A debt collector’s autodialed calls to a reassigned cellular telephone number violate the Telephone Consumer Protection Act (TCPA) unless the current subscriber to that number has consented to the calls, the Seventh Circuit has ruled. In its decision in Soppet v. Enhanced Recovery Company, LLC, issued on May 11, 2012, the Seventh Circuit held that a prior subscriber’s consent does not serve as “the prior express consent of the called party” required by the TCPA for autodialed, non-emergency calls to cell phone numbers.
The Seventh Circuit agreed to hear the issue after the district judge certified it for interlocutory review in the plaintiffs’ class action case (which followed the judge’s certification of a class with the plaintiffs as its representatives). The Seventh Circuit’s decision is the first by a federal appellate court on the issue, with the court noting in its opinion that the absence of appellate court authority was a major factor in its decision to hear the appeal.
The Seventh Circuit found no support in the TCPA’s language or “the way the law understands consent” for the debt collector’s argument that the court should equate the consent of the “called party” with the consent of the call’s “intended recipient.” In addition, the court was unmoved by the debt collector’s argument that the plaintiffs’ reading of “called party” would make the use of autodialers more risky and thereby increase the cost of debt collection, resulting in higher prices overall. As support for its argument, the debt collector had noted the population’s shift from landline to cell phone use and the portability of phone numbers (such that numbers previously used to reach landline phones can result in cell phone calls).
In its opinion, the Seventh Circuit provided various options available to debt collectors that would allow them, consistent with the court’s reading of “called party,” to continue to use autodialers permissibly. Such options included having a live person make the first call and then switch to an autodialer after verifying that the cell phone number was still assigned to the person who provided consent and using a reverse lookup to identify the current subscriber.
The Seventh Circuit also noted the 2008 TCPA order issued by the Federal Communications Commission in which the FCC concluded that provision of a cell phone number to a creditor as part of a credit application can evidence the consumer’s “prior express consent” to be contacted at that number by a debt collector. However, the court stated that it did not “get” the debt collector’s argument that the FCC’s order was conclusive support for the collector’s position, finding that the FCC’s order addressed only the meaning of “express consent” and not the meaning of “called party.”
We are disappointed that the Seventh Circuit did not reach the same result the 11th Circuit did in Meadows v. Franklin Collection Service, Inc., where the 11th Circuit held that a call made to the prior owner of a residential telephone number did not violate the TCPA when answered by the number’s current owner. (For more on Meadows, see our prior legal alert.)
We continue to see a high volume of class actions against companies alleging TCPA violations. In part, this is because the penalties are draconian. Violations can yield damages equal to a minimum of the greater of $500 or actual damages per violation, triple damages for willful violations, and unlimited class action liability.
Alan S. Kaplinsky is a senior partner in the Business and Finance Department at Ballard Spahr LLP and Chair of the Consumer Financial Services Group. He is also a member of the Higher Education, Mortgage Banking, and Bank Regulation and Supervision Groups.
Ballard Spahr’s Consumer Financial Services Group is nationally recognized for its guidance in structuring and documenting new consumer financial services products, its experience with the full range of federal and state consumer credit laws throughout the country, and its skill in litigation defense and avoidance (including pioneering work in pre-dispute arbitration programs). In addition to having vast experience in defending all manner of TCPA lawsuits, the group has counseled a number of clients on establishing auto-dialing and monitoring protocols.
The group also produces the CFPB Monitor, a blog that focuses exclusively on important CFPB developments.