ITASCA, Ill — Brown & Joseph / Altus, the leading Commercial Collections company in the U.S., is very pleased to announce that Ellen Reinhardt has joined the team as Vice President of Sales!

Ellen comes to Brown & Joseph / Altus with over 30 years of industry relationship management experience where she has consistently been a top performer. Ellen reunites with several former co-workers from D&B RMS who are now at Brown & Joseph / Altus. Her consultative approach and knowledge in insurance (Property & Casualty and Health Payer) and transportation further establishes Brown & Joseph/Altus’s commitment to these industries.

“I along with Mike Welliver and Dave Robbins worked with Ellen during our time at D&B RMS and couldn’t be happier to bring yet another piece of the puzzle to support the growth of our business. Now more than ever, companies are searching for trusted partners to help them drive innovative solutions for managing through these difficult times. The ability to drive sustained value for our clients is further enhanced with Ellen on our team,” said Mike Baldwin, CEO of Brown & Joseph / Altus.

In Ellen’s role as Vice President of Sales, she will work closely with Sales and Operations to support Brown & Joseph / Altus’s impressive growth trajectory.

“The opportunity to work again with Mike, Mike and Dave and to be a key part of the top performing agency in commercial collections made my decision to join the team a very easy one,”  commented Ellen.

For more information on the services Brown & Joseph / Altus provides to our customers, please contact:

Ellen Reinhardt
Vice President of Sales
Direct: (612) 590-8031
Toll-Free: (847) 758-3000
EReinhardt@brownandjoseph.com

Editor’s note: This article is provided through a partnership between insideARM and Squire Patton Boggs LLP, which provides a steady stream of timely, insightful and entertaining takes on TCPAWorld.com of the ever-evolving, never-a-dull-moment Telephone Consumer Protection Act. Squire Patton Boggs LLP—and all insideARM articles—are protected by copyright. All rights are reserved.

The score is now 3-2 in favor of the Marks ATDS definition. Yesterday, the Sixth Circuit Court of Appeals ruled that a predictive dialer system is an automatic telephone dialing system (ATDS) because the Telephone Consumer Protection Act’s (TCPA) ATDS definition includes all dialers that call from a list, not just those that call using a random or sequential number generator. The case is Allan v. Pa. Higher Ed. Assist. Agency. Case No. 19-2043 (6th Cir. 2020)  and it can be found here. 

For the uninitiated, the TCPA’s ATDS definition includes: “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.”

Rather plainly, the statutory definition requires the use of a random or sequential number generator to trigger statutory coverage—you’ll see the words right there in the very precise and specific definition.

But words, schmurds.

Many courts have picked apart the definition in an effort to expand the restrictions of the TCPA—which purportedly, but not really, prevents robocalls—in an effort to apply the statute to technology that Congress never intended to cover when the statute was drafted. Add Allan to that list.

The analysis in Allan is similar to Duran. The Court latches on to the problem with the word “store” appearing in the statutory definition and the supposed superfluity of the phrase if random and sequential generation is required:

[I]t is hard to see how a number generator could be used to ‘store’ telephone numbers,” even if it can “as a technical matter.

From this thread, the Sixth Circuit panel unravels the definition completely.

Common sense suggests that any number that is stored using a number-generator is also produced by the same number-generator; otherwise, it is not clear what ‘storing’ using a number-generator could mean.

Let me help. The statute was phrased as it was to prevent a defendant from producing numbers using one machine and then storing them in a dialer that calls randomly. The statute uses an “or” to clarify that a device need not do both, otherwise a caller could thrwart the statute by splitting up the functionalities into two systems. Yet the requirement of randomness (should) remain the lynchpin of the definition. The word “storage” is not superfluous at all, it clarifies that random numbers stored in a separate system that dials them after their production by a random number generator are subject to the statute. But… oh well.

The Allan court does not pick up on this rather obvious explanation and, instead, pretends it has no choice but to read the big clear words “random and sequential number generator” out of the statute entirely. Quite the leap.

Interestingly, the Sixth Circuit panel suggests its adoption of Marks will not expand the reach of the TCPA to smartphones because the statute is only covered when an ATDS’ automatic capabilities are actually in use. Remarkably, therefore, the Sixth Circuit reads the word “capacity” out of the statute entirely—a determination it suggests is compelled by ACA Int’l:

[T]he D.C. Circuit held that a device is an ATDS only if it actually is used in the way prescribed by statute. Id. That means that use of a cell phone would be subject to a fine under the TCPA only if it actually is used as an ATDS.

Huh?

The ACA Int’l opinion did a lot of things, but it certainly did not hold that the use of automatic functionalities is a necessary trigger for the TCPA to apply. Yes, it raised that issue—and Chief Judge Edwards seemed particularly convinced at oral argument that only the use of automated features can trigger the statute—but that is not what the Court actually held. So Allan’s use of ACA Int’l to serve as a brake for such an expansive reading is questionable, at best.

Still, Allan is clear that non-automatic or “reply only” responses that leverage ATDS technology would not trigger the statute because they do not make “use” of automatic dialing technology:

Voice activation software simply allows a person to dictate the recipient, message, and command to send rather than type the instructions and message. It is not an “automatic” process. And automatic reply messages are only sent in reply. Plaintiffs would have a tough go of showing that they did not consent to receiving a message after they themselves initiated contact.

This is all brand new and really tricky stuff to apply. There will be plenty of time (and opportunity) to decipher precisely how the Sixth Circuit’s definition works between now and next May when we expect a ruling from the Supremes. Until then, folks within the Sixth Circuit footprint must work with this as their new ATDS definition:

We accordingly read § 227(a)(1) as follows:

An ATDS is “equipment which has the capacity—

(A) to store [telephone numbers to be called];

or produce telephone numbers to be called, using a random or sequential number generator; and

(B) to dial such numbers.”

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What. A. Mess.

Notably, the case was argued by Jeff Lohman—yes, that Jeff Lohman—for the Plaintiff and in a jurisdiction that previously came very very close to following the statutory ATDS definition. Yet defeat was aptly snatched from the jaws of victory by a Defendant that should have just accepted Plaintiff’s offer to stay the case.

It’s also worth noting that Allan likely completes the reversal of the TCPA’s ATDS saga post-ACA Int’l. While just a few months ago there was a clear majority position developing requiring application of the statutory definition—with Allan now decided, the score is three Circuit Courts of Appeals following Marks and only two following the statutory approach. This seemed absolutely unthinkable following Gadelhak, but Duran opened the door and now Allan appears to have sealed a new and crippling TCPA ATDS paradigm—right when the Supreme Court is set to review the statute.

And while SCOTUS won’t just count hands in deciding the issue, the fact that three Circuits now prefer a broad ATDS definition, there can be no question that Marks is no longer an outlier—it is the lead dog going into the final briefing showdown next month. 

Want short and sweet summaries of all industry-related court decisions?
The iA Case Law Tracker helps you do that in less time than it takes to pour your morning cup of coffee.

Both the Consumer Financial Protection Bureau (CFPB) and Pennsylvania’s Attorney General (PA AG) filed lawsuits against Navient for its processes. Navient challenged the concurrent investigations, arguing that the Consumer Protection Act prohibited concurrent, parallel actions by the AG and the CFPB, and that the Higher Education Act preempts the state’s actions under state law. The Third Circuit—agreeing with the district court below it—ruled against Navient, finding that there was nothing wrong with these concurrent lawsuits. This article will focus on the concurrent suit claims only.

The underlying claims.

The claims of the underlying PA AG suit alleges that Navient engaged in unfair, deceptive and abusive practices (UDAAP) under the Consumer Protection Act by:

• Steering borrowers into forbearance rather than Income Driven Repayment plans (IDR);
• Failing to properly notify consumers of the negative consequences of submitting untimely or incomplete applications and breaking their enrollment in IDR;
• Placing borrowers into paid ahead status and sending a statement for $0, but then treating the lack of a payment on such zero-balance statement as a missed payment, thus resetting the clock for releasing loan cosigners; and
• Failing to correct an error that caused the misallocation or misapplication of submitted payments, resulting in improper law fees, interest charges, and negative credit reporting.

Nine months prior to the PA AG suit, the CFPB filed a suit against Navient for failing to adequately disclose availability of IDR plans.

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Third Circuit says the Consumer Protection Act does not prohibit concurrent suits.

Navient argued that the PA AG suit was attempting to do the same thing as the previously-filed CFPB suit, which is to require Navient to provide certain disclosures. In other words, Navient argued these were copycat claims filed by the same consumers for the same conduct. While Navient agrees that the Consumer Protection Act gives power to state AGs to enforce it, it only does so when the CFPB has not already enforced the act for the same conduct.

The Third Circuit disagreed, finding that nothing in the Consumer Protection Act prohibits concurrent suits. The court looked at the plain meaning of the specific statutory provision in question, finding that there was no language in the statute prohibiting concurrent claims by state AGs. The court contrasted this with other sections of the statute that did expressly prohibit concurrent claims. Based on statutory interpretation principles, the court found that the omission was intended by Congress, and thus concurrent claims are not prohibited.

The court also rejected Navient’s pre-suit notice argument. The Consumer Protection Act requires that states send a copy of their complaint to the CFPB prior to filing so that, if necessary, there can be coordination between the regulators. The Third Circuit disagreed with the argument that this means the state can only proceed with claims that the CFPB is not aware of.

The court concluded:

Accordingly, we hold that the clear statutory language of the Consumer Protection Act permits concurrent state claims, for nothing in the statutory framework suggests otherwise.

insideARM Perspective

While this is a civil—rather than a criminal—case, double jeopardy doesn’t technically apply…but that’s what I thought when I read this suit. When someone is harmed by the actions of another, our justice system allows for the harmed person to be “made whole” again through whatever recovery is appropriate. However, one of the court’s reasonings for allowing concurrent claims is that the PA AG may be able to recover more for their claim than the CFPB will in theirs. But then the question arises: if, hypothetically, the case goes to a judgment against Navient, will it then be liable for the difference between the two judgments, or will they be liable for both in full? The latter is probably the answer, since the Third Circuit mentioned in dicta that the PA AG’s claims were distinct from the claims brought by the CFPB—no matter how related they were. 

The biggest elephant in the room is whether this means that companies would face 10, 20, 30 concurrent suits for the same or similar allegations? Odds of this happening are relatively low, but apparently not impossible as Navient dealt with the above concurrent suit situation with the CFPB and three separate states (Pennsylvania, Washington, and Illinois).

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This article, written by Joann Needleman and Michael Lamm, is part of the iA Think Differently series. Written by or recorded with members of the iA Innovation Council, the series of articles and videos showcases thought leadership in analytics, communications, payments, and compliance technology for the accounts receivable management industry.

—

The COVID-19 pandemic has affected all sectors of the economy. For a few companies, including those in the digital media, in-home exercise and online delivery spaces, opportunities have expanded. But survival has hung in the balance for many other companies as they have had to reimagine the concept of the workplace seemingly overnight.

When the pandemic first hit, most Mergers & Acquisitions (M&A) assignments were put on hold. Companies on both the buy and sell sides of the transaction couldn’t figure out what the new environment would look like. The question for many was, “Am I buying or selling?” Now that we have settled into the new normal more than three months later, M&A transactions have been picking up.

The clear driver behind this increased M&A activity has been the Work From Home (WFH) movement.

During our work with companies entering the M&A space today, none have expressed the opinion the “work at home” concept will go away after the pandemic is either solved or diminished either by herd immunity or a vaccine. This has been the case even though challenges have included data security, information flow, human resource management and capital allocation.

What we are hearing from these companies is the WFH movement is here to stay.

How companies solve WFH will help to determine which have a future.

Companies that were not able to get work from home fully established, as the pandemic spread through the economy – and then going further to add the bells and whistles needed to be successful today – will have issues going forward.

Companies that were able to pivot and quickly get up to speed on WFH have won a key battle. They are growing and getting more client opportunities, which are leading to greater profitability.

Since mature accounts receivable management (ARM) businesses, unlike debt burdened-revenue challenged IPOs, are valued based on how much profit they generate each month and each year, this is leading to higher valuations.

Don’t waste the COVID-19 crisis.

No good crisis should be wasted, including COVID-19. Even as the pandemic eventually decreases, double down on your WFH learnings and capabilities. What’s more, challenge yourself, your business partners and your staff to expand upon these capabilities. While this may have been an unwelcome education, it can prove to be a valuable one.

Fast forward technology.

Prior to the pandemic, technology had been an afterthought for many ARM companies. It was not considered to be a driving force for these businesses. Following the initial days of the pandemic, technology has become the primary area of focus for ARM companies.

Any ARM company doing work for a large financial institution will watch its business slip away if technology isn’t among its priorities.

Choosing the what, how, when and legality of technology.

Technology is expensive and complicated, so you will want to get it right. A major challenge for ARM companies is to figure out what is the right technology to deploy and how to deploy it.

Technology can also be controversial. In choosing technology, companies will need to not create a lot of legal action as a result of trying to do something that is more innovative. Even with all the omnichannel options available from technology providers, what you can use and when can you can use it is the big question on the debt collection side.

What can we expect from a change in the White House?

ARM companies won’t have a choice but to continue automating and figuring out how to leverage technology. Whoever eventually occupies the Oval Office, the consumer is driving new communications strategies. If consumers don’t want to be spoken to over the phone and prefer to communicate via text, chat or e-mail, they will drive how the market shifts.

We don’t see the ARM business going backward, regardless of administration. This will certainly be true for people working from home. We see consumers increasingly wanting multiple communications as an option, in particular for the debt collection area.

Privacy concerns should remain at the forefront.

While consumers may be driving the market to provide greater convenience through technology, privacy considerations compel companies to guard against data leakage and theft. This is and will continue to be a delicate balancing act for ARM companies. Consumers want speed and convenience while also wanting their confidential information to be kept safe.

ARM companies who are making a significant investment in technology today will be winners in the future.

—- 

Michael Lamm is Managing Partner of Corporate Advisory Solutions and a strategic partner to the iA Innovation Council. 

Joann Needleman is a Member and Leader of the Consumer Financial Services Regulatory & Compliance Practices Group, at Clark Hill PLC, and host of the podcast Credit Eco to Go. Joann is also a member of the iA Legal Advisory Board.

—- 

The iA Innovation Council is a collaborative working group of product, tech, strategy, and operations thought leaders at the forefront of analytics, communications, payments, and compliance technology. Group members meet in person (and lately, virtually) several times each year to engage in substantive dialogue and whiteboard sessions with the creative thinkers behind the latest innovations for the industry, the regulators who audit and establish guardrails for new technology, and educators, entrepreneurs and innovators from outside the industry who inspire different thinking. 

2020 members include:

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ROCKVILLE, Md. — The attendees of iA Strategy & Tech voted Remitter the winner of best overall industry technology. The company won over the event’s 500 attendees with their white-label, AI-powered digital communications platform. 

iA Strategy & Tech, the new digital conference from insideARM, featured 14 companies showcasing new or newly enhanced collections industry tech last week. Remitter won Day 1 best new tech and overall best new tech. LiveVox’s speech analytics tool won best tech for Day 2. MRS BPO won best new tech on Day 3 for Adam, their new IVR tool.

You can view Remitter’s winning demo video right here. You can schedule a demo with Remitter right here.

“We are thrilled by the Best New Tech award, I think it affirms that lenders and the ARM industry in general are ready to adopt the use of artificial intelligence to optimize customer engagement.” said Roxanne Bartley, Remitter’s EVP, of Strategic Partnerships. “Collection strategy leaders are recognizing that their consumers are also those of Amazon, Zoom, Uber etc. and the need to provide them with the personalized self service customer journeys they have come to expect from all companies they do business with is only growing. Remitter solves for that, plus added compliance benefits. It isn’t just about the increased revenues, which is valuable, but also about the improved customer experience and resulting brand loyalty.”

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About Remitter

Remitter is a white-labelled digital communications platform powered by artificial intelligence that helps lenders maximize revenue by optimizing customer engagement.

The system sends personalized mobile communications (SMS or Email) to customers based on their own interactions with the platform, at the right time and on their preferred channel. With only a few clicks customers can pay in full without any extra steps like finding the bill, creating profiles or logging in using configurable payment options. Borrowers can also create a payment plan with a start date, amount and payment terms that work for them. If they would like to speak to someone about their bill, customers are able to connect to an agent or request a call back at a time that suits them. The intelligent communications platform is delivering proven results with customers seeing an increase in collections and achieving operational expense savings whilst remaining more compliant and enhancing their consumers brand experience. 

About iA Strategy & Tech

iA Strategy & Tech 2020 is a new digital event from insideARM designed specifically for collections strategy executives. Last week, attendees got insight into the biggest challenges in collections strategy, including how best to implement and assess new tech, how to design effective self-service, critical levers to alleviate expense pressure, and best practices for modeling and segmentation. Plus, the event featured short, to-the-point, all-product, demos for new, cutting-edge industry solutions. 

iAST content is now available on-demand. Register now and view all sessions and demos on your schedule.

A court decision out of the Western District of Washington (W.D. Wash.) came out on Friday that discusses the balance between the credit reporting and the Fair Debt Collection Practices Act’s (FDCPA) bona fide error defense. The case is Burr v. Evergreen Prof’l Recoveries, Inc. and the key takeaway is to audit what you report.

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What Happened?

This case arises out of plaintiff’s medical debt, which was broken up into a group of several accounts. At some point, defendant sued plaintiff to collect on this debt. The parties settled the collection lawsuit, and defendant now agrees that the underlying debts are no longer owed.

The problem occurred when plaintiff reviewed her credit report and saw that defendant continued to negatively report on two of the accounts. Plaintiff sent a letter to defendant demanding that they delete the entries, which defendant did. However, defendant then erroneously re-reported the accounts and continued to do so until plaintiff said she would file an FDCPA lawsuit against them. Defendant again corrected the reporting, and plaintiff filed the lawsuit in question.

The Court’s Decision

The court quickly concluded that an FDCPA violation occurred based on defendant’s own admission to the errors. The court then turned to the question of whether defendant was entitled to the bona fide error defense, and summarily decided the answer was “no.”

The court’s reasoning turned primarily on the requirement for defendant, if it seeks to assert the bona fide error defense, to have maintained procedures reasonably adapted to avoid the violation. The court found:

The Court has reviewed the briefing of the parties and the declaration of Evergreen president Monica Severtsen and finds there is no evidence for a reasonable juror to conclude that Evergreen maintained a specific procedure adapted to avoid the initial reporting error. Instead, there is only evidence that Evergreen has a system of coding accounts as disputed or paid off. There is no evidence that Evergreen has procedures to double check coding before it is implemented, or to audit the coding after it has been completed.

With that, the court granted summary judgment in favor of plaintiff on the FDCPA claim.

Want to see how courts are ruling on the bona fide error defense?
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New York, N.Y. — The Office of Inspector General (OIG) of the United States Department of Health and Human Services (HHS) has issued a favorable decision – Advisory Opinion #20-04 – in response to a request filed by RIP Medical Debt (RIP), a national nonprofit. The request was for the OIG to review a proposed expansion of RIP’s mission-driven medical debt forgiveness program.

The OIG’s Advisory Opinion states it will not impose sanctions under federal anti-kickback or civil monetary penalty laws when RIP works with health systems and large physician groups that donate or sell certain unpaid patient accounts (i.e., bad debts) to RIP. After acquiring an account, RIP abolishes the patient’s financial liability and rehabilitates their credit score.  

“We are excited by this development and look forward to growing our ability to provide economic relief to even more families through the removal of medical debt,” says RIP’s Executive Director, Allison Sesso. “Through this transformative opinion, hospitals and health systems can now expand their healing reach to include their patients’ financial health – a known determinant of physical and mental wellbeing.” 

RIP is a national 501(c)(3) organization founded in 2014 for the sole purpose of eliminating the medical debt burdens of low-income individuals with limited capacity to pay their medical bills. The model leverages even small donations from people across the country to abolish outstanding medical debts. To date, RIP has purchased medical debt accounts only from commercial debt buyers on the secondary debt market. These debts originated from hospitals and physician groups which sell their accounts receivable to commercial debt buyers. RIP acquires, and then forgives, these debts.  

RIP provides relief to individuals with incomes at or below two times the federal poverty level, whose medical debts are five percent or more of their gross annual incomes or who are insolvent. (Individuals cannot apply to have their debts abolished.) Until now, RIP has acquired delinquent accounts that meet these criteria for relief only when those debts have been available on the secondary debt market.  

Now that the OIG has issued Advisory Opinion #20-04, RIP Medical Debt will begin obtaining debt directly from health systems and large physician groups, vastly expanding the number of families benefiting from the work of RIP. Over the next several months, RIP will ramp up its direct engagement with providers. To inquire about working with RIP Medical Debt as a hospital, health system or independent physician’s group with more than 50 members, please contact RIP’s Director of Debt Acquisition & Relief, Mike Toth at mtoth@ripmedicaldebt.org or 832-717-2879. 

“Partnering directly with providers – especially health systems and hospitals – allows RIP to help resource-challenged individuals sooner than we can now. Our vision of removing hardship for the highest number of people is now in sight,” says Craig Antico, RIP’s co-founder and Director of Debt Operations. “I’m grateful the OIG sees our value and is giving their green light for hospitals and physicians to donate or sell debts owed by the poor and those in hardship directly to RIP.”  

The massive and growing problem of medical debt in America, and RIP’s charitable efforts, were most publicly highlighted on an episode of John Oliver’s HBO show Last Week Tonight when the late-night host worked with RIP to eradicate $15 Million of medical debt. The nonprofit has also collaborated with numerous pro-athletes, WeTransfer, NBC Universal and many others. Its work has been covered by Good Morning America, The New York Times, Associated Press, CNN, Fox News and many other outlets.  

“We believe the Advisory Opinion will provide an important measure of comfort to hospitals and health systems and large group practices,” says RIP Board Member and Nixon Peabody Partner Michele Masucci. “Now they can donate their qualifying medical debts to RIP consistent with compliance considerations and it will clear the path to creating a positive impact on patients challenged by current health care conditions.” 

Medical debt causes wide-ranging damage, from preventing people from seeking the care they need and filling their prescriptions to blocking access to jobs, housing and loans when employers, landlords and banks check credit ratings.   

About RIP Medical Debt

Since being founded in 2014 by two former debt collectors, RIP Medical Debt has acquired, and abolished, more than $2.5 billion of oppressive medical debt, helping over 1.5 million individuals get out from under the burden of crushing medical debt. On average, one dollar donated to RIP forgives $100 of medical debt, empowering every donor to have an outsized impact. To learn more, visit https://ripmedicaldebt.org/ or reach out to Daniel.

TROY, Mich. — TECH LOCK Inc., a RevSpring Company, today announced its TECH LOCK Secure™ Managed Cybersecurity and Integrated Compliance Services, fulfilling a growing demand for customers struggling with the challenges of keeping pace with modern security threats. TECH LOCK Secure™ is comprised of a comprehensive suite of Managed Security and Compliance Services, including Endpoint Detection and Response, Network/Firewall, Log/SIEM and Vulnerability Management. The service is supported by a U.S. based 24x7x365 Security Operations Center (SOC) providing quick response to security events through the TECH LOCK Secure™ service portal, powered by a cloud-based machine learning engine enabling security event orchestration, detection and response.

TECH LOCK recognized that businesses were spending on compliance basics but were falling behind in what was needed to keep their business and customer data safe against hackers. TECH LOCK Secure™ is designed to address this concern and meet the demands of businesses that have limited budgets, so they do not have to focus on security or compliance, but now have a service that addresses both. “We wanted to make it easy and accessible for any company to obtain best-in-breed security technology, operations and orchestrated incident response,” said Brian McManamon, president of TECH LOCK Inc. “Our in-depth knowledge and experience with data compliance standards ensures that our solution provides immediate value to businesses by delivering comprehensive data protection while maintaining continuous compliance.”

TECH LOCK Secure™ is a turn-key solution based on modern, adaptive cybersecurity technologies. Customers have complete transparency to all security and compliance operations. The TECH LOCK Secure™ portal provides real-time dashboards and reports with the ability to drill down into specific data. Through the information provided in the portal, the customer can quickly validate that their organization is secure and up to date with their compliance requirements.

“As a leader in outsourced patient financial services, ensuring patient privacy and protecting the data entrusted to us is critical,” said Jim Warner, chief technology officer, State Collection Service, Inc. As a result, working with TECH LOCK Inc. is not just about checking the box for compliance.” “Security and compliance are so interwoven that subscribing to TECH LOCK Secure™ was an easy choice to make to ensure data security,” said Tim Haag, president, State Collection Service, Inc.

“Our long-term partnership with TECH LOCK provides us with tremendous peace of mind knowing that we are using market-leading technology and processes to ensure data security and patient privacy.”

About TECH LOCK

TECH LOCK enables organizations to navigate, detect, and respond to today’s modern cybersecurity and compliance challenges. Our focus is the delivery of adaptive managed security services and security operations leveraging industry-leading technology enriched with threat intelligence and powered by machine learning in an orchestrated model. We deliver comprehensive security and compliance services with measurable outcomes and personalized support. For more information, visit techlockinc.com.

Editor’s note: This article is provided through a partnership between insideARM and Squire Patton Boggs LLP, which provides a steady stream of timely, insightful and entertaining takes on TCPAWorld.com of the ever-evolving, never-a-dull-moment Telephone Consumer Protection Act. Squire Patton Boggs LLP—and all insideARM articles—are protected by copyright. All rights are reserved. 

Here’s a big TCPA ruling for debt collectors and servicers—and a bit of a downer for everyone else.

The Court in Mosley v. General Revenue Corp., No. 1:20-cv-01012- (C.D. Ill. July 20, 2020) granted a defendant debt collector’s motion to dismiss a TCPA claim at the pleadings stage, reasoning that it is simply not plausible the Defendant used a random or sequential number generator to make the challenged calls. While that’s great news, the ruling contains a bit of a curveball for other callers hoping to leverage Gadelhak at the pleadings stage.

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There is an ongoing split of authority regarding the scope of the TCPA. The Seventh Circuit Court of Appeals—where Mosely was venued—is a particularly favorable jurisdiction for Defendants because the ruling in Gadelhak assures that the TCPA only applies to pre-recorded or random-fired calls. Nonetheless, there is relatively little case law regarding the pleadings standard for post-Gadelhak TCPA cases. As we all know, positive case law is scarcely beneficial if it can’t be used at the pleadings stage to cut these cases off at the knees—if a Defendant is forced to wait until summary judgment for a dismissal on the ATDS issue, hundreds of thousands in fees and expense may already be incurred. (A cost the Defendant is unlikely to recoup).

That’s what makes Mosely so important. The Plaintiff in Mosely admitted—as he had to—that Gadelhak requires the use of a random or sequential number generator to make out a TCPA ATDS claim. However, Plaintiff argued at the pleadings stage that he could not be expected to know how the Defendant’s system operated. Instead, he argued it was enough to allege that he had no relationship with the caller and allege that the system had the capacity to dial randomly or sequentially. 

The Court was unmoved and made a critical finding that everyone should keep in mind out there in TCPAWorld:

The Court rejects the inference that a claim is plausible because a plaintiff merely alleges the dialer system has the capacity to randomly or sequentially generate numbers, without any factual basis for such allegations.

In other words, conclusory allegations of the “capacity” of a system to randomly or sequentially dial, but lacking any supporting facts, are to be properly and summarily dismissed. Nice!

But it gets even better, especially for debt collectors. The Court goes on to look at the context and content of the phone calls and determines that random or sequential number generation is simply not plausible—the calls at issue were debt collection calls and debt collectors do not make random-fired calls. In the Court’s words:

Plaintiff offers no plausible explanation why a debt collection company would need or use a machine which had the capacity to dial or store randomly or sequentially generated numbers.

In the absence of such an explanation, the Court would not allow the claim to move forward and dismissed it.

There is a dark cloud over this sunny day for TCPA defendants, however. The Court does throw some callers under the bus as potential random-dialers:

It is far more likely that a telemarketing company, bank, or other seller of goods would desire to have machines with the capacity to dial randomly or sequentially generated numbers.

That’s a bit of a sucker punch for non-collectors, but hopefully this dicta will not be used to keep marketing callers trapped in TCPA cases longer than necessary.

We’ll keep an eye on all of this for you.

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