Proactive Changes to the TCPA – It’s All about Communication

1. Proactive Changes to the TCPA – It’s All about Communication Balaji “Raj” Rajan, Ceannate Corp James Schultz, The Sessions Firm Timothy Fitzgibbon, NCHER

2. The Telephone Consumer Protection Act How Did We Get Here And Where Are We Headed? James Schultz

3. TCPA Prohibitions • Passed in 1991, the TCPA generally has 4 distinct requirements: • Prohibits sending unsolicited fax advertisements • Prohibits making telemarketing calls to landlines with a pre-recorded or artificial voice • Prohibits making calls to cellular or wireless phones without prior express consent and with either an automatic telephone dialing system or pre-recorded or artificial voice • Creation of a “Do No Call” List 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

4. Frequently Disputed Issues What is an ATDS? Are the calls I am making subject to the TCPA? Was there consent for the call? So what? What are the available damages under the TCPA? 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

5. Technical Definition of an ATDS • The TCPA specifically defines an ATDS as: • “equipment which has the capacity to store or produce telephone numbers to be called, using a random or sequential number generator, and to dial such numbers. 47 U.S.C. 227(a)(1) • What does that mean? 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

6. Dialer capacity and affect of FCC’s rule making FCC has broad discretion to enact implementing regulations and uses this authority to fundamentally alter statutes.  Initially, the FCC had concluded that calls to collect debts were not made with an ATDS.  In 2003, the FCC flip-flopped, and concluded predictive dialers were covered.  The new focus became on “human intervention” rather than capacity to store or produce numbers. Effect has been to significantly broaden the types of calls that are now subject to the TCPA – calls with theoretical “capacity” or calls made without direct human intervention might be covered. 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

7. Do various calling services fit within TCPA’s coverage? Text messages VoIP Call forwarded to cell phones 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

8. Preview dialing – how much human interaction is needed • The FCC has been very broad in defining equipment as an "automatic telephone dialing system" (ATDS) and has basically stated that if the dialer has the capacity to make calls without human intervention, it is an ATDS.  More significant, the FCC stated "the purpose of the requirement that equipment have the capacity to store or produce telephone numbers to be called is to ensure that the prohibition on autodialed calls not be circumvented."  In the Matter of Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, 18 F.C.C.R. 14014, Para. 132 (2003). 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

9. Preview dialing – how much human interaction is needed • How will the court resolve the use of a preview dialing mode?  There are 2 options - the focus can either be on: • the reality of how the equipment was being used (with human intervention), or • the capacity of the equipment (calls can still be made without human intervention, though not as operated).  Clearly, if the focus is on how the equipment is being used, the Dynamic Preview application would exempt the calls from the TCPA as they are being made with human intervention.   But because the calls are made through a dialer, there is still the capacity to make calls without human intervention so that the calls could be covered by the TCPA.  Though not directly on point, the reported cases generally focus only on capacity. 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

10. What is Prior Express Consent If the number is provided by the customer to the creditor, there is prior express consent Consent must be in writing if making telemarketing calls If you are sued, you need to prove there was consent 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

11. Is The Consent Good Enough? Spouse provides the number Ported numbers Inherited numbers 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

12. Can Consent Be Withdrawn?Yes, No or Maybe So • 3 approaches • Consent can be withdrawn by the consumer at any time and in any fashion • Consent can be withdrawn in writing only • Consent cannot be withdrawn 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

13. Examples of the explosion of TCPA claims and settlements • Alliance One • Sallie Mae • Jiffy Lube • Bank Of America • Wells Fargo • Fifth Third Bank • Discover • JP Morgan Chase • Steve Madden • ADT • Papa John’s • Domino’s • Google 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

14. How Can You Protect Yourself? Scrub Call manually Do Not Leave Messages Obtain consent through agreement with consumer Obtain and document verbal consent Vendor solutions 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

15. A Study on the Borrower Impact of the TCPA Balaji “Raj” Rajan

16. 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

17. Study Findings • Student borrowers under the age of 49 years hold over 83 percent of all student loans. • The most recent report from the Centers for Disease Control study (National Health Interview – National Center for Health Statistics released June 2013) documents that 54.1 percent of all American households now are exclusively or predominantly wireless. 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

18. Study Findings • Approximately 27 percent of student loan borrowers in repayment are delinquent on their loans – the vast majority of which never speak to their student loan servicer. If contacting them were easier, most students could receive help entering Income Based Repayment (IBR) or Pay As You Earn (PAYE) plans. However, it is impossible to timely contact all borrowers needing these important services without the appropriate use of technology. • Unnecessary defaults impose significant costs to taxpayers. Estimates suggest that defaulted loans cost as much as 25 cents for every dollar borrowed. 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

19. Study Findings • In FY 14, an estimated 1.3 million borrowers will default on their student loans, in large part because their servicers are unable to use modern technology to contact them and provide counsel on the many available options to avoid default. Nearly 12 million borrowers could avoid the pitfalls of default over the next ten years if their servicers could use autodialing technology to reach them on their wireless devices. • As the number of wireless households increases, and the corresponding ability to efficiently contact borrowers on their cell phones declines, recoveries of defaulted loans could drop by nearly $26.5 billion over the next ten years. 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

20. Study Findings • Modifying the TCPA will allow the Federal government and its agents to use automatic dialing systems when contacting wireless phones in the servicing and collection of debt owed to or guaranteed by the United States and will increase collections by $41.3 billion and the number of borrowers serviced by 7.9 million. All existing consumer protections will remain in place to safeguard consumers’ rights and privacy. The U.S. Departments of Education and Treasury support this position. • There are 5.9 million student loan borrowers currently in default status. Given that total student loan indebtedness has grown by 70 percent since 2008, this number is expected to increase without action and, conversely, could decrease significantly if the appropriate modifications are made to the TCPA. 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida

21. Questions? 2013 Knowledge Symposium November 5-7, 2013 ● St. Pete, Florida