This was the central question addressed by the Eastern District of New York earlier this week in M.A. v. Nra Group, 2019 U.S. Dist. LEXIS 93444, 17–cv-7483 (NG) (RLM) (filed June 4, 2019).

The plaintiff, an 11-year old, received a cell phone from his grandmother for his birthday. Over a succeeding 9-month period, the defendant attempted to reach a debtor fifty-five times at the plaintiff’s phone number. Of course, neither the youngster nor his mother who was the named representative on the account had consented to receive such calls. The plaintiff sued under the TCPA and moved for summary judgment.

[article_ad]

The defendant conceded that on each of the fifty-five calls, its “automatic dialing system detected a specific electronic tone from Verizon’s answering service, plaintiff’s phone service provider.” After hearing that tone, the defendant’s “telephony system confirmed that a connection had been established with Verizon and left or attempted to leave fifty-five prerecorded messages on the plaintiff’s phone.” Nra did not dispute that eight of the calls resulted in actual prerecorded voicemail messages; nor did it contest that it attempted to leave such messages on all of the calls. Instead, Nra argued it should be let off the TCPA hook for forty-seven of the calls because the plaintiff had not “demonstrated that [those]… call attempts actually reached plaintiff’s phone.”

The Court would have none of this attempt at statutory sleight of hand, noting that “[i]n effect, the plaintiff seeks to change the focus of the statute from the making of a call to the receipt of a call.” (emphasis in original). Judge Gershon rejected as inapposite precedent (Mais v. Gulf Coast Collection Bureau, Inc.) where the “calls never left the [defendant’s] system.” Here, the defendant had hoisted itself on its own proverbial TCPA petard by conceding that its “dialed calls ‘successfully went through’ because defendant does not dispute that its dialer actually dialed the plaintiff’s phone number on fifty-five occasions and …a tone was heard from the plaintiff’s side indicating the telephony system had answered the phone.” (emphasis in original).

The defendant’s argument might have fared better had it offered up the Fifth Circuit’s decision in Ybarra v. DISH Network, L.L.C. There the Court held that “[t]o be liable under the ‘artificial or prerecorded voice’ section of the TCPA, we conclude that a defendant must make a call and an artificial or prerecorded voice must actually play.”

But in this case, no escape from summary judgment for the plaintiff on all fifty-five calls.

—

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.  

GENESEO, N.Y. — Coast Professional, Inc. (Coast) has formed a Mentor-Protégé Agreement (MPA) with Mid-South Adjustment Co., Inc. (Mid-South) as part of the All Small Mentor-Protégé program (ASMP) established with the Small Business Administration (SBA). This relationship will emphasize the synergies between Coast’s top performance on multiple federal government contracts and Mid-South’s experience and growth potential. Both companies will utilize the program to continue to create high-quality, long-term careers and provide top performing, compliant accounts receivable management services to clients across the United States.

Mid-South is an accounts receivable management firm located in Pine Bluff, AR and is a certified Historically Underutilized Business Zones (HUBzone) small business enterprise. Mid-South was founded in 1982 and has worked with Coast since 2018 on one of Coast’s federal government contracts.

The SBA created ASMP was designed to provide opportunities to small businesses through business development assistance, experience in federal contract bidding, strategic planning, and guidance on Federal government contracts. Small businesses partner with experienced contractors to develop a mentor and protégé relationship. A protégé relies on the mentor to provide guidance and business support with federal government contracts. To qualify as a protégé, a business has to be a certified small business with industry experience; have a proposed mentor prior to applying; be organized as a for-profit company; and have no more than two mentors in the business’ lifetime. To qualify as a mentor, a business has to be organized for profit and have no more than three total protégés.

“In 2007, Coast was given the opportunity to subcontract on one of the industry’s largest government contracts,” stated Brian Davis, CEO and Co-Chairman of the Shareholder’s Board. “That opportunity provided Coast with the necessary experience and infrastructure to win our first federal government contract in 2009. Coast uniquely understands the value that these relationships create and we are dedicated to providing similar opportunities to small business organizations. This agreement puts both Coast and Mid-South in the very best position for both small and large future opportunities.”

“Mid-South is excited for the opportunities our new partnership will create for our organization,” stated Nathan Sullivan, President of Mid-South. “We look forward to gaining industry experience and counsel throughout our Mentor-Protégé engagement.”

About Coast Professional, Inc.:

Coast Professional, Inc. is an accounts receivable management company, dedicated to the respectful and ethical collection of higher education and government debt. Coast provides professional collection services to over 200 campus-based colleges, universities, and government clients. Coast is a five-time honoree on the Inc. 5000 list for American’s Fastest-Growing Private Companies provided by Inc. Magazine and in 2019, was recognized for the fourth time as one of the “Best Places to Work In Collections” by insideARM.com and Best Companies Group. Since 1976, Coast has worked closely with clients to increase recoveries by assisting consumers in resolving their financial obligations. Coast’s success is exemplified by exceptional recoveries, superior service, and dedication to the highest levels of compliance. More information about Coast can be found at www.coastprofessional.com

About Mid-South Adjustment Co., Inc.

Mid-South Adjustment Co., Inc. is a HUBzone certified receivables management company specializing in the recovery of healthcare and municipal based debts. Since the company’s founding in 1982, Mid-South has built a reputation of performance and integrity while holding a central focus on industry compliance. The company prides itself on establishing long-term relationships based on trust and transparency with its clients.

Yesterday at its Open Commission Meeting, the FCC voted to adopt its Declaratory Ruling and Third Further Notice of Proposed Rulemaking, clarifying that voice service providers may block illegal and unwanted calls as the default before they reach consumers’ phones, and proposing a safe harbor for providers that block calls that fail call authentication while ensuring that emergency and other critical calls reach consumers.

But what happens when wanted calls are miscast as unwanted calls, or worse yet, miscast as illegal calls? That’s the world we’re currently living in today, and it’s about to get worse.

The Shifting Tides

In reflecting on the FCC’s current stance, which has been previously defined as a “longstanding prohibition on call blocking,” it seems there’s been a sizeable shift since the Connect America Fund, A National Broadband Plan for Our Future, Establishing Just and Reasonable Rates for Local Exchange Carriers, et al (2011) to where we are today on the subject. The aforementioned Report and Order and Further Notice of Proposed Rulemaking also included the following section, describing the FCC’s commitment to protecting the trust and transparency of the phone network:

In the 2007 Call Blocking Order, the Wireline Competition Bureau emphasized that “the ubiquity and reliability of the nation’s telecommunications network is of paramount importance to the explicit goals of the Communications Act of 1934, as amended” and that “Commission precedent provides that no carriers, including interexchange carriers, may block, choke, reduce or restrict traffic in any way.” We find no reason to depart from this conclusion. We continue to believe that call blocking has the potential to degrade the reliability of the nation’s telecommunications network.

Oh, how far we have shifted.

Numeracle and The FCC

Since the release of the FCC’s Declaratory Ruling and Third Further Notice of Proposed Rulemaking, Numeracle has attended Ex Parte meetings with each of the Commissioners’ staffs on the subject. While the meetings differed in tone and topic from each other, the overall sentiment expressed was a general lack of willingness by the FCC to admit that the potential for harm in moving forward with this declaratory ruling may actually outweigh the good.

Introducing Inconsistencies

The first topic Numeracle brought to the FCC during our Ex Parte meetings was a concern about the use of analytics technologies by voice service providers as the basis by which to perform default blocking for consumers. Through the work we have completed on behalf of our clients and industry colleagues, evidence was provided demonstrating the frequency by which legal call originator phone numbers are erroneously labeled as “Scam” or “Spam” across multiple analytics providers.

As another demonstration of the inconsistencies exhibited by the analytics ecosystem, we provided evidence that identical, legal calls originating from one caller can even be rated inconsistently within one analytics provider. So not only do inconsistencies exist from provider to provider, but inconsistencies also exist from within.

A recent FCC blog post “Beating Back Unwanted Robocalls” states:

“Soon your phone company will know with certainty that it is able to block calls based on computer analytics that tells them that these calls are unwanted robocalls.”

This bold claim misses the mark in so many ways that the only thing we can say here with “certainty” is that this overconfidence in robocall identification technologies will lead to additional false positives and further disruption in communications. Assuming that today’s technologies will be capable of identifying the personal consumer preference of which calls are wanted vs unwanted when they are not yet even capable of accurately identifying truly illegal calls from all other calls is a gross misstep.

Feedback Loop = Null

Carriers and their analytics partners are not mandated to inform legal callers of how their calls are being labeled and/or blocked. This means there is no visibility into calls that will be lost due to the default call blocking plan and no way to ensure that vital communications are not disrupted. Unless there is an opportunity to leave a voicemail, consumers will also have no visibility into calls they have not have received, which includes a wide variety of calls, some in the critical, personal emergency, and life-saving categories.

In addition to the evidence provided by Numeracle of legal calls in the commercial, financial, and retail industries improperly classified as ‘Scam’ or ‘Spam’ calls by analytics, Numeracle also presented evidence of critical/life-saving calls improperly labeled and at risk of disruption should the proposed declaratory ruling pass:

• Notifications from a free, nationwide, state-sponsored solution that lets victims of crime and other concerned citizens access timely and reliable information regarding the status of offenders in the jail system.
• Phone numbers used by a branch of the military to engage in recruiter to recruitee dialog.

Our Take

What is evident from Numeracle’s findings is that while good intentions may exist for identifying “illegal” and “unwanted calls,” there are unintended consequences that must be addressed before allowing voice service providers the flexibility to offer aggressive default blocking for consumers.

The draft order plays fast and loose with the terms “illegal call” and “unwanted call,” and the Commission has never fully defined these terms, said Rebekah Johnson, Founder & CEO, Numeracle, in our Ex Parte filings.

The same sales call that is illegal if the customer has not consented to receive it is perfectly legal with customer consent. Every consumer will have his/her own definition of an “unwanted call.”

[article_ad]

A Path to Improved Accuracy

Voice service providers can integrate with solutions such as Numeracle to obtain the vetted entity identity and call intent to display to consumers to empower the consumer to make their own choice on what calls are wanted or not wanted.

With less than 250,000 complaints on “unwanted calls” in the FCC complaint database since its inception, it is clear consumers are not asking their voice service providers to default block “unwanted calls.” The FCC is interrupting a 90-year requirement of call completion to allow unrestricted blocking based on the undefined term “unwanted call” that inevitably will vary for every consumer.

To implement such an option will require voice service providers to provide refined categories and accurate labeling with the inclusion of consumer personal preference. For the last few years, the FCC has reinforced that carriers cannot engage in unreasonable call blocking of calls to rural carriers, yet now is authorizing wide scale, standardless blocking based on undefined criteria.

It is unreasonable to allow carriers to block based on any analytics designed to identify unwanted calls without recourse for blocked legal and wanted calls. The Commission should consider the inevitable false positives that have and will continue to result on an even grander scale with the default opt-out approach.

The Role of STIR/SHAKEN

While Numeracle fully supports the deployment of STIR/SHAKEN by voice service providers, it should be noted that this is not a solution to identify “legal vs. illegal” or “wanted vs unwanted” calls. STIR/SHAKEN was designed to provide consistent traceback to determine the originating carrier, but STIR/SHAKEN does not determine whether a call is legal or illegal or wanted or unwanted.

The need for analytics will remain, but an even more pressing need is the ability for legal callers to identify to carriers and their analytics partners that they are making lawful and proper calls from telephone numbers they are authorized to use.

Numeracle was in physical attendance at yesterday’s Open Commission Meeting representing the perspective of the legal enterprise caller. While we believe the truly illegal and fraudulent calls should be stopped, we caution that more work is needed before we are reliably able to do so without causing catastrophic disruption to the flow of legal, wanted communications.

To check out Numeracle’s full-text Ex Parte filings as recorded in the FCC’s filings and proceedings database, click here. To learn more about Numeracle’s mission of improper call blocking and labeling prevention and awareness, visit us at www.numeracle.com.

—

Editor’s Note: This article previously appeared on Numeracle’s blog, and is re-published here with permission. Minor updates have been made to reflect that the FCC’s Open Commission Meeting has already taken place; the blog was posted prior to the meeting.

Yesterday, on June 6, 2019, the Federal Communications Commission (FCC) affirmed a declaratory ruling that allows voice service providers to establish call blocking as a default setting for their customers. This is the FCC’s latest step in battling against illegal robocalls.

While the FCC has been working on solutions to illegal robocalls for a long time, it announced the now-enacted default call blocking declaratory ruling less than a month ago on May 15. There was no formal opportunity to comment, but many industries and businesses publicly voiced their concerns over a rushed solution such as this.

As stated above, voice service providers may now implement default settings for blocking unwanted calls “based on reasonable call analytics.” Voice service providers must disclose such default settings to consumers and allow them an opportunity to opt-out.

The declaratory ruling goes even further by allowing voice service providers to provide an opt-in service where their customers can block calls from any number that is not on the customer’s contact list or on some other white list.

At the June open commission meeting, where the FCC affirmed the declaratory ruling, the focus was primarily on the impact of robocalls on consumers. Commissioner O’Rielly articulated concerns from the business perspective, specifically that the widely-cast net of the declaratory ruling will sweep far more than just illegal robocalls due to imperfect analytics. O’Rielly states:

Like my fellow Commissioners, I share the desire to eliminate the menace of illegal robocalls and believe that this item is very well-intended, though I nonetheless wonder if it may lead to certain problematic consequences. Completely legitimate organizations and businesses regularly engage in socalled “robocalling” to provide consumers with critical and time-sensitive information, such as fraud alerts, flight schedule changes, school closures, delivery window delays, prescription notices, appointment reminders, public safety alerts, and—yes—anti-delinquency notices. Efforts to attack illegal and fraudulent calls should not restrict or prevent these beneficial robocalls.

O’Rielly’s statement continues:

As any e-mail user knows, spam filters, which operate through analytics, are by no means perfect. Almost everyone has had the experience of missing important messages because of an oversensitive filter. For a service that is generally free and unregulated, I can accept placing the burden on consumers to go into their spam folders periodically to look for erroneously-labeled emails. That same circumstance doesn’t exist for voice calls, which have been hyper-regulated for decades and do not feature a means to determine what has been missed. To the extent that providers implement this new default regime, I worry that consumers will only realize that important voice calls have been blocked after it’s too late.

I sought to rectify this potential harm by requesting that the item at a minimum require carriers to implement a redress process for erroneously blocked calls. After all, even the CEO of First Orion, one of the largest analytics companies and likely beneficiaries of this item, recently sat in my office and stressed the need for mechanisms that respond to blocking complaints effectively and expeditiously—in hours, not days, in his words.

If you’re interested in a deeper dive into this issue, this article by Numeracle’s CEO Rebekah Johnson discusses the intricacies and potential unintended consequences of the FCC’s decision.

[article_ad]

In a report published on March 25, 2019, the Office of Inspector General (OIG) found that the Consumer Financial Protection Bureau’s (CFPB) Division of Supervision, Enforcement, and Fair Lending (SEFL) scheduled and abruptly canceled examinations for institutions outside of its supervisory jurisdiction. SEFL also at times scheduled examinations for institutions in the incorrect region.

According to the report, at the time these examinations were scheduled, SEFL did not have sufficient information about companies to determine whether they were large market participants. (Large market participants are organizations with revenues from debt collection exceeding $10M annually.) The report notes that:

[I]t is sometimes challenging to determine whether an institution is a larger participant in particular markets, most notably in the debt collection market. Similarly, the location of an institution’s operations may not be publicly available information. As a result, the regional offices can become aware of this information through a preexamination questionnaire, which SEFL sends to the institution after it prioritizes and schedules an institution for examination.

These preexamination questionnaires, if not provided in a timely manner, can lead to “abrupt, late-stage cancellations [of the examinations] and potentially lead to an inefficient use of examiner resources.”

Debt collectors seem to be the ones impacted by these cancellations. The OIG found that two debt collectors that fell outside of the scope of the CFPB’s jurisdiction had examinations scheduled and then later canceled before the start date. Persons interviewed by the OIG stated:

[A]ssessing whether debt collectors, in particular, satisfy the Larger Participant Rule is challenging because the collection of certain types of debt, such as medical debt, does not contribute toward meeting the Larger Participant Rule threshold, and information on the types of debt collected by an institution is often not publicly available.

[article_ad]

One way the CFPB aims to fix the late-stage cancellation issue is by sending information request letters that would help the Bureau assess whether an institution falls under its supervisory authority. The CFPB allegedly increased the lead time for sending these letters. However, the report found that in the time period between November 2015 to October 2018, only the most recent examination cycle included this additional lead time.

The report’s recommendation, which the CFPB concurred with, is to add additional lead time to the information request letters before scheduling examinations to avoid abrupt, late-stage cancellations.

American Medical Collection Agency (AMCA), a collection agency that collects on behalf of LabCorp and Quest Diagnostics, experienced a massive data breach that exposed consumer personal data and payment information.

[article_ad]

On Monday, June 3, Quest Diagnostics filed a disclosure statement with the U.S. Securities and Exchange Commission (SEC) about the incident. The report states that there was “unauthorized access” to AMCA’s web payment page between August 1, 2018, and March 30, 2019. The affected system contained records of approximately 11.9 million consumers.

The following day on Tuesday, June 4, LabCorp filed a similar, more descriptive disclosure statement with the SEC, likewise stating that there was “unauthorized activity” on AMCA’s web payment page during the same period. AMCA serviced approximately 7.7 million consumers on behalf of LabCorp, and AMCA is sending approximately 200,000 consumers notices that the breach has potentially compromised their credit card or bank account information. The compromised information “could include first and last name, date of birth, address, phone number, date of service, provider and balance information” as well as payment information for those who sought to make payments. The compromised system does not store social security numbers or insurance identification information, according to the disclosure.

In a statement obtained by Krebs on Security, AMCA says:

We hired a third-party external forensics firm to investigate any potential security breach in our systems, migrated our web payments portal services to a third-party vendor, and retained additional experts to advise on, and implement, steps to increase our systems’ security. We have also advised law enforcement of this incident. We remain committed to our system’s security, data privacy, and the protection of personal information.

insideARM Perspective

Since collection agencies handle personal and sensitive information about consumers, data privacy is a very important topic. insideARM received some insights from industry experts on what the AMCA data breach means for debt collectors.

Josh Allen, CEO of Revenly, a digital engagement platform for collection companies built with consumer experience and data security as its cornerstones, states:

This should be a wakeup call for collection companies who are using — or thinking of using — digital engagement platforms to interact with and collect payments from consumers. While digital assets can cut costs, cutting corners can lead to disaster.

Agencies need to carefully consider their path: either build your own asset or buy one from an outside resource. Many agencies are not well-equipped to build their own consumer-facing asset, which can cost more than seven figures, while also maintaining annual security requirements to accept credit cards and other forms of electronic payments. Many try, but they miss critical steps.

As more agencies see the value of digital engagement to their bottom line, they also need to consider the investment and staffing requirements for properly implementing these solutions. A cheap solution is not always the best solution.

Brian McManamon, President and CEO of TECH LOCK, adds:

The breach of AMCA demonstrates receivables management firms, and the sensitive consumer data we are required to manage, are on the radar of hackers who continue to become more sophisticated. As hackers become more proficient, compliance with key security standards such as PCI DSS or HITRUST is only one component of an overall cybersecurity strategy and framework. In this instance, the entity that breached AMCA was present and undetected for 8 months. To appropriately protect the consumer data with which we are entrusted, it requires a strategic security platform that must include 24/7/365 monitoring, detection and response resources. This breach also demonstrates the importance of requiring partners who access your protected data to undergo a third-party assessment. As this unfortunate breach indicates, the importance of implementing a strategic security platform continues to grow.

New York—where AMCA is located—rolled out sweeping cybersecurity rules through its main financial regulator, the Department of Financial Services (NYDFS). The cybersecurity rules went through a gradual implementation process, with the full implementation by March 1, 2019. The final implementation step included establishing policies for third-party vendors that called for, among other things, risk assessments. According to the SEC filings, the data breach ended around March 30, 2019. The details of the incident are not released yet, but it will be interesting to see if the final implementation step of the NYDFS rules led to the discovery of the incident considering the temporal proximity.

A few weeks back, Jay Edelson’s firm helped break the bank in the trial of a TCPA class action.

Not to be (completely) outdone, the folks at Bursor & Fisher have just tried their own certified TCPA class action suit in the Northern District of California—this time resulting a jury verdict sustain a potential judgment totaling $267MM. See Perez v. Rash Curtis & Associates, Case No. 16-cv-03396 (N.D. Cal.)

[article_ad]

The case involved purported calls made using an ATDS and pre-recorded calls to numbers obtained via skip tracing, in addition to a wrong number component.  Following a multi-day jury trial, the jury entered its verdict—found here—determining that over 534,000 calls were made using the Defendant’s dialers and using a pre-recorded voice without consent.

Following the verdict—which was entered May 13, 2019—Plaintiff’s counsel has filed a Proposed Judgment seeking a final award of $267,349,000 in favor of the class.

On the heels of the big Dish ruling last week, TCPA defendants really did not need any more bad news but– oh well. It all goes to show why defeating TCPA class certification is absolutely critical for companies who want to stay in business.

We’ll keep an eye on developments on this one.

—

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 was originally published on the Maurice Wutscher blog and is republished here with permission.

The Texas Legislature has passed House Bill 996 which limits when a debt buyer can initiate legal action or arbitration to collect consumer debt and requires specific notices with respect to out-of-statute debt.  Upon approval by Texas Gov. Greg Abbott, the new provisions will become effective Sept. 1, 2019.

Definition of a Debt Buyer

“Debt buyer” is defined as “a person who purchases or otherwise acquires a consumer debt from a creditor or other subsequent owner of the consumer debt, regardless of whether the person collects the consumer debt, hires a third party to collect the consumer debt, or hires an attorney to pursue collection litigation in connection with the consumer debt. The term does not include:

• a person who acquires a charged-off debt incidental to the purchase of a portfolio that predominantly consists of consumer debt that has not been charged off; or
• a check services company that acquires the right to collect on a paper or electronic negotiable instrument, including an Automated Clearing House (ACH) authorization to debit an account that has not been processed.”

[article_ad]

No Lawsuits, Arbitration or Revival

The legislation prohibits a debt buyer from bringing suit or initiating arbitration on consumer debt if the applicable statute of limitations provided by Tex. Civ. Prac. & Rem. Code § 16.004 or Tex. Bus. & Com. Code § 3.118 has expired.  Additionally, once the statute of limitations on a consumer debt has expired it cannot be revived.

Notice to Consumer

With the passage of this legislation, Texas joins other jurisdictions (California, Connecticut, Massachusetts, New Mexico, New York, New York City and West Virginia) that require a consumer be provided notice regarding the expiration of the statute of limitations.

In Texas, one of the three required disclosures will apply depending on whether the credit reporting period has expired and whether the debt buyer credit reports.

1. If the credit reporting period has not expired and the debt buyer does credit report:

“THE LAW LIMITS HOW LONG YOU CAN BE SUED ON A DEBT. BECAUSE OF THE AGE OF YOUR DEBT, WE WILL NOT SUE YOU FOR IT. IF YOU DO NOT PAY THE DEBT, [INSERT NAME OF DEBT BUYER] MAY CONTINUE TO REPORT IT TO CREDIT REPORTING AGENCIES AS UNPAID FOR AS LONG AS THE LAW PERMITS THIS REPORTING. THIS NOTICE IS REQUIRED BY LAW.”

1. If the credit reporting period has not expired but the debt buyer does not credit report:

“THE LAW LIMITS HOW LONG YOU CAN BE SUED ON A DEBT. BECAUSE OF THE AGE OF YOUR DEBT, WE WILL NOT SUE YOU FOR IT. THIS NOTICE IS REQUIRED BY LAW.”

1. If the credit reporting period has expired:

“THE LAW LIMITS HOW LONG YOU CAN BE SUED ON A DEBT. BECAUSE OF THE AGE OF YOUR DEBT, WE WILL NOT SUE YOU FOR IT, AND WE WILL NOT REPORT IT TO ANY CREDIT REPORTING AGENCY. THIS NOTICE IS REQUIRED BY LAW.”

The notice must be “in at least 12-point type that is boldfaced, capitalized, or underlined or otherwise conspicuously set out from the surrounding written material.”

We’ve been closely following the cases out of the district courts within the Third Circuit related to whether a validation notice that tracks the statutory language of the Fair Debt Collection Practices Act (FDCPA) is misleading or confusing. Those decisions tend to be all over the place, and courts are starting to put these cases on hold as we await review by the Third Circuit. However, the jurisdictional split on this issue between the Third Circuit and the remainder of the country is visible in a recent case out of the Middle District of Georgia.

[article_ad]

In Urquhart v. Credit Bureau of Napa Cnty., Inc., No. 5:18-cv-00371 (M.D. Ga. May 30, 2019), the court granted defendant’s motion for judgment on the pleadings on this very issue. In this case, the defendant sent a collection letter that included a validation notice that tracked the language in section 1692g. The letter then went on to say, “If you would like to submit a dispute you can call us at 877-256-2510 or send it by mail to: Chase Receivables [address].” Plaintiff sued, alleging that this statement overshadows the validation notice because it could lead a consumer to call with a dispute.

The court granted defendant’s motion for judgment on the pleadings, and the most significant part of the decision is the reasoning. The court differentiates between the different options within the validation notice. The court found that there is a difference between disputing the validity of the debt (which a consumer can submit through any medium) and the “advanced remedy” of requesting verification of debt (which a consumer must submit in writing).

According to the court, these instructions are very clear from the validation notice language and there was no violation of the FDCPA’s requirements with this letter. The court states:

Any reading to the contrary is plainly unreasonable.

insideARM Perspective

This interpretation is very different from the decisions coming out of the Third Circuit, and this situation highlights the uncertainty debt collectors face as they attempt to comply in good faith with the FDCPA and related laws and regulations. When reviewing federal requirements, which should apply consistently nation-wide, a letter containing the same validation notice language is fine in some jurisdictions but problematic in others.

Uniformity for something as basic as the validation notice should be a no-brainer. While the Consumer Financial Protection Bureau’s (CFPB) Notice of Proposed Rulemaking (NPRM) for debt collection attempts to fill in and provide clarity to gaps in requirements, the NPRM only tangentially addresses this issue in the 538-page document. The NPRM provides a model form and instructions about the validation notice, which allows for an oral dispute, but would this be enough for the Third Circuit to take back its interpretation that all disputes under section 1692g must be in writing? Who knows.

The good news is this: the CFPB’s proposed rules provide a mechanism for seeking official interpretations of requirements from the CFPB itself. The rules may not be finalized in time to help with this specific issue, but this could be an excellent tool to utilize on whatever wild FDCPA theories the plaintiffs’ bar comes up with in the future—depending, of course, on the turn-around time for the Bureau’s official interpretations.

Can a party who contractually consents to receive autodialed calls from another party to his cellular telephone number change his mind and revoke such consent?  No, said a Florida magistrate judge earlier this week in a report and recommendation in the case of Lucoff v. Navient Solutions, LLC, 2019 U.S. Dist. LEXIS 89879 (S.D. Fla. May 28, 2019). 

Plaintiff, who had taken out various student loans, alleges that defendants violated the TCPA by calling him on his cellphone regarding these loans after Plaintiff had orally revoked his consent to receive such calls.  Significantly, Plaintiff was a class member in a class action settlement against Defendants, which settled in 2012.  As part of the class action settlement, class members, who did not opt out of the settlement, agreed to receive autodialed and prerecorded calls from Defendants unless they submitted a revocation request.  Plaintiff did not opt out and did not submit a revocation request.  But Plaintiff alleges that he orally revoked such consent on June 24, 2014 in a call with one of Defendants’ representatives.

Relying on Reyes v. Lincoln Auto Fin. Servs., 861 F.3d 51 (2d Cir. 2017) and Rodriquez v. Student Assistance Corp., 2017 WL 11050423 (E.D.N.Y. Nov. 6, 2017), the magistrate judge found that “because Plaintiff did not submit a Revocation Request, he could not unilaterally revoke his express consent to receive autodialed and prerecorded calls from Defendants, which he gave as part of the Arthur Settlement.” 

The magistrate judge also found that this conclusion was consistent with decisions from the Eleventh Circuit, such as Medley v. Dish Network, LLC,2018 WL 4092120 (M.D. Fla. Aug. 27, 2018).  The magistrate judge agreed with the Medley court that the Eleventh Circuit’s decision in Osario v. State Farm Bank, 746 F.3d 1242 (11th Cir. 2014), which found that a party could orally revoke previously-given consent under the TCPA, “did not address the issue [here] ‘which is whether consent may be unilaterally revoked when it is given as part of a bargained-for contract.’”  As the Medley court found, it is black-letter law that one party to an agreement cannot, without the other party’s consent, unilaterally change the agreement and “’[n]othing in the TCPA indicates that contractually-granted consent can be unilaterally revoked in contradiction of black-letter law.’”   Thus, the magistrate judge recommended that defendants be granted summary judgment on the TCPA claim because the undisputed facts establish that they had Plaintiff’s prior express consent to make the challenged calls.

Further, the magistrate judge found that even if Plaintiff’s attempted revocation were effective, the undisputed facts establish that Plaintiff later provided his express consent to receive the challenged calls, which was yet another ground supporting summary judgment.   

We at TCPA World never get tired of expanding the ever-growing list of courts that have followed the Second Circuit’s lead and refused to recognize unilateral efforts to revoke bargained-for consent. 

—

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.