Introduction to the Telephone Consumer Protection Act

Transcription

1 Introduction to the Telephone Consumer Protection Act Utah Bankers Association Compliance Conference October 24, 2017 Copyright 2017 by Ballard Spahr LLP

2 Overview of Presentation Overview of TCPA restrictions Litigation trends and recent TCPA settlements Thorny TCPA issues Best practices 2 DMEAST #

3 TCPA Overview The Telephone Consumer Protection Act of 1991 (TCPA) seeks to strike a balance between consumer protection and communication of important information to customers Congress: Individuals privacy rights, public safety interests, and commercial freedoms and speech and trade must be balanced in a way that protects the privacy of individuals and permits legitimate telemarketing practices. A broad consumer protection statute 3 DMEAST #

4 TCPA Overview Restrictions in General Bans unsolicited advertising faxes Requires solicitors to maintain and honor a companyspecific do-not-call list Requires companies to honor the national do-not-call registry Restricts certain calls to landlines and cell phones 4 DMEAST #

5 Overview of TCPA Restrictions Home lines The TCPA prohibits making telemarketing or advertising calls using an artificial or prerecorded voice to residential telephones without prior express written consent. Advertisement means any material advertising the commercial availability or quality of any property, goods, or services. Telemarketing means a call made for the purpose of encouraging the purchase or rental of, or investment in, property, goods, or services. 5

6 Overview of TCPA Restrictions Cell Phones TCPA provides heightened protection for wireless consumers Prohibits nonemergency calls that use an artificial or prerecorded voice and calls made using an automatic telephone dialing system (i.e., autodialers and "robocalls"). Calls include text messages 6

7 Overview of TCPA Restrictions Cell Phones Exceptions: - Calls solely to collect a debt owed to or guaranteed by the U.S. - Telemarketing calls permitted with prior express written consent - Other calls permitted with prior express consent - With certain limitations, no consent necessary for the following informational calls: Calls intended to prevent fraudulent transactions or concerning events that suggest a risk of fraud or identity theft Calls regarding possible data breaches and steps consumers can take to prevent or remedy harm caused by breach Calls regarding money transfers 7

8 Overview of TCPA Restrictions Permitted artificial voice or prerecorded calls must include disclosure information: - Identify business or entity calling - State telephone number of business or entity - If the call advertises or constitutes telemarketing, provide automated, interactive opt-out mechanism at outset of message Terminate call if recipient opts-out 8 DMEAST #

9 Damages The TCPA is effectively a strict liability statute that provides: Statutory damages of $500 per violation Treble statutory damages for willful violations (i.e., $1500 per call) NO CAP ON LIABILITY. (Capital One recently settled a TCPA class action for over $75 million.) 9

10 Litigation Trends 10 DMEAST #

11 Recent TCPA Settlements In re Capital One TCPA Litig., No (N.D. Ill.): nationwide settlement class is estimated to consist of approximately 21 million persons. Settlement fund of approximately $75 million and class members must submit a claim form in order to receive payment. Estimated that each class member will receive between $20 and $40 regardless of the number of calls they may have received. Steinfeld v. Discover Financial Serv., No (N.D. Cal.): (1) approximately 9,000,000 class members; (2) settlement fund of approximately $8,700,000; (3) the settlement fund includes account credits; (4) class members must submit a claim form; (5) class members to share in the settlement fund equally (estimated to recieve between $20-$40); (6) $2,175,000 in counsel fees; and (7) costs of settlement administration largely deducted from the fund. 11

12 Recent TCPA Settlements (cont d) Rose v. Bank of Am. Corp., No (N.D. Cal.): settlement fund of $32.1 million to settle TCPA claims of 7.6 million class members where it was estimated that each class member would receive between $20-$40. The costs of administration and counsel fees would be paid out of the settlement fund. Hanley v. Fifth Third Bank, No (N.D. Ill.): (1) approximately 200,000 class members; (2) settlement fund of $4,500,000; (3) in order to receive a payment, class members must submit a claim form; (4) class members to share in settlement fund equally (payments estimated to be between $200-$300 ); (5) up to $1,500,000 in counsel fees to be paid out of settlement fund; and (6) costs of settlement administration (estimated to be approximately $300,000) to be paid out of settlement fund. 12

13 What constitutes consent? Depending on the situation, a TCPA-compliant consent can take many forms: Prior Express Written Consent - Paper - Electronic Prior Express Consent Burden of proving consent is on the caller 13

14 What constitutes prior express written consent? Signature, which may be in electronic or digital form Clear authorization for the company to deliver telemarketing messages using ATDS or artificial or prerecorded voice The phone number to which authorized calls/messages may be made/delivered A statement that the person is not required to consent as a condition of purchasing any property, goods or services 14

15 Thorny Issues Obtaining prior express consent - Cell phone number provided on credit application will generally suffice - Other means of obtaining prior express consent?? 15

16 Thorny Issues Revocation - Consumers must be able to respond to unwanted calls to prevent future calls. - A caller may not limit the manner in which revocation may occur. - Consumers may revoke consent at any time and through any reasonable means. - Revocation is effective if it clearly expresses a desire not to receive further messages. - Revocation may be oral or in writing. 16

17 Statutory definition of ATDS As used in this section (1) The term "automatic telephone dialing system" means equipment which has the capacity (A)to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers. 47 USC 227(a)(1) 17 DMEAST #

18 The FCC's Interpretation of ATDS The FCC has interpreted the phrase automatic telephone dialing system broadly to include all equipment which has the capacity to store or produce numbers and dial them without human intervention. [T]he capacity of an autodialer is not limited to its current configuration but also includes its potential functionalities. 18 DMEAST #

19 One-time "on-demand" text exception [W]e find that a one-time text sent in response to a consumer's request for information does not violate the TCPA or the Commission's rules so long as it: (1) is requested by the consumer; (2) is a one-time only message sent immediately in response to a specific consumer request; and (3) contains only the information requested by the consumer with no other marketing or advertising information. 19 DMEAST #

20 The Problem of Reassigned Numbers Consent by the prior owner does not continue to a reassigned phone number. Irrelevant whether intent was to call prior owner of number the one who had consented to receive calls Called party refers to the party actually called, and intent is only relevant to whether the violation was willful (i.e., treble damages) One call safe harbor 20 DMEAST #

21 Best Practices Check the Do Not Call Registry before making any calls - Maintain written procedures for checking DNC Registry Obtain PEWC for marketing communications Utilize consent forms that are conspicuous and easily understood Maintain procedures for referring to the consent record before initiating communications Maintain consent records for at least four years after the last calling activity (the statute of limitations for a TCPA call is four years) 21 DMEAST #

22 Best Practices Implement or improve safeguards against calling reassigned numbers Provide consumers easy mechanisms to opt out of communications covered by the TCPA Limit the number of repeat calls - A consumer who receives only a few calls is much less likely to sue 22 DMEAST #

23 Related issues State Mini-TCPAs - Utah Telephone and Facsimile Solicitation Act Utah Code Ann a Generally tracks TCPA Do-not-call requirements Consent requirements Questions? 23 DMEAST #