Manually Dialed Calls to Mobile Phone Held to Violate TCPA

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John Rossman,  Moss & Barnett

John Rossman,
Moss & Barnett

The proliferation of Telephone Consumer Protection Act (TCPA) litigation against the debt industry continues unabated.  Damage awards and settlements in TCPA cases costing debt collectors hundreds of thousands — and even millions — of dollars are a common occurrence.  The latest development regarding the TCPA is sobering: a Federal Court found a debt collector liable for TCPA violations where some of the calls to a consumer’s mobile phone were made in dialer “preview” mode and an individual collector “clicked” on the number to dial it.

Use of Dialer Preview Mode with Human Intervention Violates the TCPA

In the case In Re Nelson, a Federal Court in Wisconsin held that a debt buyer called the Plaintiff on a mobile phone more than 1000 times.  The Defendant raised several defenses, including the defense that some of the calls were made in dialer preview mode.  The Court wrote:

“In making these calls, defendant used . . . a computer telephone software system that routes and places inbound and outbound calls. [The software system] has the capacity to (1) store telephone numbers and then call them; and (2) perform ‘predictive dialing’ and ‘preview dialing.’”

In predictive dialing, the system times the dialing of numbers using an algorithm to predict when an agent will become available to receive the next call. To facilitate that method of dialing, defendant created lists of customer telephone numbers to be called on a particular day. In preview dialing, an employee chooses a telephone number by clicking on a computer screen and the system calls it. Defendant’s employees never called plaintiff by pressing numbers on a keypad. (emphasis added).

The Court held that because the calls to the Plaintiff were made through the dialer – and despite the human intervention of the individual collector choosing a telephone number and clicking on a screen to prompt the dialer – the Defendant violated the TCPA.  The Court wrote:

Regardless whether preview dialing falls outside the scope of § 227(a)(1) and the FCC’s order, I agree with plaintiff that defendant’s argument is another red herring. Under both the statute and the order, the question is not how the defendant made a particular call, but whether the system it used had the “capacity” to make automated calls. Satterfield v. Simon & Schuster, Inc., 569 F.3d 946, 952 (9th Cir. 2009) (“[A] system need not actually store, produce, or call randomly or sequentially generated numbers, it need only have the capacity to do it.”) (emphasis added).

The Court in Nelson ultimately awarded the Plaintiff $571,000 in statutory damages for violations of the TCPA.

Does Any Phone Exist Today That Does Not Store and Dial Numbers?

The TCPA applies to calls made from an automatic telephone dialing system (ATDS).   An ATDS is defined as “equipment which has the capacity to store or produce telephone numbers to be called, using a random or sequential number generator; and to dial such numbers.”

Most debt collectors use sophisticated telephony systems to record consumer calls, catalog those recordings as well as to make outbound calls and accept inbound calls.   The recording of consumer collection calls is mandated in some jurisdictions such as New York City.  Nearly all of the telephone systems available to comply with debt collection requirements have the ability to store and dial numbers, especially when incorporated with collection software.   Thus, how can a debt collector call a consumer cell phone in any circumstance when the phone system itself has the ability to store and dial numbers?

Not only are sophisticated telephony systems considered to fall within the definition of an ATDS, but all smart phones on the market today have the ability to store and call phone numbers.  It is not a far stretch to envision a TCPA lawsuit alleging a collection agency employee violated the TCPA by dialing a smart phone to contact a consumer.  Simply put, the focus of the TCPA must shift from the capabilities of the device used to place the call and emphasis must be placed on the actual means by which the call was made.

Clarification from the FCC is Now Imperative

In 2008, the FCC issued a Declaratory Ruling regarding the use of ATDS technology and in it, it wrote:

“The Commission noted that the evolution of the teleservices industry had progressed to the point where dialing lists of numbers was far more cost effective, but that the basic function of such dialing equipment, had not changed—the capacity to dial numbers without human intervention. The Commission noted that it expected such automated dialing technology to continue to develop and that Congress had clearly anticipated that the FCC might need to consider changes in technology.” (emphasis added)

Many companies rely on FCC’s above reference to “human intervention” in calling mobile phones.  In many circumstances, an individual collector interacts with telephony system to dial a single number, much as was alleged in Nelson. However, reliance on FCC’s reference to “human intervention” is now in question.

Borrowing from the above quote from 2008, now is the time for the FCC to “consider changes in technology,” along with the various regulatory requirements for recording of consumer collection calls, and issue a definitive ruling setting forth how the debt industry can communicate with consumers on their mobile phones.  Without such clarification from the FCC, debt collectors continue to run the risk daily of crushing TCPA litigation.

This publication is provided only as a general discussion of legal principles and ideas. Every situation is unique and must be reviewed by a licensed attorney to determine the appropriate application of the law to any particular fact scenario. If you have a legal question, consult with an attorney. The reader of this publication will not rely upon anything herein as legal advice and will not substitute anything contained herein for obtaining legal advice from an attorney. No attorney-client relationship is formed by the publication or reading of this document. Moss & Barnett, A Professional Association, assumes no liability for typographical or other errors contained herein or for changes in the law affecting anything discussed herein.

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Posted in Accounts Receivable Management, Collection Laws and Regulations, Debt Collection, Debt Recovery, Dialers, Featured Post, Opinion, TCPA .

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  • avatar mike kaufmann says:

    As my android phone is now also an atds I would like to offer its services to all of you who need a dialer. Perhaps this could launch my new company “mike’s auto dialing service” and I can retire at 50.

    So now our only option is to actually let our fingers do the walking….

  • avatar Mike Bevel says:

    We have some attractive advertising packages on insideARM, Mike. You’re going to have more money than you can shake a Yahtzee app at.

  • avatar john-smith40 says:

    With all the truly important decisions that need to be made to save lives, create jobs, educate our young and guide the next generation of leaders properly, we have time for this rubbish?

    This article demonstrates the lunacy that exists in our judicial system. We have drifted so far away from the culture and laws that made us a great country that America is becoming harder and harder to recognize as each day goes by.

    Whatever blessings or luck, depending on your spiritual compass, we have had in the past… We have squandered it all. It is rulings such as this one that chip away at the fabric of justice, commerce and fair play.

  • avatar jmapes says:

    I would hope the case is appealed as well. Understand that Wisconsin is known for it’s “wide” intrepretations of the law but you’re stuck until it is appealed or laws are changed.

    I believe it’s going to be become more cost beneficial at some point to have offshore dial the phone call initially and pass the calls back to the U.S. attendants. Maybe set up a manual dialing block with transfers to an ACD group. Past the transfer the collectors could be setting in a “dialer” world and the offshore people would set on manual lines incapable of predictive or preview dialing.

  • avatar jessie-gomez says:

    Nothing will change until a law is pass allowing debt collectors to go after the deadbeat consumers in anyway they can to collect the debt. Deadbeat consumers will always cry when it is time to pay but when the creditor is giving them credit they will be smiling like a dog eating [grown-up word because the commenter was too lazy to look up the word "fæces"] off of a hair brush.

    [This comment has been edited by Mike Bevel because we try not to use our Evening at the Improv vocab.]

  • avatar Mike Bevel says:

    On a side-topic: Does it help your case at all to use the phrase “deadbeat consumer”?

    If we assume, together, as a group, that legislation voted on primarily by consumers is going to, for the most part, though not always, be more pro- than anti-consumer (consumers being the bulk of the voting population; politicians needing to court voters for their votes — I don’t mean to break the entire voting process down for you): what if you didn’t use “deadbeat” as the pejorative adjective?

  • avatar David Russell says:

    “In the case In Re Nelson, a Federal Court in Wisconsin held that a debt buyer called the Plaintiff on a mobile phone more than 1000 times. ”

    Harassment or abuse [15 USC 1692d]
    A debt collector may not engage in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:

    (5) Causing a telephone to ring or engaging any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number.

    That must have been one juicy commission the agency was chasing. 1000 calls over how long?

    Wondering if the plaintiff already pursued for FDCPA violations.

  • avatar jessie-gomez says:

    Mike, what do you call a consumer that get credit and then run and hide when come time to pay or complain when the creditor ask for them to pay. You need to do a little research and you will see that states call consumers, deadbeats when they owe child support.

  • avatar Aaron Kozloski says:

    And Jessie, what do you call a consumer who has worked and established good credit, borrowed wisely and invested, and wakes up one day to find his company doors closed and his pension gutted, and he’s at an age where finding the simplest employment is tough?

    You may be in the wrong line of work my friend.

  • avatar jessie-gomez says:

    Aaron, a honest person would try and work out a payment plan with the creditor to repay their debt one way or other.

  • avatar Jennifer Skornik says:

    I can’t help but join the fun. Jessie, what about when there’s a billing error and a consumer’s previously paid invoice is sent to collections? Is he still a deadbeat?

  • avatar jessie-gomez says:

    Jennifer, that is understanding and you run in to that type of problems when you buy debts from brokers or re-sellers. In our case we buy direct from the OC that only work the files in house. Jennifer if the consumer provide the debt collector a copy of the invoice that they can verify the debt has been paid then the collector should stop all collections

  • avatar zach-baumann92 says:

    If I was called 1000 times on a $100 bill, I would proabably sue you too. Call me a dead beat, I would’nt care because I would have 1/2 million dollars while JessieGomez will still be stuck behind a desk calling people “Deadbeats”

  • avatar jessie-gomez says:

    Zach, the debt collector should have call you only one time unless you were hiding or running from paying your debt or on some low life message asking questions on how to get out of paying or seeing how Ii can trick the debt collector in a violation.

  • avatar zach-baumann92 says:

    It is frustrating dealing with professional debtors, those are the consumers/attorneys who make their living off of suing debt collectors. However, considering every consumer out there deadbeats is not fair.

    The only thing we can do is try and prepare and identify these people. Over the past 6 years I have spoke with 1200 debtors per month. They werenot all peaches let me assure you. After a while you can tell in less than the first minute their intentions.

    Calling 1000 times on an account is a waste of time and resources. Espescially when it leads to a lawsuit. tsk tsk

  • avatar Marc Johnston says:

    Good luck to all of you attempting to have an intelligent conversation with Jessie. the only one that has any teeth is Bevel. This is the mentality and speech that only gasses up the fire.

  • avatar Marc Johnston says:

    think im gonna go out and jump in front of a bus, so i can rack up a medical bill and steal from the hospital that hopefully saves me. Deadbeats is not the way to refer to consumers in any case

  • avatar gwheelock915 says:

    Being a ‘deadbeat’ consumer, jessies attitude is typical of most collectors, at least in the mind of the average consumer. Fortunately, I don’t see anyone here jumping on the wagon behind jessies point of view.

    I would never slam a collector for being a collector. People all have needs and bills to pay. Slamming the industry is something different.

    Congrats to Midland on buying out Asset. What a courtroom party thats going to be.

  • avatar Commercial Guy says:

    Actually, Jessie’s attitude is not typical of most collectors at all. His rants are legend in the forums on this site, and virtually the only value from them is comic relief. Oh, and the regular lessons in how not to spell or construct a sentence.

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