Compliance Outlook: TCPA

Compliance Outlook: TCPA AFSA's webinar will discuss recent Telephone Consumer Protection Act (TCPA) litigation and the TCPA regulations that went into effect in October. The webinar will provide an overview of the TCPA and discuss auto dialers, the capacity issue, prior express consent and revocation of consent, vicarious liability, and AFSA's efforts related to the TCPA. PRESENTERS: Chuck Gall, Dreher Tomkies LLP Kelly Lipinski, McGlinchey Stafford Eric Troutman, Severson & Werson

The Telephone Consumer Protection Act SEVERSON & WERSON, APC By Eric J. Troutman

What is the TCPA? Something awful. Comes from an earlier time The private right of action was rushed in as an amendment and wasn t very well thought out Many ambiguities (virtually nothing is defined.) Massive Penalties Four year statute of limitations By Eric J. Troutman, Severson & Werson, APC

What is the TCPA? Designed to prevent telemarketing but applies without respect to the content of the call. Applies to debt collection and servicing calls to cell phones Applies to all text messages even purely informational texts Content neutral and strict liability statute The FCC and the Courts have struggled to keep it up to date. E.g. Joffe v. Acacia Mortgage Corp., 211 Ariz. 325, 329 (Az. Crt. of Appls. 2006) (applying TCPA to e-mails received on a phone.) By Eric J. Troutman, Severson & Werson, APC

Prohibitions of TCPA (In General) The TCPA principally outlaws four practices.

Prohibitions of the TCPA (In General) PROHIBITION NO. ONE: Unlawful to make any call using any automatic telephone dialing system; or using an artificial or prerecorded voice; without the prior express consent of the called party; to any emergency telephone line, hospital or elder-care patient, pager, cellular telephone, or any service for which the receiver is charged for the call. 47 U.S.C. 227(b)(1)(A).

Prohibitions of TCPA (In General) Prohibition No. Two: Unlawful to initiate any telephone call to any residential telephone line; using an artificial or prerecorded voice to deliver a message; without the prior express consent of the called party; subject to important exemptions. 227(b)(1)(B);

Prohibitions of TCPA (In General) Compare and Contrast Cell phones: Unlawful to make any call ATDS calls prohibited using an artificial or precorded voice prior express consent only exemption Land lines: Unlawful to initiate any call ATDS calls allowed to deliver a message prior express consent and other exemptions.

Prohibitions of TCPA (In General) Prohibition No. Three: Unlawful to send unsolicited advertisements to fax machines, subject to certain exceptions. 227(b)(1)(C). Prohibition No. Four: Unlawful to use an automatic telephone dialing systems to engage two or more of a business' telephone lines simultaneously. 227(b)(1)(D).

TCPA Penalties The TCPA authorizes an award of $500.00 per violation in statutory damages. 47 U.S.C. 227(b)(3)(B). This is the minimum amount that can be awarded in the event of a violation of the statute and a Court has no discretion to reduce that amount. See e.g. Adamcik v. Credit Control Services, Inc., 832 F. Supp. 2d 744, 754 (W.D. Tx. 2011). The statute also permits for trebling of statutory damages, in the trial court s discretion, in the event of a finding the statute was willfully or knowingly violated. 47 U.S.C. 227(b)(3)(B). So up to $1,500.00 per call!!!! (But no attorney s fees..) Congress forgot to include a statute of limitations so the four-year catch-all limitations period applies. By Eric J. Troutman, Severson & Werson, APC

The TCPA s Strangely-Worded Private Right of Action PRIVATE RIGHT OF ACTION. A person or entity may, if otherwise permitted by the laws or rules of court of a State, bring in an appropriate court of that State an action based on a violation of this subsection. Strange language caused much confusion. Accordingly most early cases are just one-off junk fax claims. Two key developments changed matters: Courts began holding that the TCPA was directly enforceable and that state opt-in statutes are not required. See MLC Mortg. Corp. v. Sun America Mortg. Co., 212 P.3d 1199, 1203-1205 (Okla. 2009); Kaufman v. ACS Systems, Inc., 110 Cal.App.4th 886, 896-905 (2003); and Federal Courts were determined to have jurisdiction after all. Mims v. Arrow Financial Services, LLC, 132 S. Ct. 740 (2012) (overruling Murphey v. Lanier, 204 F.3d 911, 915 (9th Cir. 2000) and many other cases.) This made nationwide class actions a possibility. By Eric J. Troutman, Severson & Werson, APC

TCPA Private Right of Action History Several earlier versions of the bill were floated in the House and Senate. None had a private enforcement mechanism. The earlier version of the 1991 TCPA bill called upon the FCC to enforce. The FCC thought the bill was unnecessary and enforcement efforts would cost it $70 million annually. After the bill left committee, an amendment adding a private right of action to the TCPA was proposed on the Senate floor. Senator Ernest Fritz Hollings (the amending Senator) stated on the Senate Floor: The [private right of action] provision would allow consumers to bring an action in State court against any entity that violates the bill. He goes on to say Small claims court or a similar court would allow the consumer to appear before the court without an attorney. Statement of Senator Hollings, 137 Cong. Rec. S30821-822 (1991) By Eric J. Troutman, Severson & Werson, APC

TCPA LITIGATION IS ON THE RISE! Hundreds of class action TCPA cases seeking millions of dollars from companies have been filed in recent years, and the number is only climbing. TCPA suits were up 116 percent in September 2013 compared to September 2012. TCPA suits were up 54-percent in September 2012 from September, 2011. The pace of these lawsuits is increasing and the settlements are massive. $47 Million (In re Jiffy Lube Int l, Inc. Text Spam Litig., (S.D. Cal. 2011) $32 Million (Rose v. Bank of America Corp., (N.D. Cal. 2013)) $24 Million (Arthur v. Sallie Mae, Inc., (W.D. Wash. 2010) $17.1 Million (Malta v. Wells Fargo) (S.D. Cal. 2013) By Eric J. Troutman, Severson & Werson, APC

CALL DEFINED YES- A TEXT MESSAGE IS A CALL CALL is not defined by the TCPA. Courts have used the dictionary definition: to communicate with or try to get into communication with a person by a telephone Satterfield v. Simon & Schuster, Inc., 569 F.3d 946, 953-954 (9th Cir.2009) Courts have found that this obviously means text messages and even e-mails converted to text messages are calls. Joffe v. Acacia Mortgage Corp., 211 Ariz. 325, 329 (Az. Crt. of Appls. 2006) The FCC agrees that text messages are covered. 18 FCC Rcd. 14014, 14115 (July 3, 2003) (And then again!) 19 FCC Rcd. 15927, 15934 (FCC August 12, 2004). By Eric J. Troutman, Severson & Werson, APC

What Constitutes an Autodialed Call Subject to the TCPA Dreher Tomkies LLP By Charles V. Gall

TCPA Autodialer Provisions Prohibits calls to cell phones and certain other numbers without prior express consent. 47 U.S.C. 227(b)(1)(A); 47 C.F.R. 64.1200(a)(1). Prohibits telemarketing calls to cell phones and certain other numbers without prior express written consent. 47 C.F.R. 64.1200(a)(2). Prohibits engaging two or more business lines simultaneously. 47 C.F.R. 64.1200(a)(5); 47 U.S.C. 227(b)(1)(D). The first two provisions set forth above also apply to persons using an artificial or prerecorded voice.

TCPA Definitions Automatic telephone dialing system and autodialer mean equipment which has the capacity to store or produce telephone numbers to be called using a random or sequential number generator and to dial such numbers. 47 U.S.C. 227(a)(1); 47 C.F.R. 64.1200(f)(2). The TCPA does not define the term call.

FCC Ruling on Predictive Dialers The FCC has described a predictive dialer as equipment that dials numbers and, when certain computer software is attached, also assists telemarketers in predicting when a sales agent will be available to take calls. The hardware, when paired with certain software, has the capacity to store or produce numbers and dial those numbers at random, in sequential order or from a database of numbers. Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, CG Docket No. 02-278, Report and Order, FCC 03-153 (July 3, 2003). The FCC has ruled that predictive dialers are autodialers for purposes of the TCPA. Id.

Most Courts Have Interpreted Autodialer Broadly Meyer v. Portfolio Recovery Assocs., 707 F.3d 1036 (9th Cir. 2012) Nelson v. Santandar Consumer USA, 931 F. Supp. 2d 919 (W.D. Wis. 2013) Bates v. Dollar Loan Center, LLC, No. 2:13-CV-1731- KJD-CWH, 2014 WL 60472 (D. Nev. Jan. 7, 2014) Hunt v. 21st Mortg. Corp., No. 2:12-CV-2697-WMA, 2013 WL 5230061 (N.D. Ala. Sept. 17, 2013) Stockwell v. Credit Mgmt., No. 30-2012-00596110-CU- NP-CXC (Cal. Super. Ct. Oct. 2, 2013)

Petitions Filed with the FCC GroupMe, Inc Petition for Expedited Declaratory Ruling and Clarification, CG Docket No. 02-278 (filed Mar. 1, 2012) Communication Innovators Petition for Declaratory Ruling, CG Docket No. 02-278 (filed June 7, 2012) Cargo Airlines Association Petition for Declaratory Ruling, CG Docket No. 02-278 (filed Aug. 17, 2012) YouMail, Inc. Petition for Expedited Declaratory Ruling and Clarification, CG Docket No. 02-278 (filed Apr. 19, 2013) Professional Association for Customer Engagement Petition for Expedited Declaratory or, in the Alternative, Petition for Expedited Rulemaking, CG Docket No. 02-278 (filed Oct. 18, 2013) Glide Talk, LTD Petition for Expedited Declaratory Ruling, CG Docket No. 02-278 (filed Oct. 28, 2013)

Top Takeaways on the Scope of the TCPA Autodialer Provisions The FCC and most courts have taken the position that autodialers include equipment (such as predictive dialers) that have the capacity to store and dial numbers to be called. The focus is on whether the equipment has the present capacity to act as an autodialer without substantial modification or alteration even if the calls were actually manually dialed. Do autodialers include preview dialers (i.e., equipment that enables a caller to dial a stored telephone number by clicking the number on a computer screen)? The FCC may limit the type of equipment that may be deemed an autodialer for purposes of the TCPA in response to the many petitions before it.

TCPA: Prior Express Consent and Revocation Kelly Lipinski McGlinchey Stafford klipinski@mcglinchey.com

Prior Express Consent Non-telemarketing calls Cell phones Land lines Telemarketing calls

Prior Express Consent for Cell Phones Non-Telemarketing You must have the called person s prior express consent to make a call using an ATDS or an artificial or prerecorded voice to, inter alia, a cell phone or any service for which the called party is charged for the call. 47 U.S.C. 227(b)(1)(A)(iii). The FCC has clarified that prior express consent is required for any call to a cell phone that uses an ATDS or prerecorded voice, including fraud alerts, servicing calls, and debt collection calls.

Prior Express Consent for Land Lines Non-Telemarketing You must have the called person s prior express consent to initiate a call to a residential telephone line (i.e., a landline) using an artificial or prerecorded voice to deliver a message. 47 U.S.C. 227(b)(1)(B). The TCPA does not require prior express consent to initiate calls to a landline using an ATDS. By rule, the FCC has excluded commercial calls that do not transmit an unsolicited advertisement and calls that arise from an established business relationship from the prior express consent requirement.

How to Obtain Prior Express Consent Neither the TCPA nor the implementing regulations require the consent to be in writing or oral, but a caller has the evidentiary burden to prove it was obtained. Providing a cell phone to a creditor reasonably evidences a person s prior express consent to be contacted at that number regarding the debt. The FCC built upon its 1992 Order stating a person who knowingly releases his phone number has in effect given his invitation or permission to be called at the number, absent instructions to the contrary. The FCC has advised that a person that obtains prior express consent to call a cell phone can transfer this consent to an associated party.

How to Obtain Prior Express Consent The cell phone number must be provided by the called person. Cannot rely upon a family member s release or disclosure. The number must have been provided during the transaction that resulted in the debt for which you are calling.

Challenges to the FCC Order There have been attempts to reject the FCC s 2008 order arguing it allows implied consent to satisfy the express consent standard. Mais v. Gulf Coast Collection Bureau, 2013 WL 1899616 (S.D. Fla. May 8, 2013). Pending appeal with the 11th Circuit; FCC has filed amicus brief that emphasizes the jurisdictional limitations of the district court under the Hobbs Act. Other courts have since rejected the Mais decision and affirmed the FCC s order. See Murphy v. DCI Biologicals, 2013 WL 6865772 (M.D. Fla.).

Prior Express Consent Issues Does the called person have to provide consent to call a specific number (e.g., (216) 378-4969) or is general consent to be called sufficient? What happens if the consumer changes numbers? How to obtain consent for new cell phone? How to preclude calling the person who now has this re-assigned cell phone?

Prior Express Consent Telemarketing As of October 13, 2013, you must have the called person s prior express written consent to make calls to: i) a landline using an artificial or prerecorded message; or ii) a cell phone using ATDS equipment or a prerecorded message if the call contains an advertisement or constitutes telemarketing. The established business relationship exemption has been eliminated when making telemarketing calls to a landline using a prerecorded message or ATDS.

Prior Express Consent Telemarketing Written consent must be signed and show the consumer: Received a clear and conspicuous disclosure that she will receive prerecorded or autodialed calls from the caller; and Unambiguously agrees to receive such calls at a telephone number she designates. Consent cannot be required as a condition of obtaining a good, service or credit. Must establish an opt-out mechanism that is available at the beginning and duration of call.

Pending Petitions Before the FCC GroupMe/Skype - filed March 1, 2012 Requests the FCC to clarify that a wireless subscriber may consent to receive nontelemarketing, informational calls or texts through an intermediary. GroupMe offers a free group text message service similar to a listserv, but users must be invited to join via text. GroupMe has the group creator s consent, but not the recipient s consent.

Pending Petitions Before the FCC United Health Care filed January 16, 2014 Requests the FCC to clarify that a person may rely upon valid prior express consent which has, unbeknownst to the caller, been reassigned to another wireless subscriber. Intent to eliminate claims when a person is unaware a cell phone has been released and reassigned to a new user and thus, lacks prior express consent to call the new subscriber.

Pending Petitions Before the FCC Cargo Airline Association filed August 17, 2012. Requests the FCC to clarify that in limited circumstances prior express consent to receive autodialed or pre-recorded nontelemarketing calls on a cell phone can be provided by a third-party. Delivery companies should be able to rely upon a package sender s representation that a recipient would like to receive a message once the package is delivered.

Revocation of Consent The TCPA and its regulations are silent as to whether prior express consent can be revoked and if so, how. Recall the FCC s 1992 Order, discussed above, which states that a person who knowingly releases his phone number has in effect given his invitation or permission to be called at the number, absent instructions to the contrary.

Revocation of Consent Courts have reached different conclusions regarding the consumer s ability to revoke prior express consent and, when allowed, whether the revocation must be in writing or verbal. Consumer may revoke prior express consent to call cell phone and there is no time limit on when this may be done. Gager v. Dell Financial Services, 727 F.2d 265 (3rd Cir. 2013) Oral statement that calls to cell phone are inconvenient is not a sufficient revocation. Cunningham v. Credit Mgmt., 2010 WL 3791104 (N.D. Tex. Aug. 30, 2010) Revocation must be in writing. Starkey v. Firstsource Advantage, 2010 WL 2541756 (W.D.N.Y. Mar. 11, 2010).

COMMERCIAL PURPOSE EXEMPTION Exemption for calls made for a commercial purpose [that] does not include or introduce an unsolicited advertisement or constitute telephone solicitation. 47 C.F.R. 64.1200(a)(3)(iii). Pre-recorded debt collection calls to landlines are exempted from TCPA liability! (But dual purpose" calls ARE NOT. Chesbro v. Best Buy Stores, LP, 697 F. 3d 1230, 124 (9th Cir. 2012).) Applies only to landlines: The FCC has been clear in drafting its regulations that the exemption applies only to landline calls. (See 47 C.F.R. 64.1200(a)(3)(iii).) Courts agree. E.g. Bentley v. Bank of America, N.A., 773 F. Supp. 2d 1367, 1374 (S.D. Fla. 2011); Zehala v. American Express, 2012 WL 1657061 (S.D. Oh. 2012); Iniguez v. The CBE Group, F.Supp.2d -, 2013 WL 4780785 (E.D.Cal. 2013). No Established Business Relationship exemption: The FCC overhauled its regulations in 2012. There is no longer an established business relationship exemption and all prerecorded telemarketing calls to landlines require prior written express consent. By Eric J. Troutman, Severson & Werson, APC

VICARIOUS LIABILITY The FCC has recently clarified that vicarious liability principles apply to the TCPA and the federal common law of agency governs whether creditors on whose accounts dialers place calls can be held liable for those calls. See FCC13-54, 28 (May 9, 2013). Previously it was unclear whether an agency relationship had to exist. To avoid vicarious liability for TCPA under the new FCC ruling, the finance company must not: i) exercise such control over the operation of the vendor as to warrant a finding of agency; ii) enter into a relationship with the vendor that could be deemed a partnership or joint venture; iii) hold its vendor out as its agent to third-parties so as to warrant a finding of apparent authority ; or iv) knowingly accept the benefits of unlawful phone calls so as to merit a finding of ratification. By Eric J. Troutman, Severson & Werson, APC

VICARIOUS LIABILITY FCC s Exemplar Facts: The FCC focuses on integrated operations for agency. Seller allows outside sales entity access to information and systems that normally would be within the seller s exclusive control; Ability of outside sales entity to enter consumer information into the seller s sales or customer systems; Authority to use the Seller s name, trademark or service mark; Seller reviews outside agency s scripts and approves message; Knowledge of TCPA violations. Source: FCC 13-52, par. 46. By Eric J. Troutman, Severson & Werson, APC

VICARIOUS LIABILITY Ratification appears to be the most dangerous remaining avenue to vicarious TCPA liability for creditors. Ratification occurs "through conduct justifiable only on the assumption that the person consents to be bound by the act's legal consequences." FCC 13-54 par. 28. At least one district court has found that a debt collector ratifies a dialer s conduct merely by accepting the benefit of payments received as a result of a phone call violating the TCPA. See Jamison v. First Credit Services, Inc., 290 F.R.D. 92, 100 (N.D. Ill. 2013). Must be vigilant never to turn a blind eye to TCPA violations by vendors. By Eric J. Troutman, Severson & Werson, APC

THE END?

Compliance Outlook: TCPA Recent AFSA efforts - AFSA Executive Vice President Bill Himpler

Compliance Outlook: TCPA QUESTIONS? Use chat window on lower left side of screen

Compliance Outlook: TCPA Chuck Gall Dreher Tomkies LLP 2750 Huntington Center 41 South High Street Columbus, Ohio 43215 (614) 628-1605 - cgall@dltlaw.com Kelly Lipinski McGlinchey Stafford 25550 Chagrin Boulevard, Suite 406 Cleveland, OH 44122-4640 (216) 378-4969 - klipinski@mcglinchey.com Eric Troutman Severson & Werson 19100 Von Karman Avenue, Suite 700 Irvine, CA 92612 (949) 442-7110 - ejt@severson.com Bill Himpler American Financial Services Association 919 18th Street, NW Washington, DC 20012 (202) 466-8616 bhimpler@afsamail.org