The mobile revolution will be costly: How the TCPA impacts your industry
The Telephone Consumer Protection Act of 1991 (“TCPA”) restricts telemarketing, the use of automated telephone dialing systems, prerecorded voice messages, text messages, and faxes. It also prohibits calls and texts to cell phone numbers using automatic dialing or messaging systems or artificial or prerecorded voices unless made for emergency purposes or with prior express consent (written consent is often required and is always optimal).
Originally intended to protect the privacy interests of residential and wireless telephone subscribers, plaintiff lawyers have taken advantage of the statute – which awards damages of $500 per negligent violation and $1500 per willful violation – and the fact that many people are using cell phones as their primary contact point, to file multi-million dollar class actions against, and coerce settlements from, companies in almost every industry that deal with consumers.
By way of illustration: a telephone company asked a judge to approve a $45 million settlement related to unsolicited calls; two national banks recently resolved class actions for $32 million and $75.5 million; a pro basketball and pro-football team settled improper text cases for $5 million and $2.5 million; and a national pizza chain settled an unwanted text class action for $16.5 million. And a July 7, 2015, decision, King v Time Warner Cable, U.S. District Court, Southern District of New York, No. 14-02018, crystallizes the risks posed by the TCPA for the business community. Per the claims asserted by Araceli King, Time Warner Cable called her over 150 times, often leaving messages for a man named Luis Perez, who previously owned her phone number. In granting a $229,500 judgement in favor of Ms. King, the Court made some critical rulings:
- With respect to wrong number liability (calls made to reassigned phone numbers), the Court ruled that calls prior to consent being revoked and before TWC was notified that they were calling the wrong number were not actionable. In this case, the consent question revolved around 153 calls made to Ms. King after October 3, 2013, when she told a TWC representative that she was not the person TWC was trying to reach and asked the calls to stop. The Court found the 153 calls made after October 3, 2013 to be willful violations – trebling the damages from $500 to $1500. The Court took particular umbrage at calls made after March 26, 2014 – the date the law suit in question was filed.
- The court ruled that unanswered calls also violate the TCPA, ruling, “TWC violated the statute each time it placed a call using its ATDS [Automatic Telephone Dialing System] without consent, regardless of whether the call was answered by a person, a machine, or not at all.”
- Time Warner Cable argued that its telephone system wasn’t an ATDS because the list of called numbers wasn’t random or sequential, and that the list of called numbers could have been created by a human. The court wrote, “TWC ignores that face that the lists were not created by a human. In fact, it has not identified any human involvement at all in any state of the customer selection, list compilation, or dialing process.”
This ruling comes on the heels of the FCC's – the regulatory body charged with interpreting the TCPA – adoption of a slate of declaratory rulings on a 3-2 margin that "affirmed consumers' rights to control the calls they receive;" denying many of the petitions filed by the business community. Among those rulings:
- Consumers now have the right to revoke their consent to receive robocalls and robotexts in any reasonable way at any time
- If a phone number has been reassigned, companies must stop calling the number after one call
- The consent-based rules that apply to voice calls made to wireless numbers also apply to text messages
- While – and thankfully – free calls or texts to alert consumers to possible fraud on their bank accounts or to remind them of important medication refills, among other financial alerts or healthcare messages, are allowed without prior consent; other sorts of financial or healthcare calls, such as marketing or debt collection calls, require prior consent. And, again, consumers have the right to opt out from these permitted calls and texts at any time.
In short, TCPA liability has expanded exponentially. With recent multi-million dollar class actions and settlements by companies in almost every industry, combined with unsettled law and guidance, the upward trend of new TCPA lawsuits will continue.
To combat this, companies should engage a TCPA expert to ensure effective compliance and defend high exposure cases. Such counsel should be familiar with the nuances of: when written prior express consent is required; vicarious liability for the acts of third parties (marketers, collection agencies, etc.), and the sort of contractual language that can help protect a company from liability. For example:
18. Telephone Contacts, Monitoring and Recording: You agree that any calls with us may be monitored and/or recorded and that we (or anyone acting on our behalf) may contact you from time to time regarding your Account (including for collections purposes). You further agree that all of our contacts with you may be made via text message or with an automated dialing and announcing or similar device and/or an artificial voice or prerecorded message. You also agree that we may contact you at any telephone number you provide to us, whether a residential or business number, even if that number is a wireless, cellular or mobile number; is converted to a mobile/wireless number; or connects to any type of mobile/wireless device. You agree that you have an established business relationship with us, that all of our contacts with you are not unsolicited, and that we may contact you at the telephone number you provide in this application, in any of the ways described above, with advertisements and telemarketing messages regarding products and services that we believe may be of interest to you. You understand that your consent to telemarketing contacts is not a condition of purchasing any property, goods, or services. To opt out of these contacts, please call Customer Service at ________________.
As an unsettled and evolving area of the law, the TCPA creates uncertainty and places the compliance burden on any industry that interacts with consumers. As with most areas, effective planning and strategy can go a long way to minimizing exposure and avoiding costly, and potentially company-killing, litigation. All companies that interact with consumers should learn about the TCPA and how to minimize litigation and compliance risk.