Phone number collectors launch alleged bogus suits

Parley

Telecom services companies and their representatives met with a group of plaintiff’s lawyers in June as they aired grievances before the House Subcommittee on the Constitution and Civil Justice. At issue in the hearing, titled “Lawsuit Abuse and the Telephone Consumer Protection Act,” were purported abuses of the TCPA by plaintiffs who sought to monetize provisions in the Act.

Hit and Run

Rob Sweeney, founder of Mobile Media Technologies (MMT), a Kansas City-based company that enables its clients to broadcast noncommercial texts to the client’s subscribers, gave testimony. Schools, media companies and hospitals are among just some of MMT’s clients.

Sweeney testified that plaintiffs–most likely spurred on by lawyers eager for a big payout–had been empowered to launch unfair lawsuits against his clients, using a recent tweak to the TCPA.

Sweeney dated the beginning of his troubles to a July 2015 declaratory ruling order by the Federal Communications Commission that broadened TCPA rules. Anyone receiving text messages could use any reasonable means to revoke their prior consent to be texted, making future texts unlawful. According to Sweeney, the DRO made it very easy for consumers to drop out of a text program and then file a complaint under the Act upon receiving another text. While the lawsuits that Sweeney described were against his clients, he claimed that MMT had suffered from the change in policy since many of his customers opted out of his company’s text services to avoid legal trouble.

Plaintiffs’ underlying motivation became clear, he maintained, when he examined the actual circumstance of the plaintiffs’ engagement with his service. According to Sweeney, plaintiffs were signing up multiple phone numbers using multiple derivations of their names, and then opting out of the service after only a few texts–knowing full well that MMT’s clients could not turn off the service fast enough to avoid a repeat text. “The entire exercise,” Sweeney maintained, “…was nothing more than a shake down.”

The Cure?

In response to abuses of the kind outlined by Sweeney, the U.S. Chamber Institute for Legal Reform proposed a number of changes to the TCPA that would soften its impact on companies like MMT, including:

• Implementing a statute of limitations on TCPA cases, thereby shortening the default four-year period to one year;

• Expanding the applicability of affirmative defenses to protect companies attempting in good faith to comply;

• Interpreting the “capacity” of an autodialer according to the text of the statute, thereby limiting causes of action to devices that have the actual ability to randomly/sequentially dial telephone numbers;

• Including a safe harbor for businesses that sent texts to reassigned or wrongly provided numbers; and

• Reforming the law to focus on intentional fraud rather than on companies trying to contact their consumers for legitimate business purposes; to reconsider the cell phone carve-out and to address new technologies, such as test messaging.

Overwhelming Need

Hassan Zavareei, a plaintiff’s lawyer, argued against changes to the TCPA. He noted that the Act–including the 2015 ruling–already included ample protections for businesses by creating a blanket defense against any TCPA action: consent.

The broad definition of consent, he claimed, could require nothing more than the consumer’s provision of his or her phone number to a company. Thus, there was plenty of latitude for companies to obtain customers, as long as those customers’ wishes to cease receiving text messages are honored.

Additionally, according to Zavareei, many of the objections lodged by proponents of changes to the Act were dubious. For instance, a common objection was that the TCPA had been created to punish illegitimate businesses, and that these provisions, when applied on a broad scale, punished legitimate companies that were attempting to contact existing customers. But, Zavareei maintained, the Act was specifically engineered to place limits on ALL companies, legitimate or not, to end the inconvenience of massive robocalling programs.

He also noted that TCPA cases amounted to a tiny sliver of total federal cases filed and that the number of TCPA filings had decreased during the prior year.

The Takeaway

Congress has been put on notice by both business and consumer advocates regarding perceived problems with the TCPA. While it remains unclear how, or whether, Congress will respond, companies that engage in large-scale telemarketing campaigns should pay close attention to possible changes to the TCPA.