Archives for September 2018

ARLINGTON, Va. — Numeracle™, Inc., the pioneer of robocall blocking and labeling visibility in the calling ecosystem, and NobelBiz™, leading innovator in the contact center technology industry, announced today at the 2018 PACE Washington Summit, a collaborative engagement between the two companies to provide trusted local caller ID management solutions delivering enhanced brand protection and improved campaign performance.

The Numeracle and NobelBiz intelligent local caller ID solution combines patented outbound calling technology with advanced data analysis on call delivery metrics to increase customer engagement by establishing a trusted local presence. By presenting a geographically familiar number to the calling party, this fully-compliant solution increases contact rates and call backs while also improving brand reputation by ensuring incoming calls to consumers are not incorrectly displayed as FRAUD or SCAM.

Local caller IDs are registered across the network to improve successful call delivery by verifying the calling party’s identity as a trusted entity and minimizing the likelihood of an incorrect or fraudulent label being displayed to the consumer. Through the addition of risk rating analysis from Numeracle, NobelBiz’s patented automated number rotation is now able to identify and remove numbers flagged by robocall detection technologies as ‘high risk’ in order to preserve the favorable calling reputation of the call originator.

By applying feedback from carrier analytics partners on changes likely to affect the status of a calling party’s number, Numeracle and NobelBiz are able to offer personalized insights into corrective strategies and mitigation techniques to enable improved reputation management and brand preservation. By utilizing best practices to improve call delivery while preserving customer satisfaction, this offering enables the call originator to minimize risk while maximizing return. 

“NobelBiz is excited to join together with Numeracle to offer enhanced local caller ID solutions to improve brand reputation and customer connectivity in the age of call blocking and labeling. Through our combined offering we’re not only able to deliver improvements to productivity and the achievement of success metrics, we’re also able to employ vital industry feedback to maintain and improve that performance in accordance with best industry practices,” said Ted Fortezzo, Executive Vice President, NobelBiz.

“The coming together of our two companies represents our combined vision to build greater customer engagement through the establishment of trust,” said Peter Licata, President, Numeracle. “Numeracle and NobelBiz are a natural fit for an innovative partnership to combine the ROI of local caller ID strategy with the visibility, control and reach to successfully navigate the evolving complexities of the new calling ecosystem.”

To discover how Numeracle and NobelBiz can help you to convert more calls while protecting your brand, please visit http://nobelbiz.com/contact or www.numeracle.com/contact to get in touch.

About Numeracle

Numeracle, established to take action against the growing problem of unwanted and illegal robocalls, provides a single point of discovery into the new calling ecosystem to uncover a number’s entire journey from call origination to destination. By working together with carriers, analytics companies, device manufacturers, and the developers of call blocking and labeling apps, Numeracle provides visibility across all major stakeholders and delivers actionable control to the originators of legal and wanted calls. To learn more about our mission to return trust and transparency to the voice channel, please visit www.numeracle.com.

About NobelBiz

NobelBiz is the leading innovator in the contact center technology industry. The company has grown to serve contact centers globally, providing world-class voice, cloud contact center and business intelligence solutions. NobelBiz transforms contact centers into higher-performing intelligent contact centers and helps take companies from ‘isolated cost center’ to ‘company-wide intelligence generator’ for customer service, sales, marketing, product development, and more. Visit www.nobelbiz.com to engage with us on our intelligent call center solutions.

Earlier this month, the Middle District of Georgia (M.D. Georgia) reviewed whether a debt collector can avoid Fair Debt Collection Practices Act (FDCPA) liability by relying on the information provided by the creditor as a stand-alone defense — as opposed to through the bona fide error defense. In Foster v. Franklin Collection Services, Inc., Case No. 5:17-cv-8 (M.D. Ga. Sep. 13, 2018), the court declined to recognize such a stand-alone defense.

Factual and Procedural Background

Plaintiff incurred a medical debt for treatment at RedMed Urgent & Family Clinic (“RedMed”). Plaintiff indicated on her intake form that she had insurance. RedMed placed plaintiff’s account for collection with Franklin Collection Services, Inc. (Franklin).

Franklin sent plaintiff a letter stating she had a balance due and included the 1692g validation notice. Within the validation period, plaintiff called RedMed — not Franklin — disputing the debt, stating that her insurance made an error and that it would reprocess the claim.

While the contract between Franklin and RedMed states that RedMed has a continuing obligation to provide any new or additional information with respect to accounts placed with Franklin, Franklin never received information about plaintiff’s call regarding the insurance issue. Without knowledge of the dispute or the insurance issue, Franklin sent a second collection letter to plaintiff a few months later, listing the same amount owed as the first letter.

Plaintiff filed an FDCPA lawsuit against Franklin alleging, among other things, that Franklin attempted to collect a debt that plaintiff did not owe. Franklin filed a motion for summary judgment on the issue, arguing that it is entitled to a defense — separate from the bona fide error defense — due to its reliance on the information provided by RedMed. 

The Decision

During briefing, the court asked Franklin to either provide additional briefing of how the issue fits within the bona fide error defense or to forego the bona fide error defense. Franklin chose the latter, arguing that a “right to rely” defense was established in Ducarest v. Alco Collections, Inc., 931 F.Supp. 459 (M.D. La. 1996). 

The court disagreed with Franklin and found that there is no stand-alone “right to rely” defense within the Eleventh Circuit because the FDCPA is a strict liability statute. The court relied on an Eleventh Circuit Court of Appeals case, Owen v. I.C. System, Inc., 629 F.3d 1263 (11th Cir. 2011). In Owen, the Eleventh Circuit found that debt collectors are liable even if FDCPA violations are not knowing or unintentional. The court stated that the only exception to this rule is the bona fide error defense, which Franklin relinquished and therefore the court did not analyze.

Based on this, the court denied Franklin’s motion for summary judgment on this particular issue.

insideARM Perspective

The Circuit Courts of Appeal appear to be divided regarding just how much a debt collector can rely on information provided by the creditor.

In the Foster case described above, the debt collector had no way of knowing that the amount they were collecting was not owed. The creditor never contacted Franklin with a change of information. Nor did the consumer ever contact Franklin with her dispute as required by 1692g, which was stated in the letter received by the consumer. Yet, outside of the bona fide error defense, the debt collector is none-the-less liable according to M.D. Georgia under 1962e. 

On the other hand, the Seventh Circuit held that the 1692g verification requirement extends only to the debt collector’s records, not the creditor’s. In Walton v. EOS CCA, the Seventh Circuit held that a debt collector need only verify that they are collecting on the amount the creditor provided and that requiring a debt collector to investigate the validity of the amount owed would be “burdensome and significantly beyond the [FDCPA’s] purpose.”

Mashing these two rulings together, we get inconsistent guidance for debt collectors about when and how they can rely on the information provided by the creditor. Let’s assume that plaintiff in the above case did dispute the debt directly with Franklin. If this was the 7th Circuit, Franklin would only be required to verify that it was collecting the amount the creditor placed with it. Yet, despite this, Franklin would still be liable in the Eleventh Circuit — save for the bona fide error defense — even if all of its information matched what the creditor provided.

It seems a little odd that the same information a debt collector can rely on pursuant to its 1692g investigation is insufficient to shield it from liability except for when the bona fide error defense is invoked. The bona fide error defense is expensive to litigate and requires a debt collector to open its doors by providing its policies and procedures to plaintiffs’ attorneys, who are likely on the prowl for their next claim, whether or not it has any merit. Even if the debt collector succeeds with the bona fide error defense, the attorney’s fees provision of the FDCPA does not allow a debt collector acting in good faith to recover their fees.

This is an issue that a set of regulatory rules for debt collections could clarify. The rules could address the discrepancy of when and how a debt collector can rely on information from the creditor, and also provide some sort of legal relief outside of the arudous bona fide error process for debt collectors who are acting in good faith.

It has been an interesting time in TCPAland since ACA Int’l was decided in March. We’ve seen a number of decisions going different ways with respect to the continued viability of the 2003 and 2008 Predictive Dialer rulings. And while it was neat to keep score – and we did – it seemed like the current morass of ATDS rulings were mere holdover entertainment ahead of the real show– the FCC’s TCPA Omnibus II that will be unveiled soon (probably next month). That ruling, it seemed certain, would afford the TCPA a little ATDS bedrock and–at long last–end all the bickering in TCPAland.

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Following the Marks decision, however, complete and uniform deference to the FCC’s intensely-anticipated TCPA declaratory ruling is no longer a sure bet. Indeed, its a fantasy. That’s not to say courts should disregard the FCC’s new-and-more-conservative-than-ever TCPA ruling most observers expect, but Marks *cough* marks a major departure point for TCPA jurisprudence and one that is sure to have an impact long after the FCC has had its say.

First, some historical perspective on the uniqueness of Marks. Since 2009 there have been over 50 cases holding that predictive dialers qualify as an automated telephone dialing device (“ATDS”) under the TCPA. No surprise there, really. The FCC has twice (some say three times) directly held that predictive dialers are subject to the TCPA because it says so. But until a month ago zero of those cases held that dialers calling lists of stored numbers automatically qualify under the TCPA’s statutory definition. Instead, all of those cases had held that  predictive dialers were subject to the TCPA owing solely to deference to the 2003 and 2008 FCC Predictive Dialer Rulings mandated by the Hobbs Act. (More on that below). Obviously, therefore, the FCC’s past (and presumably its future) rulings on the definition of ATDS hold monumental–if not dispositive–sway.

But, as fate would have it, Marks would not be the first case to ignore both the FCC and the statutory language mandating  “random and sequential”generation. That dubious honor belongs to Heard v. Nationstar Mortg. LLC Case No.: 2:16-cv-00694-MHH, 2018 U.S. Dist. LEXIS 143175 (N.D. Ala. Aug. 23, 2018). In Heard the Court determined that the ATDS definition was vague–which is weird since the definition is so so not vague–and determined that the mere fact that debt collectors do not use random dialers must, somehow, mean that the ATDS applies to predictive dialers. (No really, that was the analysis.) And while Marks held that the FCC’s earlier predictive dialer rulings were vacated–setting up one of the greatest legal head fakes in history BTW– Heard was not so bold and, instead, merely chose to disregard the Orders for purposes of its analysis. So it became the first court to apply the TCPA’s ATDS definition to predictive dialers without leveraging the 2003 and 2008 FCC Orders, and I wrote a long and very often read article to commemorate the weirdness of the event. 

Heard was a curiosity but in no way a threat to the FCC’s power to reconsider the TCPA’s ATDS definition. In the first place it was a district court ruling, and in the second its results-driven analysis didn’t make a whole lot of sense. It was a head-scratcher-of-a-one-off ruling that only a “true beleiver” would bother citing to in a brief. Not the sort of analysis that would drive any reasonable court to disregard the FCC’s upcoming ATDS ruling.

But Marks demands to be taken seriously. It is a published Circuit Court of Appeal decision binding–at least for now–on all district courts within the Ninth Circuit’s expansive and populous footprint. And that begs the question. Might courts–at least in the Ninth Circuit and potentially outside of it–continue to follow Marks even after the FCC issues guidance to the effect that a dialer must store numbers generated using a random or sequential number generator to qualify under the TCPA?

The short answer is that they shouldn’t. But that doesn’t mean they won’t.

To understand the big picture here you need to understand this thing called the Hobbs Act. What a weird statute. The Hobbs Act essentially makes FCC rulings made under the Telecommunications Act binding and unshakable precedent across the country. No district courts–and not even Circuit Courts of Appeal outside of narrow circumstances–can issue orders contrary to FCC TCPA rulings. This is not the case with all agencies, BTW. So the Hobbs Act converts the FCC into a sort of super agency whose TCPA rulings cannot be tinkered with by the grubby little hands of regular courts. See, most famously, Mais v. Gulf Coast Collection Bureau, Inc., 768 F.3d 1110, 1119 (11th Cir. 2014).

Notably, the mandates of the Hobbs Act are quite different from Chevron deference–that’s the rule that courts apply to regular agency rulings. Chevron requires courts to defer to reasonable solutions to the complex problems caused by the vague statutes Congress keeps enacting (if you’ve ever voted to send a non-lawyer to Congress you’re part of the problem, but I digress. ) Again, however, the FCC is no regular agency so Chevron doesn’t matter and a Court should never even get to the point that it has to decide whether or not to defer to the FCC–it must obey the FCC.

As the Fourth Circuit Court of Appeals recently wrote:

When Chevron meets Hobbs, consideration of the merits must yield to jurisdictional constraints. An Article III court’s obligation to ensure its jurisdiction to resolve a controversy precedes any analysis of the merits … [A]rguing that the district court can put off considering its jurisdiction until after step one of Chevron … turns that traditional approach on its head. Indeed, a district court simply cannot reach the Chevron question without “rubbing up against the Hobbs Act’s jurisdictional bar.

Carlton & Harris Chiropractic, Inc. v. PDR Network, LLC, 2018 WL 1021225, at *2–4 (4th Cir. 2018)

Well that all sort of makes sense in most instances. But don’t district courts also have to follow the rulings entered by Circuit Courts of Appeal? Well… yes they do. And it is a very unusual circumstance where, as here, an agency is set to act with binding force in an area where a Circuit Court of Appeal just issued its own binding ruling on the reach of a federal statute. Indeed, this situation is so unusual that I can’t seem to find any examples of it. (Have some? Send to me and I’ll credit you for the research.)

But several cases have addressed the issue in the context of regular-old Chevron deference and the rulings are–not surprisingly–split. Some take the position that an action of an agency cannot overrule a circuit court of appeal ruling interpreting the same statute. See Bankers Trust New York Corp. v. US, 225 F. 3d 1368, 1375 (Fed. Cir. 2000) (applying stare decisis requiring adherence to precedential decisions rather than to agency action entitled to Chevron deference.)  Indeed the Eighth Circuit Court of Appeal has flatly stated: “Chevron does not stand for the proposition that administrative agencies may reject, with impunity, the controlling precedent of a superior judicial body.” PS Guard Services, Inc. v. NLRB, 942 F.2d 519 (8th Cir.1991). But other courts have taken the position that deference to the agency justifies departing from established precedent at least where necessary to assure uniformity. See Aguirre v. INS, 79 F. 3d 315, 317-318 (2nd Cir. 1996).

So if this was a regular Chevron deference situation, Plaintiffs would have a straight-faced argument that courts in the Ninth Circuit should keep right on applying Marks, no matter what the FCC does. After all, the Marks panellooked at the language of the statute and made its own decision as to what the TCPA regulates based upon its own reading of legislative history and Congressional intent–a straightforward issue of statutory-interpretation that courts are well-qualified to make for themselves (no matter how extraordinary the result). District courts in the Ninth Circuit would probably be well-supported, therefore, if they elected to continue applying Marks even in the face of a countervailing FCC order.

But what about that pesky Hobbs Act?

Lacking any precedent for this situation it is useful to look at what courts are doing with  the application of ACA Intl. The Hobbs Act dictates that the ACA Int’l ruling is binding across the country, so gauging district court willingness to defer to the D.C. Circuit Court of Appeal over conflicting precedent from their own circuits today might afford a pretty nice glance at what those same courts will do tomorrow. And here the scales tip heavily in favor of deference– indeed only two district court cases have held that ACA Int’l does not trump existing circuit court precedent. So that’s good. Unfortunately, both of those courts are within the Ninth Circuit. See McMillion and Alarm.com. As Pooh would say: “Oh bother.”

Moreover, the Sixth Circuit’s decision in Sandusky Wellness Ctr., LLC v. Medco Health Sols., Inc. 788 F.3d 218 (6th Cir. 2015) set a bad example for district courts. There, the appellate court directly tackled the meaning of the term “advertisement” under the TCPA, declining to defer to the FCC’s 2006 ruling on the subject because it found the statutory definition unambiguous, without even mentioning the Hobbs Act’s jurisdictional bar. See Id. at 223. Hmmmm. Although Marks found that the language of the TCPA was ambiguous, it also made a decision for itself as to what the statute meant to say knowing full well that the FCC was set to rule on that same issue. Might a district court–when weighing whether the impact of the Hobbs Act–conclude that if the Sixth Circuit didn’t have to yield in interpreting the TCPA then the Ninth Circuit won’t either? And, that being the case, might that same court also conclude that it is better to apply existing and binding circuit court authority rather than honor the jurisdictional limits of the Hobbs Act? And when you factor in that an appeal from a district court ruling applying Marks over the FCC’s latest ruling within the Ninth Circuit’s footprint would be appealed to–you got it–the Ninth Circuit Court of Appeals, it starts to seem pretty likely that district courts out West won’t be abiding the FCC’s ruling, even if they really should be.

Eesh.

The bottom line is–I think–that the Fourth Circuit’s approach to the Hobbs Act is the correct one.  As was stated in Carlton & Harris Chiropractic, Inc., a future district court will lack jurisdiction to even consider an argument contrary to the FCC’s new ATDS formulation. Assuming the district courts take that mandate seriously, they should disregard Marks entirely in favor of the FCC’s new ruling, even within the Ninth Circuit–the question of whose definition to apply should never even arise since district courts lack jurisdiction to consider the FCC’s inviolate statements in the first instance.

Then again, if the district courts took the FCC’s primary jurisdiction seriously they would be yielding to it right now instead of issuing conflicting ruling by the barrel full, so…. yeah. Don’t hold your breath folks.

Whatever district courts do with Marks, a few things are now clear. First, Marks makes an appeal of any new TCPA ruling from the FCC to the D.C. Circuit Court of Appeal much more likely. While this would probably have happened anyway, after the D.C. Circuit Court of Appeal’s ruling in ACA Int’l an appeal back to that same court on a narrow definition of the sort ACA Int’l had essentially already blessed would have been treated as a frivolous–if not criminal–waste of time. But Marks gives much more credence to the idea that a narrow statutory interpretation is not the only correct one. Second, Marks makes an ultimate showdown in the U.S .Supreme Court over the definition of ATDS much more likely. A circuit split is just a ruling away since no other circuit court of appeals is likely to track Marks’ aggressive path to TCPA expansion. Indeed, with Dominguez already holding contrary to Marks, an appeal to the Supremes may be a reality before the year is out. (Hey Crunch–if you’re looking for Supreme Court counsel, I know a guy… )

In the end, Marks is very unlikely to derail the FCC’s anticipated TCPA reform completely, but it is likely to complicate what should have been the streamlined and uniform application of a ruling to be issued by the agency Congress trusted to interpret and implement the TCPA. Rather than uniformity and calm, however, we can now expect the FCC’s new ATDS ruling to be met with conflicting district court opinions, a trip back to the D.C. Circuit Court of Appeal and another TCPA visit to the U.S. Supreme Court. In other words, Marks assures more of the same in TCPAland for a long time to come. And that’s bad news for everybody.

Except maybe for guys running TCPA-related websites…

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Editor’s note: This article is provided through a partnership between insideARM and Womble Bond Dickinson. WBD powers our TCPA case law chart and provides a steady stream of their timely, insightful and entertaining take on this ever-evolving, never-a-dull-moment topic. WBD – and all insideARM articles – are protected by copyright. All rights are reserved.

We broke the news this morning that the Ninth Circuit has published its opinion in Marks v. Crunch San Diego, LLC, No. 14-56834, 2018 WL 4495553 (9th Cir. Sept. 20, 2018). We now have a new definition of an ATDS in the Ninth Circuit. It is:

[T]he term “automatic telephone dialing system” means equipment which has the capacity—(1) to store numbers to be called or (2) to produce numbers to be called, using a random or sequential number generator—and to dial such numbers automatically (even if the system must be turned on or triggered by a person).

In other words, all dialers that call automatically from a list are – at least within the Ninth Circuit – subject to the TCPA.  How did the court get there? It took three steps (leaps?):

First, the court found that in ACA Int’l v. FCC, the D.C. Circuit invalidated the FCC’s predictive dialing rulings going all the way back to 2003, and that those rulings were therefore “no longer binding,” on the court.

Blank slate, check.

Second, the court found that Congress’s definition of ATDS is “ambiguous” and the court therefore needed to “use canons of construction, legislative history, and the statute’s overall purpose to illuminate Congress’s intent.”

Wide latitude to interpret the TCPA, check.

Third, after undertaking this examination, the court held that the statutory definition of an ATDS “includes a device that stores telephone numbers to be called, whether or not those numbers have been generated by a random or sequential number generator.”

New extreme and expansive definition of an ATDS, check.

Let’s break each piece down.

Prior FCC Rulings Invalidated

The court fist examined the impact of ACA Int’l on the validity of the FCC’s predictive dialer rulings going all the way back to 2003. It found that in the 2015 Omnibus Order, the FCC had “reopen[ed] consideration of [its] prior rulemaking,” because “[a]n agency’s reconsideration of a rule in a new rulemaking constitutes a reopening when the original rule is ‘reinstated’ so as to have renewed effect.” The Ninth Circuit therefore held:

Because the D.C. Circuit exercised its authority to set aside the FCC’s interpretation of the definition of an ATDS in the 2015 order, and any prior FCC rules that were reinstated by the 2015 order, we conclude that the FCC’s prior orders on that issue are no longer binding on us.

Due to the invalidity of all prior FCC orders on ATDS functionality, the court found it had a blank slate and would “begin anew to consider the definition of ATDS under the TCPA.”

The Definition of an ATDS is Ambiguous

The court started its analysis with “plain language” of the statute. Refreshing ourselves quickly, the TCPA defines an ATDS as equipment which has the capacity:

(A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers.

Based on the language of the statute, the Ninth Circuit framed the issues before it thusly:

The question is whether, in order to be an ATDS, a device must dial numbers generated by a random or sequential number generator or if a device can be an ATDS if it merely dials numbers from a stored list. We must also determine to what extent the device must function without human intervention in order to qualify as an ATDS.

But the court wasn’t persuaded by either party’s position on the issues, finding that their “competing interpretations . . . fail[ed] to make sense of the statutory language without reading additional words into the statute.” Even putting the parties’ own interpretations aside (because they didn’t seem to matter), the court noted that it had itself “struggle[ed] with the statutory language,” and found it was “not susceptible to a straightforward interpretation based on the plain language alone,” and “ambiguous on its face.”

So let’s pause here for a moment. The court’s finding gave it significant latitude to enshrine its own interpretation of what functions equipment must perform to be considered an ATDS. This is because a finding of ambiguity opens the door to the court’s consideration of all sorts of things that are extrinsic to the plain language of the statute like “canons of construction, legislative history, and the statute’s overall purpose to illuminate Congress’s intent.”

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But this is seemingly inconsistent with the Ninth Circuit’s prior position in Satterfield v. Simon & Schuster, Inc., 569 F.3d 946, 951 (9th Cir. 2009) “that the statutory text is clear and unambiguous.” The court addressed this in a footnote, however, and disclaimed any inconsistency because this statement in Satterfield was limited only to “one aspect of the text,” concerning “whether a device had the ‘capacity’ to store or produce telephone numbers.”

And just like that, the court cleared the way for itself to formulate its own interpretation of what Congress meant when it defined an ATDS as a device which has the capacity “to store or produce telephone numbers to be called, using a random or sequential number generator.”

An ATDS “Includes a Device That Stores Telephone Numbers to be Called, Whether or not Those Numbers Have Been Generated by a Random or Sequential Number Generator”

Based on its finding that the definition of ATDS was ambiguous, the Ninth Circuit went on to examine the “context and the structure” of the TCPA. Based on this examination, the court found that “Congress intended to regulate devices that make automatic calls,” and that the “language in the statute indicates that equipment that made automatic calls from lists of recipients was also covered by the TCPA.”

The court’s conclusion was based on just two aspects of the TCPA.

First it focused on the exceptions to the TCPA. The court reasoned that because Congress had allowed for the use of an ATDS for calls made with prior express consent, a caller would need to “dial from a list of phone numbers of persons who had consented to such calls, rather than merely dialing a block of random or sequential numbers,” in order to take advantage of this permitted use.

Second, the court looked at Congress’s 2015 amendment to the TCPA in which it exempted the use of an ATDS for debt owed to or guaranteed by the U.S. Government. As with prior express consent, this amendment showed the court that “equipment that dials from a list of individuals who owe a debt to the United States is still an ATDS but is exempted from the TCPA’s strictures.” The court also found the inaction by Congress in passing this amendment – leaving the definition of ATDS “untouched” and not “overruling” the FCC’s interpretation of the term – suggested that Congress gave the FCC’s interpretation its “tacit approval”.

So now we’re interpreting statutes based on “inferences” and “suggestions” drawn from what Congress “tacitly” did by not doing something.

Based on what essentially came down to the fact that the TCPA provides exceptions, the Ninth Circuit held that within the “overall statutory scheme”:

[T]he statutory definition of ATDS is not limited to devices with capacity to call numbers produced by a “random or sequential number generator,” but also includes devices with the capacity to dial stored numbers automatically. Accordingly, we read § 227(a)(1) to provide that the term automatic telephone dialing system means equipment which has the capacity – (1) to store numbers to be called or (2) to produce numbers to be called, using a random or sequential number generator – and to dial such numbers (even if the system must be turned on or triggered by a person).

Notably, the Ninth Circuit’s conclusion here is at odds with the Third Circuit’s opinion in Dominguez v. Yahoo, Inc., 894 F.3d 116 (3rd. Cir. 2018), in which the court held that equipment must have the capacity to generate random or sequential telephone numbers, and dial those numbers. But in a footnote, the Ninth Circuit blasted the holding in Dominguez as “unreasoned assumption” that was reached “without explanation,” and without addressing “the interpretive questions raised by the statutory definition of ATDS.”

Human Intervention

The court noted in its definition that even if a person must “turn on” or “trigger” a system to dial numbers, the system still qualifies as an ATDS.  The court noted that Congress was targeting equipment that could “engage in automatic dialing, rather than equipment that operated without any human oversight or control.” Thus, merely “flip[ping] the switch on an ATDS,” does not qualify as human intervention, nor does human intervention occur when a human adds phone numbers to a dialing platform.

Capacity

As mentioned above, the Ninth Circuit originally addressed the issue of “capacity” in Satterfield. However, this issue begs the question – particularly after ACA Int’l – of whether the term means “present” or “potential” capacity. But, alas, the Ninth Circuit found that given the basis of its reversal, it would decline to “reach the question whether the device needs to have the current capacity to perform the required functions or just the potential capacity to do so.”  So it’s left to be seen if a device must have the present capacity to automatically call numbers from a list, or if it qualifies as an ATDS merely if it has the “potential” capacity to perform those functions.

What Now?

As we continue to digest the Marks opinion we’ll follow up with additional pieces diving deeper on its potential impact in TCPAland. For now, the key takeaway here is that we have a new, extreme definition of an ATDS in the Ninth Circuit that encompasses any dialer that automatically calls from a list.

And if there’s one thing that’s clear right now, it’s that the Ninth Circuit just made its mark on TCPAland with Marks.

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insideARM Perspective

Just yesterday, insideARM published an article about Federal Communications Commission (FCC) Chairman Ajit Pai’s responses to three Members of Congress regarding the FCC’s actions on the TCPA. In his responses, Chairman Pai stated that the FCC was reviewing the comments it received on the issue, but he did not provide any specifics about how and when the FCC will provide TCPA clarification.

This new Ninth Circuit decision highlights the need for the FCC to take quick action on clarifying, at the very least, the definition of an ATDS. The Ninth Circuit is now squarely at odds with the Third Circuit, which ruled in Dominguez v. Yahoo, Inc, No. 17-1243, 2018 U.S.App.Lexis 17350 (3rd. Cir June 26, 2018) that this type of a device does not fall within the definition of an ATDS. With the circuit split, companies — many of whom conduct business nationwide — are left with conflicting guidance and uncertainty. The FCC is uniquely positioned to provide clarification on this issue, otherwise we very likely will see this issue on the front doorsteps of the U.S. Supreme Court.

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Editor’s note: This article is provided through a partnership between insideARM and Womble Bond Dickinson. WBD powers our TCPA case law chart and provides a steady stream of their timely, insightful and entertaining take on this ever-evolving, never-a-dull-moment topic. WBD – and all insideARM articles – are protected by copyright. All rights are reserved.

Editor’s Note: This article is published by insideARM with permission from the author.

Can a communication from a collector violate the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et. seq. (the “FDCPA”) if it never asks the debtor to pay any money? What exactly does the term “debt collection” mean in the context of the FDCPA? These seemingly simple questions have divided the circuit courts, and they may soon be resolved by the United States Supreme Court when it decides a case that arose out of a nonjudicial foreclosure proceeding in Colorado. See Obduskey v. Wells Fargo, 138 S. Ct. 2710 (2018).

The FDCPA has been with us for over forty years, and it is likely one of the most heavily-litigated statutes in the country. It prohibits debt collectors from engaging in a broad range of unfair and misleading debt collection practices. See 15 U.S.C. §§ 1692b-1692i. How is it, then, that after all this time and all this litigation, we still do not know exactly what “debt collection” means?

You would think this would be easy, but like most things relating to the FDCPA, it is not. For starters, as courts have observed, although the statute includes a number of definitions, Congress did not define the term “debt collection” anywhere in the Act. See 15 U.S.C. § 1692(a) (referring to “abundant evidence of” improper “debt collection practices” and observing that certain “debt collection practices” can cause undesired effects); § 1692a (defining certain terms, but not defining “debt collection”); see also Glazer v. Chase Home Fin. LLC, 704 F.3d 453, 460 (6th Cir. 2013) (“Unfortunately, the FDCPA does not define ‘debt collection,’ and its definition of ‘debt collector’ sheds little light, for it speaks in terms of debt collection.”) (citations omitted); Gburek v. Litton Loan Serv. LP, 614 F.3d 380, 384 (7th Cir. 2010) (“Neither this circuit nor any other has established a brightline rule for determining whether a communication from a debt collector was made in connection with the collection of any debt.”). To date, the Supreme Court has never defined the term “debt collection,” nor has that Court ever addressed whether a “debt collection” communication must include an explicit demand for payment of money from the debtor.

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The circuit courts have reached different conclusions on whether a “debt collection” communication must make a demand on the debtor for payment of money in order to be subject to the FDCPA. Decisions from the Ninth Circuit and the Tenth Circuit have held that a collector is not engaged in “debt collection” under the FDCPA unless the challenged communication makes a demand for payment of money. See, e.g., Ho v. ReconTrust Co., NA, 840 F.3d 618, 621-623 (9th Cir. 2016) (mailing notice of default and notice of sale to debtor, which threatened foreclosure, was not attempt to collect money from debtor, and thus was not “debt collection” under FDCPA; “The notices at issue in our case didn’t request payment from Ho.”); Obduskey v. Wells Fargo, 879 F.3d 1216, 1221 (10th Cir.) (following Ho; “Because enforcing a security interest is not an attempt to collect money from the debtor, and the consumer has no “obligation . . . to pay money,” non-judicial foreclosure is not covered under FDCPA) (citations  omitted), pet. for cert. granted, 138 S. Ct. 2710 (2018). (See footnote.)

The approach used by the Ninth Circuit and Tenth Circuit seems simple enough: “debt collection” equals asking the debtor to pay money. Other circuit courts, however, have held that a collector’s communication may amount to “debt collection” under the FDCPA, even if the collector has not made a demand for payment of money on the debtor. See, e.g., McCray v. Federal Home Loan Mortg. Corp., 839 F.3d 354, 360 (4th Cir. 2016) (“nothing in [the] language [of the FDCPA] requires that a debt collector’s misrepresentation [or other violative actions] be made as part of an express demand for payment or even as part of an action designed to induce the debtor to pay.”) (emphasis in original, citation omitted); Gburek, 614 F.3d at 386 (letter offering to discuss “foreclosure alternatives” was attempt to collect a debt: “Though it did not explicitly ask for payment, it was an offer to discuss Gburek’s repayment options, which qualifies as a communication in connection with an attempt to collect a debt.”); Glazer, 704 F.3d at 461 (FDCPA applied to judicial foreclosure complaint, despite absence of any allegation that it made a demand for payment of money on debtor: “Thus, if  the purpose of an activity taken in relation to a debt is to ‘obtain payment’ of the debt, the activity is properly considered debt collection.”); Kaltenbach v. Richards, 464 F.3d 524, 526-28 (5th Cir. 2006) (attorney who filed foreclosure action may be “debt collector” under FDCPA, despite absence of any allegation that attorney made demand for payment of money).

Ok, with the courts going in opposite directions, how do we get an answer to this question? It is possible that the Supreme Court may bring some clarity in the upcoming term when it hears the Obduskey case. The Court is expected to address in Obduskey whether the FDCPA applies to a collector’s communications made in connection with non-judicial foreclosure proceedings. While doing so, it is possible the Court will take the opportunity to opine more generally on whether communications that do not include a request for payment from the debtor are subject to the FDCPA. In the meantime, collectors will have to do their best to adjust their communications based on the law of the circuits where they are located. Stay tuned everyone.

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Footnote: Cf. Mashiri v. Epsten Grinnell & Howell, 845 F.3d 984, 989 (9th Cir. 2017) (law firm’s notice which advised that “failure to pay your assessment” would result in recording of a lien was demand for payment of money subject to FDCPA); Reese v. Ellis, Painter, et al., 678 F.3d 1211, 1217-18, n.3 (11th Cir. 2012) (law firm letter that demanded payment on promissory note was debt collection subject to FDCPA: “[W]e do not decide whether a party enforcing a security interest without demanding payment on the underlying debt is attempting to collect a debt within the meaning of § 1692e.”).

Over the past several months, three members of the House of Representatives wrote to the Federal Communications Commission’s (FCC) Chairman Ajit Pai regarding the Telephone Consumer Protection Act (TCPA). On September 7, 2018, Chairman Pai responded to the congressmen.

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The three letters addressed to Chairman Pai came from Rep. Ken Buck (R-CO), Rep. David McKinley (R-WV), and Rep. Lee Zeldin (R-NY). While worded differently, all three letters contained similar content. The letters criticize prior FCC interpretations of the TCPA for causing more problems than they solved. The prior interpretations created ambiguity that caused confusion for legitimate businesses on how to communicate with consumers and led to an increase of class action litigation that does little to help consumers. All three letters commend the FCC’s efforts on the issue of illegal robocalls.

Chairman Pai’s responses to the three letters were also extremely similar in content. The responses agree that the prior interpretations of the TCPA caused confusion. Chairman Pai pointed to his own dissent to the 2015 declaratory ruling to support his agreement with the congressmen. The Chairman stated that in response to the D.C. Circuit Court of Appeals ruling in ACA International v. FCC, the FCC sought comments on the TCPA and the definition of automated telephone dialing system. The comment period closed in June of this year and the FCC is currently reviewing the comments to assist it with further action.

The responses are available here: Response to Rep. Buck, Response to Rep. McKinley, Response to Rep. Zeldin.

insideARM Perspective

Chairman Pai’s responses don’t contain much detail of when and how the FCC will proceed with its guidance on the TCPA. It is nice to see that the TCPA issue is on the FCC’s radar, but it will be even better once the FCC finishes its review of comments and provides some clearer direction for their plan forward.

Update: Later today, the Ninth Circuit Court of Appeals released its decision in Marks v. Crunch San Diego, LLC, No. 14-56834, 2018 WL 4495553 (9th Cir. Sept. 20, 2018), finding that all dialers that call automatically from a list fall into the definition of an automatic telephone dialing system, and therefore are subjec to the TCPA. This puts the Ninths Circuit squarely at adds with the Third Circuit, which decided in Dominguez v. Yahoo, Inc, No. 17-1243, 2018 U.S.App.Lexis 17350 (3rd. Cir June 26, 2018) that this type of device is not an ATDS. The jurisdictional split among the circuits highlights the need for the FCC to take quick action on providing clarification or else the matter is likely to be decided by the U.S. Supreme Court.

COLLINSWOOD, N.J. — MyGovWatch.com, a clearinghouse for leads and intelligence about government collection contracts since 2008, has announced a major rebranding and relaunch of the site.

MyGovWatch still offers users the choice of contracting for unlimited data access, but now additionally offers data through a new, freemium access option, which lets anyone create a free account and receive no-cost bid notices in every industry at the Federal, state, and local levels, including collections. This relaunch makes MyGovWatch.com the government RFP lead site with the most robust commercially-available freemium option.

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Historically, the site has catered to a handful of industries, including collections.  The site now enables anyone to specify their particular interests from among ten top-level industries, from professional services to construction to finance and technology and beyond.  Users can set preferences to be notified about leads in nearly sixty sub-industries, such as collections, billing, systems development, business services, and others, covering every conceivable type of government purchase.

For existing users, the new site offers all of the functionality and data access that it has always provided, plus the ability to let users tap into other market opportunities through a new, pay-as-you-go model offering users the opportunity to buy and apply credits on the site to access specific information about specific contracts. The new site also features a vibrant new look and feel.  Premium users continue to receive timely notice of:

• New procurement announcements in collections covering 24 classes of debt.
• Updates on current procurements in the form of addendum tracking and reporting.
• Award notices for recent procurements announcing winner(s).
• Availability of award documents obtained through open records requests showing how decision makers selected vendors for individual contracts, including pricing.
• Pre-notification of future procurements months before they happen.
• A searchable vendor center that lets users research pricing trends and winning proposals by competitor, geography, and numerous other contract attributes.

For organizations that do not typically compete in the public sector, or that do so infrequently, the site lets users take an opportunistic approach to pursuing opportunities by monetizing access to data and services on demand, such as:

• Micro-transaction costs to download documents and submit anonymous questions to buyers.
• The ability to download detailed historical documents related to specific contracts showing how decision makers selected vendors in the past, including pricing, that can be used to make decisions on current procurements.
• The ability to order open records follow up on demand to find out, anonymously, what happened with bids your organization has recently submitted.
• The ability to subscribe to the lifecycle of individual contracting opportunities, to be notified when key events happen over time, such as the award of a contract, availability of open records, or impending expiration of existing contracts.

The relaunch was three years in the making, and also offers organizations the option to tap into Application Program Interfaces (APIs) to feed sales leads directly into their customer relationship management (CRM) systems.  This lets organizations control data traffic and increases organizational awareness of who is responsible for various leads.

To create your free account today, visit www.mygovwatch.com.

About MyGovWatch.com

MyGovWatch.com is a government RFP lead and intelligence website with the most robust freemium option commercially available.  Users can create free accounts to hear about government purchasing opportunities at the Federal, state, and local levels from among ten top-level categories and nearly sixty subcategories.  Freemium users can buy credits to get help tracking and monitoring government purchasing activity. The site also offers premium services within specific markets and in relation to specific opportunities to let users keep close tabs on government purchasing opportunities that are of greatest interest to them.  Learn more at www.mygovwatch.com.

COLLINSWOOD, N.J. — The Fed Cetera Network, a business development organization under 48 CFR 52.219-9, will hold a teleseminar at 11AM EST on October 4, 2018, on the topic of the U.S. Small Business Administration (SBA) All Small Mentor Protégé Program (ASMPP).  The teleseminar will also feature brief overviews of Fed Cetera service disabled, veteran-owned (SDVOSB) and HUBzone-certified members who are seeking mentors. Here is where you can sign up to attend. 

The SBA’s ASMPP launched in October of 2016 to provide a way for small businesses with any or no special socioeconomic designation(s) to form a mentoring relationship with another business in a manner previously available only to 8(a) firms. 

The program benefits both mentors and protégés.  Mentors can form joint ventures with their protégé and compete for federal contracts and subcontracts on the basis of the protégé’s socioeconomic attributes, so, for example, a large business that becomes an approved mentor to an SDVOSB can compete as a joint venture partner to the SDVOSB for those opportunities, and the joint venture is considered an SDVOSB, regardless of the mentor’s status.  The mentor can own part of the protégé’s business, and can perform a sizeable portion of any resulting work. Protégés can receive various types of assistance, including financial assistance, from an approved mentor.

The Fed Cetera Network has a number of small businesses that have expressed interest in partnering with a mentor to pursue Federal opportunities, including SDVOSB and HUBzone firms.  Some of those firms will be profiled on the call.

The teleseminar costs $100 to attend, but is free to Fed Cetera Network members and to Private Collection Agencies (PCAs) now serving any U.S. Federal government agency, as well as to bidders to solicitation ED-FSA-16-R-0009.  Others will be invoiced upon sign up.

The Fed Cetera Network is a one-stop shop for Federal contractors, including United States Department of Education (ED) PCA contractors, to easily find pre-qualified potential subcontractors, protégés, and joint venture partners who have the wherewithal to implement Federal subcontracts successfully.  The Fed Cetera Network has helped dozens of small businesses pursue and receive Federal subcontracts over the years, and has helped multiple small businesses find and gain approval for mentorships under the SBA ASMPP. Member companies pay nothing to join the network, but pay only a nominal fee if successfully placed as a subcontractor with a Federal contractor.

Despite all that’s been written recently about the ED solicitation still in litigation, all federal agencies, including ED, have statutory requirements to spend significant dollars directly with small businesses.  According to the SBA’s small business dashboard, 71.2% of the $843.8M small business dollars spent by ED and 24% of the $2.5B eligible dollars for the Federal fiscal year ending later this month (dollars subject to small business percentage spending requirements), have been spent with small PCAs.  (You read that right. Nearly a quarter of every dollar ED spends on anything goes to a small business PCA.)

Many of the PCAs originally awarded as small businesses in 2014 are already large today and will be forced to reclassify as such in 2019.  ED’s stated intent to implement an enhanced servicer program is expected to come to fruition at some unknown, distant point in time in the future.  Meanwhile, news of Judge Wheeler’s permanent enjoinment against any cancellation of solicitation ED-FSA-16-R-0009 may result in additional contracts and placements to large PCAs.

None of these things has anything to do with ED’s statutory requirement to make direct awards for goods and services to small businesses, requirements that cannot be met through subcontracting, which ED will simply not meet without hiring small business collection agencies.

About Fed Cetera
Fed Cetera is a “business development organization” under 48 CFR 52.219-9 that PCAs contact when subcontracting opportunities are available in order to be fully compliant with Federal regulations requiring outreach to various sources of potential subcontractors.  The company maintains a source list of qualified small collection firms, regularly markets to the PCA community, and provides advisory services around business development and compliance to firms operating in the federal market place.

This article previously appeared on the Ontario Systems Blog and is republished here with permission.

A text message service (otherwise known as “SMS,” or “short message service”) is the functional and legal equivalent of a voice call placed to a mobile phone.  As such, a text message is regulated by the Telephone Consumer Protection Act (TCPA) and triggers all the same compliance requirements as do autodialed voice calls placed to mobile phones.  But TCPA compliance is only the beginning.  A compliant text message service must also satisfy the standards imposed by the Cellular Telephone Industry Association (CTIA).

TCPA Consent

Consent to text may be obtained verbally or in writing.  In fact, if you have obtained the consumer’s consent to place autodialed calls to their mobile phone you have also obtained their consent to leave prerecorded messages and text messages.  In other words, properly obtained TCPA style consent extends to all three modes of communication.  But many creditors and third- party collection agencies interpret the law very conservatively and prefer to obtain the express and specific consent of the consumer to engage in text messaging.  They do not rely on consent obtained to autodial or leave a prerecorded message on a consumer’s mobile phone to support their text message service.

CTIA Consent

The rigors associated with securing TCPA style consent may minimize your risk of violating the TCPA but they do not help you satisfy the consent requirements of the CTIA, the cellular phone industry’s self-regulatory organization.  According to the CTIA’s 2017 Standards Manual, CTIA consent requires the consumer to enroll in or subscribe to your text message service by initiating a text message to you.

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Debt Collectors’ Invitation to Text

Getting the consumer to act first and subscribe to your text message service is not easy, particularly for a third- party debt collector.  Organizations and businesses that sell or provide a product or service typically invite consumers to subscribe to their text message service via their web site, bill boards, signs, IVR scripts, marketing voice mail messages, brochures and letters.  Some even place the invitation to text on a billing envelope.

However, third party debt collectors have fewer options to present the invitation to text because of restrictions imposed by the FDCPA (e.g. unauthorized third-party disclosure of a debt) and because they are not soliciting consumers in general to text them about their product or service.  Rather, debt collectors are only interested in those consumers from whom they are collecting money.  Consequently, third party debt collectors tend to limit their invitations to text to letters, phone calls, voice mail messages, IVR scripts and web site.

Frequently Asked Questions

Not surprisingly, questions about text message service compliance requirements abound regarding the FDCPA, TCPA and the CTIA.  A few of the most common include:

Q: Can the account representative initiate the consumer’s first text so long as the consumer authorizes the initiation of the first text on a recorded line?

A: No, the first text must be initiated by the consumer using the mobile phone they are subscribing to the text message service.

Q: Is the consumer’s verbal confirmation to join a mobile database or text messaging program acceptable?

A: No. While the consumer’s verbal consent to text meets the requirements of the TCPA, the CTIA requires the consumer to actually subscribe to the program by initiating a text.

Q: May I use the word “Free” in describing standard messaging rate campaigns?

A: No, the carriers prohibit the use of the word, in this context, because the messages the consumers send to you or the messages they receive may cost the end user if they do not have a messaging plan.

Q: May I require a consumer’s consent as a condition of a settlement or type of payment?

A: No, the CTIA prohibits the business or organization from requiring the consumer’s consent as condition of a settlement or type of payment.

Regardless of the size of your collection agency, hiring a text messaging platform provider is key to managing consent and revocation of consent, pushing your texts, notifying you of deactivated numbers and assisting you in your compliance efforts.  A text messaging platform provider should also give you the reports you need to document the date and time of delivery, open rates and bounce backs to support your compliance with FDCPA requirements and state calling time and frequency restrictions.  Ideally, the platform provider will be integrated with your collection software to ensure a seamless exchange of data both to and from the consumer.

Remember: Start small, end big.  The laws surrounding text messaging for the third-party debt collector are emerging.  Begin with a self- service text messaging program, giving the consumer control over the type and frequency of the messages to be received and gradually advance to recurring message and chat programs as you become more comfortable with the text messaging medium of communication.  Those are the baby steps you should take as this new form of communication becomes even more prominent among your account portfolio.

Back in June, a judge in the Southern District of New York (S.D.N.Y.) found that the Bureau of Consumer Financial Protection’s (BCFP or Bureau) structure is unconstitutional in Consumer Financial Protection Bureau and the People of New York v. RD Legal Funding, LLC, et al., No. 17-cv-890 (S.D.N.Y. Jun. 21, 2018).  On Friday, September 14, the Bureau appealed this decision to the Second Circuit Court of Appeals.

This news comes on the tail of State National Bank of Big Spring filing a petition for writ of certiorari with the U.S. Supreme Court in a case that questions the constitutionality of the Bureau. The petition is a request for the nation’s hightest court to hear the issue.

As previously reported by insideARM, the State National Bank of Big Spring, et al., v. Steven Mnuchin, et al. case arose from the D.C. Circuit Court of Appeals. After the lower court (the D.C. District Court) found the structure of the BCFP to be constitutional, State National Bank of Big Spring appealed the matter to the D.C. Circuit. Almost immediately after the D.C. Circuit opened the matter, the parties filed a joint motion for judgment so that they could immediately appeal the matter to the U.S. Supreme Court.

insideARM Perspective

The Second Circuit’s decision will likely have an impact on the U.S. Supreme Court’s decision to hear the case. The name of the game here is jurisdictional split.

The judgment affirmed by the D.C. Circuit found that the structure of the Bureau is constitutional. If the Second Circuit reverses S.D.N.Y.’s decision and also finds that the structure is constitutional, then the chances of the U.S. Supreme Court hearing the case are decreased. While the issue — the constitutionality of the structure of a federal agency that touches and impacts many individuals and entities — seems perfect for the U.S. Supreme Court, the highest court may feel less compelled to review the issue if the courts agree on the answer.

If, however, the Second Circuit affirms the S.D.N.Y. case or the parties follow the same procedure as in the State National Bank case, then a jurisdictional split occurs and the odds of the U.S. Supreme Court granting the petition for writ of certiorari are raised.

Whether it comes from the Supreme Court or the Second Circuit, it seems that we will soon have an answer to this question.