Editor’s Note: This article is broken up into three parts. Part 1 can be found here, Part 3 will be published next week.

The California AG’s Office has been working hard on the California Consumer Privacy Act’s (CCPA) proposed regulations. On Friday, February 7, 2020, the AG published revised proposed regulations, and then just three days later, on February 10th, the AG published revised proposed regulations again (citing an omission in the February 7th publication). 

Many of the revisions are meaningful and show the AG has been carefully listening and reviewing feedback, as well as doing its homework. For example, the AG’s Office is required to disclose what documents and information it relied upon during the rulemaking process, and the AG has disclosed 20 different published sources (ranging from studies and legal journals, to online articles and reports). 

While there were many revisions, there were 15 significant changes that may be of interest to the credit and collections industry. Part 2 of this article series deals with changes 6-10. Part 3 will be published on insideARM in the coming week.

6. Clarification on Business and Calendar Days for Responding to Requests 

The revised regulations clarify that a business has 10 business days to confirm receipt of a request to know or delete, and 45 calendar days to respond to a request (and an additional 45 calendar days to respond when necessary). The revisions also extended the timeline to comply with a request to opt-out by stating a business has 15 calendar days to process that request.

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However, if a business sells a consumer’s personal information after the consumer’s request, but before the business processes it, the business must inform the third party to whom it sold the information that the consumer opted-out and direct the third party to not sell that consumer’s information. 

7. Providing Context to Confirmation Receipts   

Many grumbled about the proposed regulations requiring a business to confirm receipt of a request. Perhaps in response to those grumbles, the AG’s office decided to include in its revisions a clarification that the “confirmation may be given in the same manner in which the request was received.” Accordingly, if the request was made over the phone, the confirmation may be provided verbally during that very same phone call. 

8. Simplifying what a Business Must Do when Responding to a Request to Know 

The revisions struck language which said a business “shall not provide a consumer with specific pieces of personal information if the disclosure creates a substantial, articulable, and unreasonable risk to the security of that personal information, the consumer’s account with the business, or the security of the business’s systems or networks.” The revisions replaced the language by stating a business is not required to search for personal information if four conditions are met:

1. The “business does not maintain the personal information in a searchable or reasonably accessible format,
2. The “business maintains the personal information solely for legal or compliance purposes,”
3. The “business does not sell the personal information and does not use it for any commercial purpose,” and
4. The “business describes to the consumer the categories of records that may contain personal information that it did not search because it meets the conditions stated above.”

The revisions lighten a business’s burden by relieving them of even having to perform the search if they can show the personal information meets the four conditions. 

9. Simplifying what Must be Disclosed in Response to a Request to Know  

The statutory definition of personal information states that it includes “inferences drawn from any [personal information] to create a profile about a consumer reflecting the consumer’s preferences, characteristics, physiological trends, predispositions, behavior, attitudes, intelligence, abilities, and aptitudes.”

The fact that personal information includes “inferences” had many scratching their head when thinking about the data artificial intelligence creates (for example, when AI is used to inform a collection strategy). The revisions appear to address this. The AG added that a business “shall not disclose in response to a request to know . . . technical analysis of human characteristics.” One reading of this suggests that inferences made using AI do not need to be disclosed when responding to a request to know if such inferences are based on human characteristics rather than personal information. 

10. Eliminated Requirement that an Unverified Request to Delete be Treated as an Opt-Out Request  

The revisions struck the requirement that an unverified request to delete be automatically treated as an opt-out request. If a business sells information, the revisions added a requirement that the business provides the consumer with the option to opt-out of the sale of their personal information and to provide the consumer with the opt-out link. 

More to Come…

Look out next week for the final part of this 3-part series, that will cover the final 5 significant changes.

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. 

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Turns out words do have meaning, at least in the Third, Seventh, and Eleventh Circuits. Earlier today, a unanimous Seventh Circuit panel followed the plain language of the TCPA and held that a system must store or produce numbers, using a random or sequential number generator, to be an ATDS. See Gadelhak v. AT&T Services, No. 19-1738 (7^th Cir. Feb. 19, 2020). And because the defendant’s system dialed from a list of numbers stored in a database, it is not an ATDS, and “unwanted” text messages did not violate the TCPA.

Gadelhak is significant on multiple fronts. Most importantly, it became the second Circuit Court to reject Marks by name, making the circuit split 3-1 in favor of the statutory definition. Almost as significant, however, is the Seventh Circuit’s reasoning.

The court began by noting that when the TCPA was enacted, telemarketers relied primarily on systems that randomly generated telephone numbers and then dialed them. Thus, the statute’s “awkwardness,” to use the Court’s term, did not have much of an impact. The TCPA plainly applied to the type of systems Congress found problematic — namely, systems that generated and called random numbers.

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And despite acknowledging at least some awkwardness in the definition of an ATDS, the Seventh Circuit reasoned that the Third and Eleventh Circuit interpretation is “the most natural one based on sentence construction and grammar.” Which is not surprising. A statutory definition requiring a random or sequential number generator means that a system must actually have a random or sequential number generator to qualify.

When advocating for a broader definition of an ATDS, the Ninth Circuit and plaintiff’s attorneys typically argue that the random or sequential number generation requirement only applies to “producing” numbers, not to “storing” them. Thus, they argue, so long as a system stores numbers to be called automatically, it is an ATDS.

But as the Seventh Circuit pointed out, systems in use in 1991 and 1992 would “store” numbers that were randomly or sequentially generated for lengthy periods of time and then dial them throughout the course of a telemarketing campaign. Faced with systems that performed in this manner, Congress had every reason to include the word “store” in the statute. Otherwise, Congress would have left a gaping hole in the statute that would have excluded systems used by telemarketers at the time.

The Seventh Circuit further noted that jettisoning the random or sequential number generation requirement would be inconsistent with the “narrow” purpose of the TCPA. It, therefore, rejected the Ninth Circuit’s “ungrammatical interpretation,” in part because “it would create liability for every text message sent from an iPhone.” As the court observed, every iPhone is able to “store” numbers and then text or call them. Leaving the word “store” on an island, standing alone and unmodified, would, therefore, turn a once narrowly focused statute into a behemoth broad enough to capture commonly used personal phones.

The Seventh Circuit correctly reasoned that such a broad interpretation would be at odds with the plain language of the TCPA and its narrow focus. And that is certainly the case. As we have remarked several times here at TCPAWorld, the TCPA was enacted with a very narrow focus: prohibiting random-fire telemarketing calls. It simply was not passed to be a panacea against every form of “unwanted” telephone call or text.

Gadelhak is a tour-de-force of statutory construction and legislative history. It took an in-depth view of n the plain language of the TCPA and — significantly — of the reasons Congress included that plain language. And it provides a clear roadmap for future courts and the FCC, as they continue to litigate the definition of an ATDS.

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The iA Case Law Tracker can help you keep up with new court decisions and conduct quick, incisive legal research in less time than it takes to pour your morning cup of coffee.

COUNCIL BLUFFS, Iowa — S.C. Riverside, global recruiting specialists in the ARM and Revenue Cycle space, are pleased to announce the 20-year Anniversary of Vice President, Sonia Macias.

Macias has worked at S.C. Riverside since 2000. Before joining S.C. Riverside, Sonia was in the banking industry. She was born in Mexico City and is fully bi-lingual. She has earned numerous Pacesetter Awards for performance by assisting hundreds of ARM/Rev Cycle candidates and clients in improving their lives and businesses. 

“Sonia has been instrumental in our success for 20 years,” said Jim Finocchiaro, president and founder. “During her career she has filled industry searches for national Agencies, BPO Call Centers, Revenue Cycle Firms, and over 150 positions for government ARM contractors. In addition, she has filled client needs on five continents and countless nearshore locations. She is an essential part of S.C. Riverside, and we are fortunate to have her on our team.”

To learn more about S.C. Riverside Inc., visit us on the web at www.scriverside.com.

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The California AG’s Office has been working hard on the California Consumer Privacy Act’s (CCPA) proposed regulations. On Friday, February 7, 2020, the AG published revised proposed regulations, and then just three days later, on February 10th, the AG published revised proposed regulations again (citing an omission in the February 7th publication). 

Many of the revisions are meaningful and show the AG has been carefully listening and reviewing feedback, as well as doing its homework. For example, the AG’s Office is required to disclose what documents and information it relied upon during the rulemaking process, and the AG has disclosed 20 different published sources (ranging from studies and legal journals, to online articles and reports). 

While there were many revisions, there were 15 significant changes that may be of interest to the credit and collections industry. Part 1 of this article series deals with changes 1-5. Part 2 and Part 3 will be published on insideARM in the coming week.

1. Improved Guidance on the Definition of “Personal Information”

The revised proposed regulations added a whole new section to clarify that information is personal information if “the business maintains information in a manner that ‘identifies, relates to, describes, is reasonably capable of being associated with, or could be reasonably linked, directly or indirectly, with a particular consumer or household.’” The revision then illustrates this: “[f]or example, if a business collects the IP addresses of visitors to its website but does not link the IP address to any particular consumer or household, and could not reasonably link the IP address with a particular consumer or household, then the IP address would not be ‘personal information.’” 

This clarification is a huge sigh of relief because, without it, the definition of personal information is unwieldy. Many businesses possess information that could conceivably be “personal information” but don’t maintain it in a manner that could reasonably be linked back to the consumer or household. Accordingly, this revision makes the definition of personal information a little more palatable and manageable. 

2. Clarification about the Various Notices Requirements to Consumers 

You get a notice, you get a notice, everybody gets a notice! The CCPA has various notice requirements throughout its text. Therefore, it makes sense that the revisions summarized, in one convenient spot, all the CCPA’s different notice requirements. The added section (§ 999.304) creates a roadmap to each of the four different notice requirements. In doing so, the revised proposed regulations make it clear that the required notice a business must provide at or before the time it collects personal information directly from a consumer is distinctly different than a businesses’ privacy policy. Note, the revisions still require a business to link, or say where the policy can be found, in its notice at or before the time of collection.

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3. Multiple Clarifications about the Notice Before the Time of Collection 

The original proposed regulations (i.e., the proposed regulations prior to the revisions) assumed that the notice provided to a consumer at or before the time of collection would be in writing. It completely ignored the fact that data collection is often conducted over the telephone. 

The revisions overhauled § 999.305 by adding a non-exhaustive list of illustrative examples of how the notice may be provided. One of those examples addresses the situation where the data collection is done over the telephone. The example shows that the notice may be provided verbally if a business is collecting personal information over the telephone. 

While our industry welcomes this revision, we are already bracing for consumers’ reactions—when a consumer realizes they are speaking with a debt collector, for example, they are already usually irritated by our verification procedure (which is necessary to authenticate their identity) and the Fair Debt Collection Practices Act’s (FDCPA) required disclosures (e.g., mini-Miranda, meaningful disclosure, validation information, etc.). We cringe thinking about adding an explanation about the categories of information we may collect over the telephone during that conversation (or future conversations) and explaining the purposes for which that personal information may be used. Many consumers easily become impatient on the phone, and it would have been nice for the AG to allow for an abbreviated version of the notice when it is provided on the phone. 

The revisions also add one significant clarification: a business may not use a consumer’s personal information for a purpose which is “materially different” than those disclosed in the notice at collection. Adding materiality relieves a business from having to think of every little conceivable way it may use the data, and now allows a business some latitude within the realm of materiality. 

Lastly, the revisions clarify that a data broker, who is registered with the AG, is not required to provide the notice to consumers if it has included “in its registration submission a link to its online privacy policy which includes instructions on how a consumer can submit a request to opt-out.” This greatly simplified the prior proposed regulation which required data brokers to either contact a consumer directly and provide them with a right to opt-out, or to confirm with the source of the information that they provided notice at collection and to obtain signed attestations from the sources.

4. Simplification of the Privacy Policy 

The revisions simplified the privacy policy by removing three requirements. The privacy policy no longer requires the sources of collected information to be disclosed, the business or commercial purposes, or the categories of third parties with whom the business shares personal information. If a business sells personal information, however, the privacy policy must still identify the categories of personal information the business has disclosed or sold for a business purpose in the last 12 months, and for each category, “provide the categories of third parties to whom the information was disclosed or sold.” 

5. Clarification about the Methods for Submitting Requests 

The revisions to proposed regulation § 999.312 simplified the methods a business must offer a consumer to submit a request to know or delete. If a business “operates exclusively online and has a direct business relationship with a consumer,” then the business is only “required to provide an email address for submitting requests to know.” All other businesses must still provide two or more designated methods for submitting requests, “including at a minimum, a toll-free telephone number.” 

The revisions removed the requirement that a business is required to provide an “interactive webform” if the business maintains a website. Another sigh of relief, because setting up an email address to accept requests is a whole lot easier than (and just as effective as) programming an interactive webform. 

The revisions still require a business to “consider the methods by which it primarily interacts with consumers when determining which methods” it offers to consumers for making such requests.

More to Come…

Check back later for Parts 2 and 3 of this article, that will discuss the other significant changes in the revisions. 

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. 

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You’ll recall that the Eleventh Circuit Court of Appeal recently interpreted the TCPA’s ATDS definition narrowly in Glasser, parting ways with the Ninth Circuit’s decision in Marks and paving the way for the great collapse of TCPA litigation in Florida.

Unsurprisingly, the Glasser plaintiff is seeking a re-hearing before the Eleventh Circuit en banc. 

The identified issues in the petition:

• Whether the Telephone Consumer Protection Act (TCPA)’s restrictions
  on auto-dialed telephone calls apply to list-based autodialers, as held by Marks v.
  Crunch San Diego, LLC, 904 F.3d 1041 (9th Cir. 2018) and the dissenting panel
  opinion, or whether those restrictions apply only to autodialers that generate random or sequential telephone numbers, as held by the panel majority.
• Whether a computer in Kentucky that dials telephone numbers
  automatically is nevertheless not an autodialer because it required a human in Florida to forward the list of numbers to the computer.

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The arguments are recycled: Congressional intent and statutory language compel a determination that ATDS covers predictive dialers. But that’s not true and Glasser explains why.

Official prediction–this will go nowhere. Glasser is an extremely well-reasoned opinion. We will obviously keep an eye on this for you, however.

Petition can be found here: Glasser Re-Hearing Petition.

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The iA Case Law Tracker can help you keep up with new court decisions and conduct quick, incisive legal research in less time than it takes to pour your morning cup of coffee.

This article is part of the iA Think Differently series. Written by members of the iA Innovation Council, the series showcases thought leadership in analytics, communications, payments, and compliance technology for the accounts receivable management industry.

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Innovation is exhilarating but can be exhausting if you aren’t fully prepared for what lies ahead. It requires a great deal of tenacity to see the process through from ideation to deployment. Depending on your company’s readiness for innovation, internal bureaucracy, etc. you can expect to be going down this road for 1-3 years or longer. Before you make your first business case pitch or ask for a cent, you need to start doing the work internally to socialize your vision and garner support. 

Here are five suggestions for getting started:

1. Know which stakeholders you need to influence and start immediately – it is never too soon to start chatting up your eventual decision-maker(s) about your vision of the future. Gauge how receptive they are. Identify the areas where they are in full support and where you sense hesitation or they express concern.
2. Design your countermeasures – now that you know the concerns your decision-maker has, make sure that your plan to address them is fully cared for in your business case. If x is the concern, then y is the solution. As you move forward with your pitch, don’t be shy about addressing their concerns and sharing your thoughts on how they can be alleviated.
3. Find your champions – as you start sharing your vision, pay attention to who jumps on board right away. You don’t have to rely solely on yourself and your decision-maker to get a yes. If you have influential leaders in your network who will have a voice at the table as you propose and drive your innovation, make sure they know what, when and how you’ll need their support. Keep these people close throughout the process.
4. Benchmark, benchmark, benchmark – talk to industry peers (like insideARM’s Research Assistant), join industry groups focused on innovation (insideARM’s Innovation Council is a great place to start) and attend relevant conferences (insideARM’s Strategy and Tech conference). Gathering information on how the industry is handling and overcoming some of the same challenges you face is a powerful and credible way to create a compelling case.
5. Get your team on board – it’s one thing for a leader to have an innovative spirit, or to see a compelling need to improve, but if his or her team isn’t bought in, it can really slow things down. My last innovation challenge was met with a lot of initial pushback. Many of my teammates had been around for a while and doubted if I would have any better luck than all who had come before me. A major key to getting a team’s support is inclusion. Include your team on building a collective vision. Encourage them to rid their minds of all of the past nos and failures and think about the possibilities of innovation without limitation. Once you and your team have collaborated on your long term strategy, ask them to proactively identify the challenges they anticipate facing. Then enlist their help in strategizing how to overcome those obstacles. From there, you’ll be moving forward as a united group. One team, one vision, one goal. Make sure you celebrate each small win along the way and connect it back to the bigger vision. In my case, it took some time, but this approach helped me win over the naysayers, even my harshest critics. They started to believe and worked even harder to drive the change with me.

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For leaders who are used to forcing their agenda, this level of organizational savvy will seem like a lot of work. Maybe even unnecessary work. But as a visionary, I have tried to innovate through every method you can imagine. What’s been proven time and time again is that proactively readying the people you need to influence is not only necessary but paramount. You can’t do this alone.

To learn more about how to effectively influence positive change and innovation, join us at the 2020 Strategy and Tech conference, June 10th – 12th in Austin, TX. At this event, you’ll meet with strategy leaders across the collections and recovery industry, see demos of the 15 hottest new technology releases and attend numerous workshops on how to improve the effectiveness and efficiency of your collections operations. We hope to see you there!

About the iA Innovation Council

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 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:

The Conference of State Bank Supervisors (CSBS), a nationwide organization of financial regulators, released the newest chapter of its whitepaper titled “Reengineering Nonbank Supervision,” and the new chapter is all about debt collection.

The whitepaper’s new chapter covers an overview of the collections process, including the history of debt collection, the different types of debt collection entities, the types and volumes of different types of debts in collection, and federal and state supervision and enforcement efforts. 

All About Debt

The whitepaper goes into detail about the different types of consumer debts that are at play. Citing a 2014 study by the Urban Institute, CSBS states that “roughly 77 million Americans, or about one third of adults, have a debt in collection status.” A frequent source of delinquency in debts is either a divorce, an unexpected job loss, or a medical issue. 

The types of debts that most frequently find their way to collections are student loans, credit cards, auto finance, mortgage lending, and medical debts. Student loan debt takes up a whopping portion of the unsecured debt marketplace, followed by credit card debt. The whitepaper references that secured mortgages account for the largest amount of debt at $11 trillion, but mortgages have a relatively low default rate and don’t go into collections as often as the others.

CSBS specifically calls out—and dedicates an entire section of the whitepaper to—student loan debt due to its sheer volume, continued growth, and high rate of delinquency on its own as well as compared to other debts.

Debt Collection Entities

The whitepaper shows that CSBS clearly understands the difference between a third-party debt collector and a debt buyer, a distinction that is sometimes overlooked by advocates and regulators.

Editor’s Note: In the same breath, the whitepaper states that “[d]ebt buyers are considered debt collectors even though they own the accounts.” This is a legal issue that is making its way through the judicial system but has not yet been fully explored and decided by the U.S. Supreme Court.

Some benefits of creditors using third-party debt collectors include that they are “specialized and regulated,” “experts in the legal method of communicating with debtors,” “experts in state laws impacting the debt collection business,” and that “they understand compliance under the FDCPA.” 

The whitepaper also discusses debt relief companies that offer different kinds of services, such as debt consolidation and debt management plans. 

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Future of Debt Collection Industry

CSBS believes that the number of debt collection agencies will decrease over time, largely due to the high barrier of entry. Smaller agencies, who can’t keep up with the ever-growing licensing and compliance requirements, will likely either close shop or become acquired by larger agencies, who are better able to absorb the burdens.

At the same time, CSBS notes that “[t]he industry is struggling to keep pace with modern technology and changing consumer needs” and acknowledges that it is because of the lack of advancement in relevant laws and regulations. 

Problems with Collection Litigation

CSBS calls out some problems related to the process of proceeding with litigation against a consumer for unpaid debts. Due to the high volume of collection lawsuits filed, court dockets have become packed, which led to more automated processes. Three specific issues were addressed:

• The difficult burden of proof for consumers.
• Consumers often don’t appear in court because they didn’t know the court date or were not properly served.
• Overwhelming evidence produced by collection attorneys leads to summary judgment motions. 

CSBS concludes…

Debt collection is a large and growing segment of nonbank financial services. The growth of all forms of consumer credit, and the too often unfortunate end state of that credit in delinquency will continue to fuel the need for debt collection and debt relief by both creditors and consumers. State regulation of debt collectors, debt relief and student loan servicing is an emerging area within the system of state supervision.

Greater effort in developing uniform and comprehensive standards for regulation throughout the state system would result in better supervision of debt collection practices. And as the need for consumer protection and industry oversight expands, regulators will undoubtedly sharpen their focus on this area and state legislatures will likely respond with new or enhanced laws focused on this important part of the nonbank marketplace.

insideARM Perspective

The highlight of this whitepaper is that it seems that CSBS understands the industry, its benefits, and the challenges it faces. The whitepaper shows an understanding of: the differences in types of debt collection entities; how outdated laws prevent collectors from using modern means of communication; how there are legitimate debt collectors who genuinely try to comply with laws and regulations; and how the industry is expected to change over the years due to technology advances and consumer preferences. It’s a good read.

Something interesting that comes to mind when reading the section about collection litigation is how these issues will only become more apparent if debt collectors are not able to communicate with consumers. If creditors can’t collect on accounts using more less formal means like collecting through a third-party agency, then collection litigation or selling the debt are the creditor’s last resorts. One great stumbling block in communication right now, as mentioned in the whitepaper, is how collectors are held back from modern forms of communication due to outdated laws and regulations. And now, as regulators like the CFPB look to clear some of those roadblocks, some consumer advocates put forward misrepresentations—or, at best, misinformed representations—that debt collectors will send “unlimited” text messages and emails. Without also mentioning that debt collection laws and regulations contain natural limits to how often a collector can communicate with a consumer, regardless of medium, this comes off as nothing more than a scare tactic. Just some food for thought.

What can happen when you turn a deaf ear to a court order to cease illegal calls to consumers advertising your carpet cleaning business? The answer is the court can call you on its own carpet in handcuffs for potential civil contempt. That is the message of State of Texas v. Kevin J. Calvin, 2020 U.S. Dist. LEXIS 22245, CA No. 4:14-cv-00654-O, United States District Court for the Northern District of Texas, filed January 6, 2020.

Mr. Calvin was among a group of defendants that the State of Texas sued for violations of the Telephone Consumer Protection Act (TCPA), in his case for telemarketing calls about his carpet cleaning business. After his “no show” before the bench, the Court granted the State’s motion for default judgment, ordered that it recover damages and attorneys’ fees, and “entered a permanent injunction ordering the defendants to cease their illegal telephone marketing activities….” At the end of April 2019, Mr. Calvin, by affidavit, “testified” that he had received and read the Court’s orders doing so.

But did Mr. Calvin get the message? Lesson learned? Apparently, not so.

Two months later, in June of 2019, the State asked Judge Reed O’Connor to order Mr. Calvin to show cause as to why he should not be held in contempt because those illegal carpet cleaning telemarketing calls persisted. The Court agreed he should be called to task and ordered Calvin to respond by July 15. The State used all manner of communications – including Facebook Messenger – to serve the directive on the defendant. Silence ensued – another no show.

After Judge O’Connor referred the matter to Magistrate Judge Hal Ray, he issued a second show cause order, summoning the offender to a hearing in early November of 2019. Again, service through various channels. Again, no Mr. Calvin.

Enough is enough. Magistrate Judge Ray found that Mr. Calvin had violated the terms of the permanent injunction and recommended that the Court, “once Kevin J. Calvin is arrested or at such other time as set by Judge O’Connor,” hold a hearing as to why the defendant should not be found in civil contempt.

Just last week, on February 7, the Judge agreed and ordered the elusive Mr. Calvin “to surrender to the custody of the United States Marshall service.” If he does not, “the United States Marshall Service or any duly authorized law enforcement officer is ordered to arrest the Defendant and produce him before” the Court.

Such can be the consequences in TCPAWorld of thumbing your nose at a Court injunction to “stop calling.”

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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. 

Editor’s Note: This article previously appeared on the Ontario Systems Blog and is republished here with permission.

During the waning hours of the first session of the 116th Congress, robocall practices were attacked with lightning speed in the form of the Pallone-Thune Telephone Robocall Abuse Criminal Enforcement and Deterrence (TRACED) Act. Sponsored by South Dakota Republican Senator John Thune and New Jersey Democratic Congressman Frank Pallone, this bipartisan bill was signed into law by President Trump on December 30, 2019. 

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Arguably hidden behind its stated purpose, which was to modify sections of the Telephone Consumer Protection Act at 47 U.S.C. § 227 (TCPA), the TRACED Act is essentially a codified directive to the Federal Communications Commission (FCC) to enact rulemaking on a number of issues relating to robocalls. This was a very formal way for Congress to push the sticky business of reforming the TCPA to the chief regulator of the communications industry, the FCC. 

For all practical purposes, the TRACED Act is a win for both consumers and the telecommunications industry. But it represents a devastating loss for third-party debt collectors.

ARM Industry Concerns Left Unaddressed

Since 2005, the accounts receivable management (ARM) industry has fervently lobbied Representatives and Senators on both sides of the aisle for amendments to the TCPA. During this time, the industry also advocated before the FCC for modifications to the agency’s 2003 TCPA regulations. 

The ARM industry’s proposed changes sought clarification of the following issues:  

• Consent requirements to use an auto dialer, prerecorded message, or artificial voice when contacting a consumer using their cellular number;
• Revocation of consent requirements to use an auto dialer, prerecorded message, or artificial voice when contacting a consumer using their cellular number;
• The definition of an automatic telephone dialing system (ATDS) and its alter ego, a manual contact system; and
• Transferability of consent when a carrier reassigns a mobile number from one person to another. 

Unfortunately, not one of the amendments offered by the ARM industry was included in last year’s landmark legislation.

Notwithstanding this defeat, third-party debt collectors as well as organizations or businesses that call consumers need to understand the TRACED Act and how it may impact them. This is not because their calls should be placed in the same category as robocalls launched by bad actors, but because in its zeal to stomp out robocalls from the bad actors, Congress included legitimate calls in its regulatory web.

Summary of the TRACED Act’s Key Provisions

As outlined by Contact Center Compliance DNC.com, the main provisions of the TRACED Act are as follows:

• Stopping Robocalls — The TRACED Act directs the FCC to take final action on its June 2019 Declaratory Ruling on Advanced Methods to Target and Eliminate Unlawful Robocalls.
• SHAKEN/STIR — Service providers are required to implement SHAKEN/STIR, or Signature-based Handling of Asserted Information Using toKENs (SHAKEN) and the Secure Telephone Identity Revisited (STIR). These are authentication protocols for digitally validating a phone call as it passes through the complex web of telecom networks, allowing phone providers to verify that the call is actually coming from the party that appears to be placing the call.
• Monetary Penalties — The FCC is authorized to assess penalties of up to $10,000 per call for violation with intent.
• Statute of Limitations — The statute of limitations for a general violation is one year, while the statute of limitations for violation with intent is four years.
• Protections from Spoofed Calls — The TRACED Act instructs the FCC to enact a rulemaking to “help protect a subscriber from receiving unwanted calls or text messages from a caller using an unauthenticated number.”
• Report on Reassigned Number Database — Within a year of the date of enactment, the FCC must give a report to Congress on its progress in implementing its proposed official database of reassigned phone numbers.
• Protection from One-Ring Scams — The FCC is required to “initiate a proceeding to protect called parties from one-ring scams.” 

Each of these provisions requires careful analysis. The SHAKEN/STIR requirements alone present challenging call authentication protocols that will be fleshed out by the FCC over the next months and years and enacted in the form of new rules. 

It would behoove members of the ARM industry to study any proposed rules published by the FCC and to file comments. For in the end, any violation of the TRACED Act could trigger a penalty as high as $10,000 per violation. Whether SHAKEN or STIRred, that’s one costly martini.

5 Things You Must Do to Mitigate Your Risks

We at Ontario Systems have closely monitored the robocall movement for several years. We’ve participated in work groups on behalf of various industries, advocated before the FCC, and monitored the TRACED Act legislation as it moved through both chambers of Congress. We’ve also conferred with our clients about their concerns with the TRACED Act. 

Based on what we know, here’s what we recommend. If you communicate with consumers—whether you’re a third-party debt collector, credit issuer, healthcare provider, or Federal, State, or local government—you should seek the advice of independent legal counsel to determine exactly how the TRACED Act may impact your communications with consumers. 

You should also consider the following next steps and ongoing practices:  

1. Enhance consent and revocation of consent documentation per consumer and per number.
2. Establish a process to pull reports on caller ID display on all outbound calls.
3. Ensure outbound calls are made using numbers associated with the proper company.
4. Monitor and analyze fraud and scam scores assigned by carriers to your outbound calls.
5. Ensure all outbound calls comply with state, Federal, and client call restrictions. 

For additional information about the TRACED Act and other contact/compliance management issues, visit Ontariosystems.com or reach out to me at Rozanne.andersen@ontariosystems.com.

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Disclaimer: Ontario Systems is a technology company and provides this blog article solely for general informational and marketing purposes. You should not rely on the content of this material for any other purpose or as specific guidance for your company. Ontario Systems’ advice, services, tools and products described herein do not guarantee compliance with any law or industry standard. You are ultimately responsible for your own company’s actions and compliance efforts. Because everyone’s situation is different, you must consult your own attorneys, accountants, and/or other advisors to obtain specific advice on your company’s compliance, legal, tax, regulatory and/or other business needs. Despite Ontario Systems’ efforts to provide current and up-to-date information, you need to recognize that the information contained herein may become outdated quickly and may contain errors and/or other inaccuracies.

© 2020 Ontario Systems, LLC. All rights reserved. Information contained in this document is subject to change. Reproduction of this publication is not permitted without the express permission of Ontario Systems, LLC.

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.

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It is fun to watch the law evolve.

In Salcedo v. Hanna the Eleventh Circuit Court of Appeal held, definitively, that receipt of a single unwanted text does not always cause Article III harm allowing a federal case. While a text might cause harm—for instance, if you fall off a ladder trying to reach your phone—in the ordinary course of things, hearing a single “chirp” is not sufficient to cause harm in the real world.

Except Salcedo actually involved two text messages—albeit received simultaneously. So it is not, and never was, sufficient to deem Salcedo a “one text” case—even though the essence of the Salcedo holding had nothing to do with the number of texts received but the qualitative nature of the Article III assessment—because more than one text was at issue there.

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That was precisely the issue picked up on by the Court in  Fenwick v. Orthopedic Specialty Inst., PLLC, CASE NO. 0:19-CV-62290-RUIZ/STRAUSS, 2020 U.S. Dist. LEXIS 21566 (S.D. Fl. Feb. 4, 2020). There the Court held that not 1, not 2, but 3 unwanted text messages did not cause Article III harm and recommended dismissal of the suit. As to texts 1 and 2, the Court interpreted Salcedo as applying in the multi-text scenario. It is not enough that more than one text was received—rather some harm from the texts musts be alleged. And the Court took much comfort in the fact that Salcedo actually involved two texts, and not one. So there.

As to the third text, this was a mere ”confirmatory” text, which the Court found does not violate the TCPA at all as a substantive matter. (Not to quibble, but doesn’t the rule permitting confirmatory texts derives from the idea that initial consent is presumed to be broad enough to encompass a single text sent after a stop notification and where no initial consent was received the confirmatory text actually might violate the TCPA? Can this result also be justified on a holding that there’s a presumed consent to receive a confirmation/informational text anytime you interact with a shortcode? Hmmmm.) And since the text did not violate the law it cannot have caused Article III harm.

So there you go—you can get up to three consent-free texts in the Eleventh Circuit without consequence these days. Then again, after Glasser probably would have required dismissal on a substantive basis anyway.

Also, BONUS holding—for those of you playing along at home. The Plaintiff’s bar is now arguing that the TRACED Act ameliorates the holding of Salcedo because it specifically mentions text messages in imposing one of its reporting requirements on the FCC. This is a bad argument—TRACED does not modify the definition of “call” or otherwise impact the scope of the TCPA. It simply requires the FCC to report on certain instances of text misconduct, presumably so that Congress can consider adding texts to the statute later. In any event, the argument is quite popular with the Plaintiff’s bar—they’re usually more creative than this—but Fenwick rejects it outright:

Nothing in the cited language, which concerns the streamlining of information sharing with the Federal Communications Commission, clearly evinces a Congressional intent at odds with the Eleventh Circuit’s analysis in Salcedo.

Bingo.

Nice little case to keep in your back pocket TCPAWorld.

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