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Attorney points to award structure for rise in TCPA lawsuits

By Jessica M. Karmasek | Feb 19, 2015

WASHINGTON (Legal Newsline) - In the last few years, the number of Telephone Consumer Protection Act lawsuits has increased significantly, and one Washington, D.C., attorney contends it’s the award structure attached to it that attracts many would-be filers.


Steve Augustino, a partner at Kelley Drye & Warren LLP, said the rise started in 2011 or so.


“It’s a combination of things,” he said of the cause for the noticeable boost. “But the statute definitely has an enticing award structure on it.”


The TCPA restricts telephone solicitations, i.e. telemarketing, and the use of automated telephone equipment.

In particular, the law limits the use of automatic dialing systems, artificial or prerecorded voice messages, SMS text messages and fax machines. It also specifies several technical requirements for fax machines, autodialers and voice messaging systems -- principally with provisions requiring identification and contact information of the entity using the device to be contained in the message.


The law provides statutory damages, generally from $500 to $1,500 for each violation.


“That’s $500 per fax, call, text, etc.,” noted Augustino, who focuses his practice on telecommunications and enforcement matters.


“So any major brand that’s conducting a campaign sends a very large number of these -- hundreds of thousands. Now, imagine $500 times those hundreds of thousands.


“It gets very big very quickly.”


Then factor in the publicity, he said.


“This leads to a number of big dollar settlements, which garner more publicity,” Augustino explained. “So people start finding out. They see the dollar signs.”


Another driver is technology itself, he said.


Companies are becoming more sophisticated in their use of telemarketing, autodialer and text message marketing campaigns.


And with that increased use comes more risks, including the potential for more class-action lawsuits.


Now those lawsuits, and questions over the statute, are flooding the Federal Communications Commission, said Augustino, who is part of a team at Kelley Drye that is currently tracking the number of active TCPA petitions before the FCC.


The FCC is tasked with regulating interstate and international communications by radio, television, wire, satellite and cable. An independent government agency overseen by Congress, the commission is the country’s primary authority for communications law, regulation and technological innovation.


According to the firm’s tracker, those petitions are on the rise.


As of Feb. 10 -- the last time the firm’s tracker was updated -- 28 petitions were pending, plus another 35 that are seeking a retroactive waiver of the opt-out requirement for fax advertisements.


“The litigation is generating petitions to the FCC,” Augustino explained. “One of the parties decides to go to the FCC to seek clarification, and then we have a flood of petitions.”


A vast majority of the petitions focus on consent, he said.


For example, in a case decided last March, the question was over group texting and express consent.


GroupMe, a mobile group messaging app owned by Microsoft, petitioned the FCC, asking what if a service, such as its own, sends out a text to a group of individuals, but doesn’t have direct relations with those individuals? Do those recipients give consent indirectly to the company that sends out the text?


“Yes, that counts in certain instances,” Augustino said of the commission’s ruling.


A similar question was raised in another case, also decided last March.


The Cargo Airline Association, which represents members of the all-cargo air carrier industry, such as FedEx, UPS and DHL, petitioned the FCC, asking for clarification on delivery notifications sent to package recipients.


The CAA questioned whether a carrier has consent from the recipient to send a text to or call that recipient’s cell phone when a package is delivered.


The FCC, in its ruling, said package delivery companies are allowed to alert wireless consumers about their packages -- as long as consumers are not charged and may easily opt out of future messages if they wish, among other conditions.


“The underlying problem, it seems, in all of this, is that we’re shifting to mobile world,” Augustino noted. “So the restrictions about calling to cell phone numbers has become much more prominent these days.”


Roughly 40 percent of households are cell phone-only now, he noted. On top of that, cell phone technology itself has changed, and most plans are unlimited -- calling and texting.


“Those changes are driving a lot of these cases,” Augustino said.


“We’re seeing it across all industries and companies. Whatever business you run, chances are high you’re dealing with customers with cell phones. And that means you have to work through a different set of regulations now.”


From Legal Newsline: Reach Jessica Karmasek by email at

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