Is That Text Message You Just Sent To Your Member Legal?

October 5, 2018 at 9:00 am 1 comment

I’ve said it before and I’ll say it again. Although credit unions continue to fret over litigation surrounding the applicability of the ADA to their websites, the litigation which should be as concerning if not more concerning to them, involves the Telephone Communications Protection Act which generally, and I mean very generally, bans companies from autodialing messages to consumers without first getting their permission.

Don’t stop reading this blog. I know you people and you’re saying to yourselves that we don’t do auto dialing so therefore the TCPA with its potential fines and class-action litigation doesn’t apply to us. Don’t be so sure. The courts aren’t and neither is the Federal Communications Commission which just issued a request for comment on how it should interpret the TCPA in light of a potentially expansive ruling by the Court of Appeals for the 9th Circuit in Marks v. Crunch San Diego, LLC , 2018 BL 340373 (9th Cir. Sept. 20, 2018). As a matter of fact, there is enough confusion among the courts as to how to interpret the TCPA that I would bet you a beer that Judge Kavanaugh rules on the issue if he gets confirmed by the Senate in the coming days. I like beer.

I know I’ve gone over this before but let’s do it again for old time’s sake. The TCPA and its enacting regulations, place restrictions on the use of automated telephone equipment including automatic telephone dialing systems and telephone facsimile machines (I doubt my kids know what a facsimile machine is). It defines an automatic telephone system as “equipment which has the capacity— (A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers.” Remember, a smart phone was an oxymoron at the time this statute was enacted, so it didn’t anticipate the scenario which is generating so much recent controversy.

Crunch Fitness communicates with respective and current gym members by sending text messages with the help of the Text Munication System. According to the court, when it wants to send a text, a Crunch employee simply logs onto the company system, selects the phone numbers to be called, creates a message and specifies a send date. It sounds an awful lot like technology that more and more credit unions are  using to tell members and potential members about new products and services. They were sued by a gym member who claimed that by sending in texts, they were violating the TCPA.

The District Court dismissed the claim because the gym did not have the equipment to “store or produce telephone numbers…using a random or sequential number generator…and to dial such numbers.” The 9th Circuit disagreed. In its recent ruling it held that “the statutory definition of ATDS includes a device that stores telephone numbers to be called, whether or not those numbers have been generated by a random or sequential number generator.” Now look at what happened in this case. The court is saying that because the company has access to a website which can be used to generate automatic dialing, it is subject to the ATDS even though the phones used and operated by the gym presumably have no such capability.

This ruling, combined with an earlier decision by the Court of Appeals for the District of Columbia, in ACA Int’l v. Fed. Comm’cns Comm’n, 885 F.3d 687 (D.C. Cir. 2018) which I discussed in this blog, has sent the FCC scrambling to once again consider what exactly an ATDS is.

If you don’t think this has a potential impact on your credit union then consider some of the questions the FCC wants stakeholders to weigh in on such as: “Does the interpretation of the Marks court mean that any device with the capacity to dial stored numbers automatically is an automatic telephone dialing system? What devices have the capacity to store numbers? Do smartphones have such capacity? What devices that can store numbers also have the capacity to automatically dial such numbers? Do smartphones have such capacity?” Inquiring minds want to know.

Entry filed under: Legal Watch, Regulatory. Tags: , , , .

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1 Comment Add your own

  • […] Let’s face it, as it currently stands, there is just too much confusion about when the statute does and does not apply. On the one hand, we have a ruling by the Court of Appeals for the D.C. Circuit clearly stating that it should not be interpreted as extending to phones simply because they have the capacity to auto-dial. On the other hand, there was a ruling months later by the Court of Appeals for the Ninth Circuit which seems to reach the exact opposite conclusion. Recall Marks v. Crunch San Diego, LLC. […]

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Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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