The most frustrating and confusing issue facing collection agencies today is the degree to which telephony equipment may be used to call mobile phones. In Nelson v. Santander, a Court held that preview dialing (using a dialer with human intervention) violated the TCPA due to the capacity of the telephone system used. That order was subsequently vacated, leaving debt collectors to question the efficacy of preview dialing.
However, a recent Federal case held that a phone system that does not have the “present capacity” to store or produce numbers is not an automated telephone dialing system (“ATDS”) subject to the TCPA.
In the case Hunt v. 21st Mortgage Corporation, the Plaintiff argued that because the telephone system used to call his mobile phone had the theoretical “capability” to store or produce numbers, it was an ATDS subject to the TCPA. The Court rejected this distinction regarding the theoretical “capability” of the telephone system – a distinction that was previously embraced by the Court in Nelson v. Santander and the Ninth Circuit Court of Appeals in Satterfield v. Simon & Schuster, Inc. – writing in an opinion filed last week:
While the court has no trouble adopting the rule of the Ninth Circuit and other district courts, the instant case would require the court to stretch the TCPA definition yet a step further. In those earlier cases, the telephone systems at issue were fully equipped and ready to automatically dial numbers at a moment’s notice, and so had the required “capacity” to meet the “automatic telephone dialing system” definition, regardless of how they were actually used. Here, the phone system was (and is) in its present state incapable of automatic dialing. Plaintiff’s argument is that certain software could have been installed onto defendant’s system which would have made automatic dialing possible.
The problem with this reasoning is that, in today’s world, the possibilities of modification and alteration are virtually limitless. For example, it is virtually certain that software could be written, without much trouble, that would allow iPhones “to store or produce telephone numbers to be called, using a random or sequential number generator, and to call them.” Are the roughly 20 million American iPhone users subject to the mandates of § 227(b)(1)(A) of the TCPA? More likely, only iPhone users who were to download this hypothetical “app” would be at risk.
The court therefore holds that, to meet the TCPA definition of an “automatic telephone dialing system,” a system must have a present capacity, at the time the calls were being made, to store or produce and call numbers from a number generator. While a defendant can be liable under § 227(b)(1)(A) whenever it has such a system, even if it does not make use of the automatic dialing capability, it cannot be held liable if substantial modification or alteration of the system would be required to achieve that capability.
The Hunt decision gives the collection industry reason to again examine whether it may use preview dialing mode to contact consumers on mobile phone numbers. However, requests for clarification on the issue of the theoretical “capacity” of telephone system as an ATDS are pending before the Federal Communications Commission, though it may be years before any guidance is issued. Certainly any dialing in preview mode should be coupled with confirmation that the telephone system used does not have the “present capacity” to store or produce numbers. In addition, it is recommended that “kill switch” security technology be integrated into a preview dialing telephone system to ensure that if ATDS software is sought to be introduced into the system, the system will issue warnings and cease to operate.
Unfortunately, as the judge in the Hunt case aptly noted, any telephone could be deemed an ATDS with theoretical capacity to store and produce numbers. Thus, collectors will continue to risk class action lawsuits and liability when dialing consumer mobile phone numbers with any telephone, regardless of the technology and safeguards.
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