Fifth Circuit Pumps The Brakes On Arbitration https://t.co/1M9RuXMhjb
House Financial Services Committee Considers Amendments to the FDCPA https://t.co/joLGqaAVZj
Eleventh Circuit Refuses to Impose a ‘Least Sophisticated Consumer’ Standard to Discharge Violations https://t.co/FwkJpuXtnq
Late in the day on July 10, 2015, the FCC issued the highly controversial and long-awaited Declaratory Ruling and Order regarding nineteen filed petitions requesting clarification of TCPA’s application. I spent most of my Sunday afternoon and evening digesting the 138-page Order, looking for positive news for the business community. Unfortunately, my search didn’t yield much in the way of positive news. The only consolation I can share is that the FCC’s decision was not unanimous. Two commissioners issued impassioned dissents, noting that the Order “expands the TCPA’s reach” and “twists the law’s words…to target useful communications between legitimate businesses and their customers. This Order will make abuse of the TCPA much, much easier. And the primary beneficiaries will be trial lawyers, not the American public.” Dissenting Statement of Commissioner Ajit Pai. ACA International, a major trade organization in the collection industry, immediately filed suit against the FCC, seeking a judicial review of the Order. In due cor, I will break down the potential impacts of the Ruling for key industries, but today I provide an overview of the Order’s highlights.
The Order rejects any “present use” or current capacity test and holds that the capacity of an autodialer is not limited to its current configuration. Instead, also includes its potential functionalities even if it presently lacks the requisite software. Thus, the FCC affirms that “dialing equipment that has the capacity to store or produce, and dial random or sequential numbers…[is an autodialer] even if it is not presently used for that purpose.” at ¶ 10. While the FCC refused to “address the exact contours of the “autodialer” definition”, its focus seems to clarify its central focus:
The FCC also concluded that callers cannot avoid liability by dividing responsibility among the separate owners of the individual components that comprise the auto-dialing system. The Order holds that “equipment can be deemed an autodialer if the net result of such voluntary combination enables the equipment to have the capacity to store or produce telephone numbers to be called, using a random or sequential number generator, and to dial such numbers. The fact that two separate entities have voluntarily entered an agreement to provide such functionality does not alter this analysis.” at ¶24.
The dissent was highly critical of the majority’s holding, particularly as it related to its statutory interpretation of capacity and the TCPA’s potential application to smartphones, which was not ruled out by the majority. As noted by Commissioner Pai, if a system cannot store or retrieve telephone numbers using a random or sequential number generator, and if it cannot dial such numbers, the system should not be included. Pai described the majority’s test as being whether there is “more than a theoretical potential that the equipment could be modified to satisfy the ‘autodialer’ definition.” Pai Dissent.
The Order confirms text messaging is covered, but concerning text messaging apps, it depends on who makes the calls. The Order requires some direct connection between the person or entity and the making of the call. Order,¶ 30. The test looks at the entire set of circumstances, including:
(a) who took the steps to place the call; and
(b) whether another person or entity was so involved in placing the call as to be deemed to have initiated it.
The FCC also determined that equipment used to send Internet to phone text messages may also be an autodialer because it is the functional equivalent to phone-to-phone texting. In doing so, the FCC held that Congress intended the word “dial” to mean “initiating a communication with consumers through the use of their telephone number.” Order, ¶ 113.
For purposes of app platforms, a contact list or address book does not establish prior express consent. Porting of landline phone numbers to wireless devices does not necessarily revoke prior express consent. Prior express consent may, under certain circumstances, carry over from a landline phone number to a wireless device if prior express consent was given for the type of call in question. So, for instance, if the consumer provided consent to receive calls or prerecorded messages on their landline phone number from an automated dialing system and that phone number is later ported to a wireless device, the Order suggests the consent remains effective unless and until it is revoked.
Consent generally may be revoked through any reasonable means and the caller may not dictate how revocation may be made. The FCC held that “the consumer may revoke his or her consent in any reasonable manner that clearly expresses his or her desire not to receive further calls, and that the consumer is not limited to using only a revocation method that the caller has established as one that it will accept.” at ¶ 70.
Only the current subscriber or the non-subscriber customary user of the phone can grant consent.
FCC Order’s resolution of the wrong number calls “penalizes businesses and institutions acting in good faith to reach their customers using modern technologies.” Dissenting Statement of Commissioner Michael O’Rielly. Several petitions requested clarification as to whether prior express consent must be provided by the intended recipient of the call or the actual recipient of the call, noting that in many instances, prior express consent is provided by the intended recipient for a particular number which is then reassigned to a third party. The FCC Order ignores the significance of the issue and will, as noted by the dissent, open the floodgates to more litigation against good faith actors. Pai Dissent.
The FCC majority believes that “there are solutions in the marketplace to better inform callers of reassigned numbers, that businesses should institute new or better safeguards to avoid calling reassigned wireless numbers…and that the TCPA requires consent of the actual party who receives a call.” at ¶ 72. The FCC refused to put any burden on the wrong number consumer to inform the caller that it is the wrong party or opt out of the calls. Instead, the FCC found that “where a caller believes he has consent to make a call and does not discover that a wireless number has been reassigned prior to making or initiating a call to that number for the first time after reassignment, liability should not attach for that first call, but the caller is liable for any calls thereafter.” Id. at ¶85.
As noted by the dissent, the “marketplace solutions” alluded to by the majority do not exist. “No authoritative database exists – certainly not one maintained or overseen by the FCC, which has plenary authority over phone numbers – to track all disconnected or reassigned telephone numbers or link all consumer names with their telephone numbers.” Pai Dissent.
The Order does contain some limited good news for the financial service and medical industries. Under certain limited circumstances, pro-consumer messages about time-sensitive financial and healthcare issues is permitted.
The Order affirms that carriers and “Voice-over-IP” (VoIP) providers may implement call-blocking technology “that can help consumers who choose to use such technology to stop unwanted robocalls.”
Caren Enloe leads Smith Debnam’ s consumer financial services litigation and compliance group. In her practice, she defends consumer financial service providers and members of the collection industry in state and federal court, as well as in regulatory matters involving a variety of consumer protection laws. Caren also advises fintech companies, law firms, and collection agencies regarding an array of consumer finance issues. An active writer and speaker, Caren currently serves as chair of the Debt Collection Practices and Bankruptcy subcommittee for the American Bar Association’s Consumer Financial Services Committee. She is also a member of the Defense Bar for the National Creditors Bar Association, the North Carolina State Chair for ACA International’s Member Attorney Program and a member of the Bank Counsel Committee of the North Carolina Bankers Association. Most recently, she was elected to the Governing Committee for the Conference on Consumer Finance Law. In 2018, Caren was named one of the “20 Most Powerful Women in Collections” by Collection Advisor, a national trade publication. Caren oversees a blog titled: Consumer Financial Services Litigation and Compliance dedicated to consumer financial services and has been published in a number of publications including the Journal of Taxation and Regulation of Financial Institutions, California State Bar Business Law News, Banking and Financial Services Policy Report and Carolina Banker. ...LEARN MORE