MBA, Trade Groups Petition FCC on ‘Auto-Dialing’ Definition
The Mortgage Bankers Association and 15 other industry trade groups joined the U.S. Chamber of Commerce in a petition to the Federal Communications Commission, asking for a declaratory ruling on the Telephone Consumer Protection Act’s definition of Automated Telephone Dialing Systems, also known as “auto-dialing” or “robo-calling.”
The petition (http://mba-pc.informz.net/mba-pc/data/images/ATDS Petition for Declaratory Ruling (As Filed).pdf) comes after a recent D.C. Circuit Court decision in ACA International v. FCC, where the FCC’s classification of an ATDS was characterized as “an unreasonably expansive interpretation of the [TCPA].” The ruling largely vacated a 2015 FCC interpretation on use of auto-dialers to call cell phones, in which the FCC said any device capable of making an automated call was subject to TCPA, whether or not that capability was being used.
The issue is sensitive for businesses, who have argued that TCPA, designed to go after abusive telemarketing practices, is casting too wide a net, putting legitimate communications efforts by, for example, mortgage lenders and servicers, under threat of penalties.
The petition argues that the TCPA, enacted by Congress in 1991 to stop abusive cold-call telemarketing and fax-blast spamming, has been improperly expanded many times.
“The TCPA landscape is dysfunctional and in need of clarity from the FCC,” the petition said. “The statute, originally intended to target a specific abusive telemarketing practice, has been expanded by courts and the FCC, turning it into a breeding ground for frivolous lawsuits against legitimate businesses trying to communicate with their customers. As a result, TCPA litigation has skyrocketed, harming businesses large and small, with no clear benefit to consumers.”
The petition argues that the FCC’s implementation of TCPA and numerous court decisions over the years have fostered a “whirlwind of litigation,” not against abusive callers and scammers, but against legitimate businesses attempting to lawfully communicate with their customers.
“Interpretations by the courts and the FCC have strayed far from the statute’s text, Congressional intent and common sense,” the petitioners said. “The TCPA has turned into a breeding ground for frivolous lawsuits brought by serial plaintiffs and their lawyers who have made lucrative businesses out of targeting legitimate U.S. companies. The focus of these lawsuits often is not on unscrupulous scam telemarketers. Instead, plaintiffs pursue marginal or technical violations in the hope of large judgments.”
For example, a group of fans sued the Los Angeles Lakers for sending text messages confirming receipt of fan-originated texts. Similarly, a ride-sharing service was sued for texts confirming receipt of ride requests. And Mammoth Mountain Ski Area was sued for calling a group of litigants who had previously provided consent.
“The TCPA has become a major obstacle for American businesses seeking to communicate with consumers,” the petition said. “Ultimately, consumers are hurt the most, as the costs of these lawsuits lead to increased prices for goods and services.”
The petition also noted the amount of TCPA litigation has “exploded;” under one analysis, the number of TCPA lawsuits increased from 2,127 in the 17 months prior to the FCC’s 2015 Omnibus Order to 3,121 in the 17 months after the Order.
Statutory damages unrelated to actual harm have also increased. TCPA sets damages at a minimum of $500 per communication (call, text or other). In notable litigation, Ocwen Financial in 2017 settled two TCPA cases for $17.5 million.
“The scope of the law has expanded, greatly increasing compliance costs and reaching technologies that were not commercially deployed in 1991, such as text messages,” the petition said. “And even if these lawsuits are frivolous, they still take time and money to defend. More litigation means more resources a company must divert from its core functions. Further, for small businesses the threat of a TCPA lawsuit with its uncapped statutory damages can spur questions of bankruptcy and place crippling distress on an owner. The result has been a boondoggle for plaintiffs’ lawyers.”
The petition asks for several remedies:
“First, the Commission should confirm that to be an ATDS, equipment must use a random or sequential number generator to store or produce numbers and dial those numbers without human intervention,” the petition said. “This straightforward interpretation flows from the functions of an ATDS outlined in the TCP A. The Commission should also make clear that these functions must be actually-not theoretically-present and active in a device at the time the call is made.”
The petition also asks that the FCC clarify that “if human intervention is required in generating a list of numbers to call or in making a call, then the equipment in use is not automatic and therefore not an ATDS. Adopting this interpretation follows the statutory text and would provide clarity to businesses seeking to reach their customers.”
