SLSA Private Loan Committee Meeting : TCPA Developments

1. SLSA Private Loan Committee Meeting:TCPA Developments Kelly Lipinski klipinski@mcglinchey.com (216) 378-4969

2. Telephone Consumer Protection Act • What does it apply to? • Automatic telephone dialing systems • Artificial or prerecorded messages • Calls to landlines • Calls to cell phones • Who does it apply to? • Anyone

3. Telephone Consumer Protection Act • TCPA defines “automatic telephone dialing system” as: • 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. • As long as the equipment has the capacityto perform both functions, it is considered to be an “automatic telephone dialing system” for TCPA purposes, even if the function is not used.

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

5. 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.

6. 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.

7. 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.

8. 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.

9. 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.).

10. 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?

11. 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.

12. 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.

13. 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.

14. 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).

15. 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.

16. FCC Rulings • GroupMe/Skype - filed March 1, 2012 • Requests the FCC to clarify that a wireless subscriber may consent to receive non-telemarketing, 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.

17. FCC Rulings • On March 27, 2014, FCC granted limited relief to GroupMe. • Prior express consent may be obtained through and obtained by an intermediary. • A text-based social network may send an administrative text confirming recipient’s interest in joining group when the recipient gives prior express consent to an intermediary. • The network remains liable for TCPA violation when consent was not obtained.

18. FCC Rulings • 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 non-telemarketing 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.

19. FCC Ruling • On March 27, 2014, the FCC granted Cargo Airline Association’s request. • Package delivery company may alert a wireless consumer that a package has been delivered, provided the consumer is not charged and may easily opt-out of future messages. • Very limited, industry specific relief.

20. FCC: “Time to Provide Clarity” • Michael O’Reilly, FCC Commissioner blog post on March 25, 2014 • Troubling that legitimate companies feel they have to ask the government for its blessing every time they need to make a business decision to avoid litigation. • Call to balance the need to hold bad actors accountable but not subject good actors and innovators to needless actions or lawsuits that discourage new communication services.

21. State Efforts to Regulate Technologies • Primarily focused on telemarketing and telephone solicitations. • Regulate use of ATDS technology. • Permits • Substantive requirements • Not preempted by TCPA.

22. Questions?