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  • Ninth Circuit: payday lenders not vicariously liable under TCPA for text messages

    Privacy, Cyber Risk & Data Security

    On January 10, the U.S. Court of Appeals for the Ninth Circuit affirmed that three payday lenders and two marketing companies (together, the defendants) did not indirectly violate the Telephone Consumer Protection Act (TCPA) by accepting marketing help from a separate lead generator company that used a program to send text-messaged advertisements. In upholding the district court’s decision, the three judge panel concluded that “it is undisputed” that the defendants did not enter into a contract with the lead generator company, and further, that the lead generator company did not act as their agent or purported agent. The plaintiff-appellant that received the text-messaged advertisement—which directed consumers who clicked on the link within the message to a loan application website controlled by one of the defendants—filed a putative class action complaint, certified by the district court, against the defendants to allege that they were vicariously liable for sending the text messages in violation of the TCPA. Specifically, the plaintiff-appellant claimed the defendants ratified the lead generator company’s actions when they accepted leads even though they knew the leads were being generated through text messages. The district court granted summary judgments for all the defendants, and ruled they were not vicariously liable for the lead generator company’s actions, and that additionally, the plaintiff-appellant failed to present evidence that defendants had actual knowledge that the texts were being sent in violation of the TCPA. The appellate panel also noted that because one of the defendants—a contracted lead provider—had “no ‘knowledge of facts that would have led a reasonable person to investigate further,’ . . . [the defendant] cannot be deemed to have ratified [the] actions and therefore is not vicariously liable.”

    Privacy/Cyber Risk & Data Security Courts Ninth Circuit Appellate TCPA Payday Lending

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  • District Court Cites Spokeo, Refuses to Certify TCPA Class Action Suit

    Courts

    On August 15, a federal judge in the U.S. District Court for the Northern District of Illinois Eastern Division granted a pet health insurance company’s (defendants) motion to strike class allegations in a Telephone Consumer Protection Act (TCPA) lawsuit over alleged robocalls. Citing a recent Supreme Court ruling in Spokeo v. Robins, the judge opined that because evidence proved some of the class members agreed to receive calls, plaintiffs failed to establish a lack of consent and could therefore not claim to have suffered a concrete injury. In 2014, plaintiffs filed a suit against the defendants proposing certification of two classes—“advertisement” and “robocall”—alleging that calls were made to individuals’ cell phones without specific consent and arguing that these calls were a form of “advertising,” which, pursuant to FTC rules, requires express written consent. However, the defendants’ position—for which the judge ruled in favor—was that because affidavits signed by individuals during the pet adoption process show that some of the class members consented to receive calls about special offers (electing not to opt-out), these individuals would not be able to prove injury under the Spokeo standard. Thus, issues of individualized consent would predominate, making it impossible for plaintiffs to “establish a lack of consent with generalized evidence.” Furthermore, the court stated that if plaintiffs agreed to receive calls—as defendants claim a significant number did, just not in writing—a lack of written evidence does not make the calls unsolicited.

    Courts TCPA Class Action Litigation U.S. Supreme Court

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  • Eleventh Circuit Holds TCPA Consent Can Be Partially Revoked

    Courts

    On August 10, the U.S. Court of Appeals for the Eleventh Circuit held that the Telephone Consumer Protection Act (TCPA) “permits a consumer to partially revoke her consent to be called by means of an automatic telephone dialing system.” As alleged in this case, when the consumer plaintiff applied for a credit card, she broadly consented to receive automated calls from the bank defendant on her cell phone. After falling behind on her payments, she started receiving automated delinquency calls from the bank. On an October 2014 call with a bank employee, the plaintiff expressed that she did not want to receive these automated calls “in the morning” and “during the work day.” The plaintiff claimed that the bank violated the TCPA by making “over 200 automated calls” thereafter during these restricted times of day, until she fully revoked consent in March 2015.

    The U.S. District Court for the Southern District of Florida had granted summary judgment in favor of the bank, but the Eleventh Circuit reversed. The Eleventh Circuit disagreed with the bank’s legal argument that “the only effective revocations are unequivocal requests for no further communications whatsoever.” Instead, the court concluded that “the TCPA allows a consumer to provide limited, i.e., restricted, consent for the receipt of automated calls,” and that “unlimited consent, once given, can also be partially revoked as to future automated calls under the TCPA.” The court also concluded that there was an “issue of material fact” as to whether the plaintiff’s October 2014 statements constituted a partial revocation. Noting that “[t]his issue is close,” the court explained that a reasonable jury could find that the plaintiff revoked her consent to be called “in the morning” and “during the work day,” even if she did not specify exactly what times she meant. Accordingly, the court remanded for trial.

    Courts Eleventh Circuit Appellate Litigation TCPA

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  • District Court Order Dismissing TCPA Claim Reversed on Appeal

    Courts

    On July 10, the U.S. Court of Appeals for the Third Circuit held that a single telemarketing call to a consumer established a concrete injury sufficient to support a Telephone Consumer Protection Act (TCPA) suit against a New Jersey-based fitness company. The appellate court reversed the District Court’s dismissal of the suit “because the TCPA provides [the consumer] with a cause of action, and her alleged injury is concrete.”

    The appellate court considered two questions in the appeal: (i) was the alleged robocall a violation of the TCPA? If so, (ii) is the alleged injury concrete enough to provide Article III standing to sue under the United States Constitution? The court answered the first question by noting that the TCPA prohibits robocalls and prerecorded messages to cellular phones and that it “does not limit—either expressly or by implication—the statute's application to cell phone calls.” In answering the second question, the court determined that the alleged injury is exactly the kind of injury the TCPA was created to prevent: a nuisance or invasion of privacy.

    The Third Circuit remanded the case for further proceedings consistent with their findings.

    Courts Appellate Third Circuit TCPA Federal Issues Litigation

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  • Debt Collector Liable for Violating FDCPA and TCPA

    Courts

    On July 3, the Court of Appeals for the Third Circuit affirmed that a debt collector violated the Telephone Consumer Practices Act (TCPA) when it called a consumer’s cell phone without the consumer’s consent, resulting in a damages award of $34,500. Additionally, the appellate court reversed the district court’s decision regarding a Fair Debt Collection Practices Act (FDCPA) claim for sending a collection letter to the consumer without taking proper precautions to ensure the consumer’s account number would remain private. The debt collector put forth the defense of bona fide error regarding its alleged violations of the FDCPA. The appellate court, citing Supreme Court precedent, rejected the defense, holding that bona fide error could be claimed only in the case of a clerical or factual error, but a “mistaken interpretation of the law is inexcusable under the FDCPA’s bona fide error defense.” The Third Circuit remanded the FDCPA claim to the district court to enter judgment for the consumer and calculate the damages the debt collector must pay.

    Courts Privacy/Cyber Risk & Data Security Third Circuit Debt Collection TCPA FDCPA Appellate

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  • Second Circuit Affirms No Unilateral Revocation Under TCPA

    Courts

    On June 22, the Second Circuit held in Reyes v. Lincoln Automotive Financial Services, No. 16-2014-cv, 2017 WL 2675363 (2nd Cir. June 22, 2017), that the Telephone Consumer Protection Act (TCPA) does not permit a consumer to unilaterally revoke his or her consent to be contacted by telephone when that consent was given as a “bargained-for consideration in a bilateral contract.” The defendant had leased an automobile from the plaintiff. As a condition of that lease agreement, the plaintiff consented to receive automated or manual telephone calls from the defendant. After the plaintiff defaulted, the defendant regularly called the plaintiff and continued to do so even after the plaintiff allegedly revoked his consent. To support his argument that the TCPA permits him to revoke his consent, the plaintiff relied on prior case law and a recent ruling from the FCC that stated that under the TCPA, “prior express consent” can be revoked. The Second Circuit, however, distinguished this case from those relied on by the plaintiff on the grounds that the prior cases and the FCC’s ruling support the proposition that consent not given in exchange for consideration, and which is not part of a binding legal agreement, can be revoked. The Court further stated that where the consent is not provided gratuitously but is instead an express provision of a contract, the TCPA does not allow such consent to be unilaterally revoked.

    Courts Litigation TCPA FCC Federal Issues Second Circuit

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  • D.C. Circuit Rules FCC Lacks Authority Under TCPA to Regulate Faxes Sent with Recipient’s Consent

    Courts

    In a 2-1 split decision, the U.S. Court of Appeals for the District of Columbia Circuit recently ruled that the Federal Communications Commission (FCC) lacks authority under the Telephone Consumer Protection Act (TCPA) to regulate facsimiles sent with the recipient’s consent. Bais Yaakov of Spring Valley et al. v. F.C.C. et al., No. 14-1234 (D.C. Cir. Mar. 31, 2017) (Dkt. No. 1668739). Specifically, the court found that a 2006 FCC Rule (the “Solicited Fax Rule”) that required a sender to include an opt-out notice on faxes sent with the “recipient’s prior express permission”—and which has formed the basis for countless putative TCPA class actions—exceeds the scope of authority given to the FCC under the TCPA. Based on this finding, the court vacated the 2006 FCC Order implementing the rule. Ultimately, the majority was not persuaded by the FCC’s argument that agency action—in this case, the FCC’s requiring opt-out notices on solicited fax advertisements—is permissible so long as Congress had not prohibited the agency action in question.

    Shortly after ruling was handed down, FCC Chairman Ajit Pai issued a statement expressing support for the court’s ruling, which he said emphasized “the importance of the FCC adhering to the rule of law.” The recently-appointed Chairman explained further that he had, in fact, “dissented from the FCC decision that the court has now overturned because, as [he] stated at the time, the agency’s approach to interpreting the law reflected ‘convoluted gymnastics.’” Chairman Pai continued, “[g]oing forward, the Commission will strive to follow the law and exercise only the authority that has been granted to us by Congress.”

    Courts FCC TCPA

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  • FCC Denies Petition by MBA to Exempt Certain Mortgage Servicing Calls from Prior Express Consent Requirement

    Federal Issues

    In an order dated November 15, the FCC’s Consumer and Governmental Affairs Bureau denied a petition by the Mortgage Bankers Association (MBA) that sought an exemption from the FCC’s prior express consent requirement for non-telemarketing residential mortgage servicing auto-dialer calls to wireless numbers. In its order, the Bureau concluded that MBA had failed to show (1) that the calls in question would be free of charge to consumers; and (2) that the parties seeking relief should be able to send non-time-sensitive calls to consumers without their consent.

    Among other things, the Order explained that the Telephone Consumer Protection Act (TCPA) “reflects Congress’ recognition of the potential costs and privacy risks imposed on wireless consumers from the use of auto-dialer equipment, which can generate large numbers of unwanted calls” and accordingly, the FCC has generally attempted to balance and accommodate the legitimate business interests of callers in addition to recognized consumer privacy interests.

    Federal Issues Consumer Finance TCPA FCC U.S. Senate U.S. House Privacy/Cyber Risk & Data Security

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  • FTC Submits Comment to the FCC on Proposal Relating to Debt Collection Robocalls

    Privacy, Cyber Risk & Data Security

    On June 6, the FTC submitted a comment to the FCC on its Notice of Proposed Rulemaking (NPR) regarding the implementation of recent changes to provisions of the Telephone Consumer Protection Act (TCPA) that permit robocalls “made solely to collect a debt owed or guaranteed by the United States.” Recommending that the FCC proceed cautiously with the expansion of permissible robocalling, the FTC instructed the FCC to establish standards for the collection of government debt that are consistent with the FDCPA, Section 5 of the FTC Act, and the Telemarketing Sales Rule (TSR). Specifically, the FTC’s comment advises the FCC to limit permitted robocalls to only (i) those relating to debts in default status; (ii) persons who actually owe the debts; (iii) those relating to the collection of the government debt; and (iv) collection purposes exclusively. In addition, the FTC’s comment on the NPR suggests that the FCC (i) maintain reasonable security practices over the data collected during covered robocalls; (ii) limit robocalls to the hours of 8:00 am to 9:00 pm; and (iii) require covered callers to “transmit caller ID information that includes a caller number that connects to a live agent representing the debt collector.”

    FTC TCPA Debt Collection FCC Telemarketing Sales Rule Agency Rule-Making & Guidance

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  • State AGs Urge Senate to Pass Bill Banning Debt Collection Robocalls

    Consumer Finance

    On February 10, Indiana Attorney General Greg Zoeller and Missouri Attorney General Chris Koster, along with 23 other state attorneys general, wrote to the Senate Committee on Commerce, Science, and Transportation (Committee) urging it to pass legislation repealing a recent amendment to the Telephone Consumer Protection Act (TCPA) that allows debt collection robocalls to consumers’ cellphones. According to the AGs’ letter, the TCPA currently “permits citizens to be bombarded by unwanted and previously illegal robocalls to their cell phones if the calls are made pursuant to the collection of debt owed to or guaranteed by the United States.” The letter references the FCC’s efforts to slow the proliferation of robocalling and calls the recent amendment to the TCPA a “step backward in our law enforcement efforts” to protect consumers from “unwanted and unwelcome robocalls.”

    TCPA State AG Debt Collection FCC U.S. Senate

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