WASHINGTON (Legal Newsline) - As courts are asked to provide guidance on the future of a federal telemarketing law that was written before the cell phone era, a House subcommittee is hearing suggestions on how to modernize it.
On June 13, the Subcommittee on the Constitution and Civil Justice heard testimony during a hearing titled “Lawsuit Abuse and the Telephone Consumer Protection Act.” The TCPA was enacted in 1991 and provides statutory penalties for those called without permission, though some plaintiffs and their attorneys have been accused of manipulating it for financial gain.
One woman has even admitted to collecting more than 30 phones with reassigned numbers in order to bring TCPA lawsuits.
“At the time of its passage, the TCPA was a sensible legislative response to consumers and businesses who were overwhelmed by unwanted calls and faxes,” said the subcommittee’s chair, Republican Steve King of Iowa. “But with advances in technology, government regulators have struggled to interpret the TCPA’s antiquated language to new situations.
“An increasing amount of regulations and court interpretations has produced a lack of clarity that is empowering plaintiffs attorneys to sue companies that are contacting their customers for legitimate reasons.”
Testifying were Rob Sweeney, founder and CEO of Mobile Media Technologies; Becca Wahlquist, a TCPA defense attorney at Snell & Wilmer; Hassan Zavareei, partner and plaintiffs attorney at Tycko & Zavareei; and Adonis Hoffman, founder of Business in the Public Interest.
To Hoffman, TCPA stands for “Total Cash for Plaintiffs Attorneys.” He feels a cap should be placed on the amount of damages a TCPA defendant can be ordered to pay and that a safe harbor provision should be added for companies that substantially comply with the law.
“In 2015, the (Federal Communications Commission) noted that it has sought to reasonably accommodate individuals’ rights to privacy as well as a legitimate business interest of telemarketers and other callers,” Hoffman said.
“But all is not well. Somewhere along the line, the balance that was originally intended shifted from business concerns and consumers into the hands of plaintiffs lawyers.”
The FCC is tasked with interpreting the TCPA. Currently, ACA International (the trade group for collection agencies and related companies) is appealing an FCC decision regarding what happens when a company calls the number of a debtor only to later find the number has been reassigned to another individual who is suing it.
In October, the U.S. Court of Appeals for the District of Columbia heard oral arguments.
The FCC issued a decision in July 2015 that created a one-call exemption. After that first call to the new holder of the number, the caller is subject to TCPA liability for any subsequent calls.
A series of Legal Newsline articles has chronicled plaintiffs alleged to have collected as many of these calls as possible for the purpose of filing suit. AT&T has claimed Kirby Spencer, who files his lawsuits in Nevada federal court, bought 15 cheap cell phones to start his career as a TCPA professional plaintiff.
Spencer sued AT&T over a text it was attempting to send to the previous owner of the number. That owner had signed up for emergency texts from AT&T’s home security system. He sought $2.7 million in damages after waiting for texts to accumulate, the company claimed.
Ultimately, the case settled. His case against Kohl’s, one of 19 he filed from 2012-2014, has been stayed while the D.C. Circuit makes its decision on reassigned numbers.
In New Jersey, TCPA defendants are waiting on another decision involving an alleged professional plaintiff – a Polish immigrant who has filed 31 lawsuits and collected $800,000 doing so, according to one of his targets.
FDS Bank has fought the lawsuit filed by Jan Konopca on the grounds that he doesn’t possess standing to sue over any calls. If he undertook a scheme to be called by debt collectors and was successful, then he was never harmed, the argument goes.
It was previously successful in Pittsburgh federal court after plaintiff Melody Stoops admitted that she bought more than 30 phones and used Florida area codes because she felt they gave her a better chance to be contacted by debt collectors looking for other people.
Zavareei, the plaintiffs lawyer at the subcommittee hearing, said corporate interests are behind the push to change the TCPA at the expense of the American public.
“The TCPA has succeeded in keeping invasive telemarketing at bay, and some businesses don’t like that,” Zavareei said.
His submitted testimony says nothing stops companies from communicating with consumers who have given their consent to being called. Also, the TCPA has exceptions for emergency calls and texts regarding the health and safety of the person being contacted.
“Despite the rhetoric of its opponents, the TCPA is narrowly crafted,” Zavareei wrote. “And most legitimate businesses know the rules and are playing by them. That is because of the potentially high cost of violating the law – which has successfully deterred unlawful conduct.
“If Congress takes away those guardrails, the current deluge of calls and texts will multiply exponentially.”
The “high cost” mentioned by Zavareei goes beyond the $500 penalty per call that can be tripled in some instances. To defend against a lawsuit that is certified as a class action, it takes approximately $500,000 in attorneys fees and court costs to go to trial.
Beyond suits that are filed, Wahlquist testified that some of her clients receive up to 50 demand letters per month. Wahlquist appeared on behalf of the U.S. Chamber Institute for Legal Reform, which owns Legal Newsline.
Her testimony details several proposed changes to the TCPA, such as:
-Changing the statute of limitations from four years to one year;
-Affirmative defenses to protect businesses working in good faith to comply with the TCPA;
-Only calls made by an autodialer can be actionable;
-Phone owners with reassigned numbers must notify the caller that it has called the wrong person; and
-A focus on actual “bad actors” instead of companies trying to reach consumers for legitimate business purposes.
From Legal Newsline: Reach editor John O’Brien at email@example.com.