Several recent court cases provide evidence that the free-for-all of class action lawsuits for violations of the Telephone Consumer Protection Act might be easing just a bit.
• In Kern v. VIP Travel Services (2017), Michigan Federal District Court ruled that vicarious liability for TCPA violations did not attach to various hotel chains simply because travel agencies placed called to consumers. The travel agencies were acting in their capacity as independent contractors and their calls were not directly under the control of the hotels.
• In Yaakov v. FCC (2017), the D.C. Circuit Court ruled to effectively undo the July 2015 FCC rule requiring opt-out notices on fax when recipients provided prior consent for those faxes.
• In Newhart vs. Quicken Loans (2016), the court denied class certification because the plaintiff could not demonstrate a lack of consent for each call being represented in the class.
• In a recent California District Court decision regarding Smith vs. Blue Shield (2016), the court dismissed a class action TCPA case brought simply because the insurance provider sent members a reminder that their insurance plans would automatically renew unless consumers changed to a new plan.
All Global Resources continually monitors the compliance and legal landscape and translates the trends into best practices for our clients.
Class-action lawsuits for violation of the Telephone Consumer Protection Action Act (TCPA) have been all the rage in litigation and bane of honest business for the past several years. We’ve all seen the massive penalties levied at companies for running afoul of the regulations.
TCPA exists to protect consumers from concrete harm, which is certainly a valid purpose. It was created to control “bad actors” and to balance consumer privacy with the economic prosperity being made possible with emerging communications technologies.
But the lawsuits have become cash cows for litigators. In 2008, only sixteen plaintiffs filed TCPA claims in Federal court. By 2016, TCPA filings had risen to 4,860 new filings for the year.
The settlements have been staggering, but the riches go to lawyers, not those affected by the violations. Settlements average $2.4 million in attorney rewards while the average consumer receives a paltry $4.12.
Unfortunately, the bulk of TCPA litigation does not target the bad guys from which consumer protection is warranted. Spoofing, fraud scams, and slamming are higher than ever. These schemes are made even easier with anonymity of the internet and VoIP technology, where a violator may be literally untraceable without a substantial string of court orders and the resources to track it all down. When those perpetrators are offshore, any punitive award is highly unlikely.
American-based businesses, which for the most part do try to operate within the law, become easy pickings for litigators thanks to their location. The cavalier way in which courts and agencies, Federal and State, have tapped those pockets is matched only by the ease with which it is done. A single TCPA infraction can lead to a lawsuit.
It doesn’t take an economist to realize that the cooling of the marketing world by these cases has had a significant impact on the economy and the very jobs that politicians always claim are the priority.
However, in recent months there have been a string of court rulings, agency actions, and official comments that suggest that TCPA litigation may see some easing.
The U.S. House of Representatives is also working on a new law called the “Fairness in Class Action Act” which seeks to bring scale to the question of concrete harm, and the relevance of penalties to actual damage.
Underpinning this movement is a new Chairman of the Federal Communications Commission, Mr. Ajit Pai, whose own scathing critique of the FCC’s rule making in July 2015 reflects an urgent and updated need to balance consumer protection and economic growth.
While we can hope for more clarity in the TCPA, more common sense in courts and more opportunity to conduct legitimate business without vague rules, there is no guarantee it will all pan out like we want.
All Global Resources continues to provide compliant marketing so that businesses can grow despite the changing sands of time and litigation. Contact us today.