Telephone Consumer Protection Act Advocacy Update

1. Telephone Consumer Protection Act Advocacy Update 2014 National Council of Higher Education Resources (NCHER) Knowledge Symposium – November 4, 2014 Jason Goldman Senior Telecommunications Policy Counsel and Managing Director Environment, Technology & Regulatory Affairs Division U.S. Chamber of Commerce

2. Background on the Telephone Consumer Protection Act (TCPA)

3. TCPA Was Passed 23 Years Ago • In response to complaints about unwanted phone calls, especially during dinner time, Congress passed the Telephone Consumer Protection Act (TCPA) in 1991. • “Computer telephone calls are invading our homes and destroying our privacy….They wake us up in the morning; they interrupt our dinner at night; they force the sick and elderly out of bed; they hound us until we want to rip the telephone right out of the wall. These machines are out of control….[I]t has got to stop.” – Sen. Ernest “Fritz” Hollings (D-SC) Source: 137 Cong. Rec. S16204 at *S16205‐ S16206, 1991 WL 229525 (Nov. 7, 1991) (Remarks of Sen. E. Hollings)

4. How Technology Looked in 1991 At the time the TCPA was passed, cellphones resembled bricks and were often connected to a bag. Wireless phones were a luxury item and the landline was the dominant consumer telecommunications device.

5. TCPA Restrictions on Calls to Cell Phones Thus, certain restrictions in the TCPA are only applicable to calls made to cell phones. Specifically, the TCPA prohibits the use of an automatic telephone dialing system (ATDS) to call or send texts to mobile phones without the consent of the recipient.

6. TCPA Restrictions on Calls to Cell Phones SEC. 227. [47 U.S.C. 227] RESTRICTIONS ON THE USE OF TELEPHONE EQUIPMENT (b) Restrictions on use of automated telephone equipment (1) Prohibitions – It shall be unlawful for any person within the United States, or any person outside the United States if the recipient is within the United States– (A) to make any call (other than a call made for emergency purposes or made with the prior express consent of the called party) using any automatic telephone dialing system or an artificial or prerecorded voice– (iii) to any telephone number assigned to a paging service, cellular telephone service, specialized mobile radio service, or other radio common carrier service, or any service for which the called party is charged for the call.

7. TCPA Restrictions on Calls to Cell Phones SEC. 227. [47 U.S.C. 227] RESTRICTIONS ON THE USE OF TELEPHONE EQUIPMENT (continued) (a) DEFINITIONS. – 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.

8. Statutory Damages for TCPA Non-Compliance TCPA provides that a consumer can receive $500 per call for a negligent violation and up to $1500.00 per call for a willful violation. Damages are assessed per call or text message. The TCPA does not include a cap on statutory damages.

9. Why Does the TCPA Need to be Updated?

10. Wireless Usage has Changed Dramatically In today’s mobile world, consumers expect and demand important information instantly no matter when or where they are located. There have been more U.S. wireless subscribers than residents since 2011, according to CTIA-The Wireless Association.

11. Wireless Usage has Changed Dramatically • According to a recent CDC National Center for Health Statistics' report, in the second half of 2013: • 41.0% of U.S. households were “wireless-only.” • An additional 16.1% were “wireless-mostly” (i.e., the household has a landline but receives all or most calls on a wireless phone). • Thus, 57.1 percent of U.S. households rely either exclusively or predominantly on wireless telephone service. Source: Stephen J. Blumberg & Julian V. Luke, Div. of Health Interview Statistics, Nat’l Ctr. for Health Statistics, Centers for Disease Control and Prevention, Wireless Substitution: Early Release of Estimates From the National Health Interview Survey, July–December 2013, at 1 (July 2014).

12. TCPA Litigation is Surging At the time the TCPA was created, its sponsor, Sen. Hollings explained the law was intended to facilitate actions in state small claims courts, which involve smaller sums and often do not require (or even allow) the participation of attorneys. But today, TCPA cases are anything but small. Trial lawyers have used the law to file large class action lawsuits.

13. TCPA Litigation is Surging The defendants in these cases are no longer just abusive telemarketers. They are businesses, big and small alike, forced to decide whether to reach a settlement with the plaintiff’s counsel or to accept the risk and spend significant resources defending itself against an action where the alleged statutory damages may be in the millions or even billions of dollars.

14. TCPA Litigation Statistics • 1,908 TCPA lawsuits have been filed in 2014 (as of 9/30), an increase of 29.9% over the same period last year. • 24 (13.6%) of the 193 TCPA lawsuits filed in September 2014, were class actions. Source: Debt Collection Litigation & CFPB Complaint Statistics, September 2014, WebRecon LLC, Oct. 17, 2014, available at http://dev.webrecon.com/debt-collection-litigation-cfpb-complaint-statistics-september-2014/; and Debt Collection Litigation & CFPB Complaint Statistics, December 2013 & Year in Review, WebRecon LLC, Jan. 22, 2014, available at http://dev.webrecon.com/debt-collection-litigation-cfpb-complaint-statistics-december-2013-year-in-review/.

15. TCPA Litigation Statistics

16. Current Status of Advocacy for TCPA Update

17. TCPA Advocacy Update • As wireless devices and services become even more prevalent in our society and TCPA litigation continues to skyrocket, we have seen more and more petitions (currently over 50) filed at the FCC seeking clarification by the agency of its TCPA rules. • Examples of common issues raised in the petitions: • Definition of autodialer; • Definition of capacity (hypothetical vs. current); • Definition of called party; and • Reassigned/wrongly dialed numbers.

18. TCPA Advocacy Update • At the FCC and on Capitol Hill, the Chamber has argued the FCC should issue clarifying rules and, if necessary, commence a rulemaking proceeding. • In the short term, the FCC needs to act to: • Bring regulatory certainty to the business community; and • Stem the tsunami of class action TCPA lawsuits driven not by aggrieved consumers, but by the opportunist plaintiffs’ firms taking advantage of uncertainty in the law to rake in attorney fees. • In the long term, statutory changes to the TCPA are necessary.

19. Additional Resources U.S. Chamber TCPA Web page. https://www.uschamber.com/issue-brief/telephone-consumer-protection-act-tcpa. U.S. Chamber Institute for Legal Reform paper on TCPA litigation: http://www.instituteforlegalreform.com/resource/the-juggernaut-of-tcpa-litigation--the-problems-with-uncapped-statutory-damages/

20. Jason GoldmanSenior Telecommunications Policy Counsel and Managing Directorjgoldman@uschamber.com202.463.5949 Visit our website at www.uschamber.com/etra and Follow us on Twitter@Regulations

21. TCPAThe Politics, The Players, and The Path ForwardNovember 4, 2014

22. TCPA: Define the Debate for Education Vertical • Today it’s “collectors versus student borrowers”, it needs to be “student borrowers versus harmful regulation” • If we can reach student borrowers, we can help them avoid default and preserve their credit worthiness; it is important to the economy that these emerging consumers are not financially crippled • Block and tackle at the grassroots level by educating your congressional representatives • Use facts and data to dispel myths and redefine the debate • Engage in Washington with the Administration and Federal agencies

23. TCPA: The Politics • Challenging… because it’s uncomfortable and does not lend itself to public support. • Radioactive… because some policymakers are [successfully] exploiting the issue for electoral gain. • Driven by anecdote… because too few people have the data to assess whether what they are hearing in the media and elsewhere is myth or fact.

24. TCPA: The Politics Bottom line: In a risk averse Congress, you are asking policymakers to take a chance. It is good policy to modify the TCPA but it is not seen as good public relations… at least for the moment.

25. TCPA: The Players • Congress: Balancing Policy and Politics • Administration: Some For, Some Against • NGOs:United in Message • Media: The Everyman Perspective

26. TCPA: The Players / Congress Congress: Balancing Policy and Politics • While they are concerned about backlash from consumer groups, some members of Congress recognize the importance of modifying TCPA and have communicated with Administration officials through letters, phone calls and the committee process.

27. TCPA: The Players / The Administration The Administration: Some For, Some Against • Office of Management and Budget • The president’s last three budget submissions have included a TCPA modification proposal • Federal Communications Commission • Department of Treasury • Department of Education’s Federal Student Aid Office • Consumer Financial Protection Bureau

28. TCPA: The Players / NGOs NGOs: United in Message • In April 2013, the National Consumer Law Center opened its “Recommendations to the CFPB Regarding Debt Collection Problems” with the following: “On a daily basis the attorneys with whom we work assist consumers who have been victimized by unfair, deceptive and abusive debt collection practices. The effects of these debt collection abuses on people take a terrible toll: stress, threats to employment, fear, lost or stolen funds from bank accounts, frustration and the embarrassment. The raw emotional toll from the constant and horrendous harassment by debt collectors is simply appalling.” • The Fact on TCPA: All existing consumer protections would remain in place to safeguard consumers’ rights and privacy.

29. TCPA: The Players / The Media Media: “The Everyman Perspective” • Fact checking is marginal at best • Editorial and news pages blurred • It’s about speed and getting eyeballs • Bad news sells better than good news

30. TCPA: The Players / The Media • “The monthly payment burden faced by student loan borrowers stayed about the same or even lessened between 1992 and 2010.” [Beth Akers and Matthew M. Chingos, Brookings, “Student Loan Update: A First Look at the 2013 Survey of Consumer Finances”, September 8, 2014] • “The value of loans in default is a constant 9 percent of all outstanding federal student loans in 2006, 2013 and 2014.” [Jason Delisle, director of the Federal Education Budget Project at the New America Foundation, “Was there a Student Loan Crisis in 2006?”, October 1, 2014]

31. TCPA: Why Engage? New Members and Key Committee Leadership Expected in 2015 • Senate HELP/House Education & Workforce Committees • Tom Harkin (D-IA) retiring; Patty Murray (D-WA) likely successor • George Miller (D-CA) retiring; Bobby Scott (D-VA) likely successor • Senate Banking/House Finance Committees • Tim Johnson (D-SD) retiring; Sherrod Brown (D-OH) likely successor • Either Richard Shelby (R-AL) or Mike Crapo (R-ID) • Reps. Jeb Hensarling (R-TX) and Maxine Waters (D-CA) likely to remain atop House Financial Services • Senate Commerce/House Energy & Commerce Committees • Jay Rockefeller (D-WV) retiring; Bill Nelson (D-FL) likely successor • Henry Waxman (D-CA) retiring; Frank Pallone (D-NJ) or Anna Eshoo (D-CA) is likely successor

32. TCPA: Why Engage? • Public opinion matters • Influence policy debate/development • Be a resource for policymakers who are getting conflicting information • Talk about this issue in terms of financial counseling for student borrowers • Create a sense of urgency to act