injunction, and Other Relief (Jan. 5, 2022) In a business-opportunity case, a stipulated order permanently restrained the Brosseau defendants from marketing any service to assist in operating a business opportunity or work-at-home opportunity, with listed examples that include lead generation. Source: Stipulated Order for Permanent Injunction and Monetary Judgment Against Defendants Brett Brosseau and EMZ Ventures, LLC and Relief Defendant Georgia Farm House Land Holdings, LLC, § I

Buyers and executives are exposed, not only the sites. Commissioner Wilson wrote that the legal standard to seek injunctive relief against company leadership is a low bar: the Commission must show only that the individual “participated directly in the deceptive practices or had authority to control those practices.” Source: Concurring Statement of Commissioner Christine S. Wilson, FTC v. ITMedia Solutions, File No. 1723017 (Dec. 16, 2021) A buyer already under an order faces a further risk: a 2014 order required Alliance to “immediately cease” purchasing leads from any lead generator telemarketing in violation of that order, and the FTC’s complaint alleged that Alliance violated the requirement by continuing to buy from such generators. Source: FTC v. Alliance Security, Complaint ¶ 43(b) Even before any charge, the FTC can demand documents: it petitioned to enforce a civil investigative demand in an investigation of the practices of online loan marketers for obtaining, selling, transferring, and securing consumer leads. Source: FTC Petition to Enforce Civil Investigative Demand, IT Media, Inc., Argument section

FAQs

1.Brief for Respondents. FTC v. Day Pacer, Brief for RespondentsSee also Appendix D: Rulings on Respondents' Proposed Findings of Fact. CFPB, Integrity Advance matter, Findings of Fact ¶ 71
2.Complaint for Permanent Injunction, Monetary Relief, and Other Relief. FTC v. Benefytt Technologies, Inc., No. 22-cv-1794 (M.D. Fla.), Complaint
3.RESPA Advisory Opinion on Online Mortgage Comparison Shopping Tools by Consumer Financial Protection Bureau (Part 2/3). CFPB, RESPA Advisory Opinion on Online Mortgage Comparison Shopping Tools, § I.C.1.a