Posts tagged ‘TCPA’

If You Call Your Members, This Case May Impact You

There is an important case pending before the Court of Appeals for the 11th Circuit which will have a direct operational impact on the type of technology your members can use to reach out to potential members. It also underscores just how unhinged the TCPA has become from Congress’ original intent and why Congress should do something to restore commonsense.

First, a primer/refresher on the issue I am talking about. The Telephone Communications Protection Act (TCPA) was passed in 1991. Its Senate sponsor, Senator Ernest Hollings of South Carolina who passed away recently, described the emerging use of automated telemarketing campaigns as “the scourge of modern civilization. They wake you up in the morning, they interrupt our dinner at night, they force the sick and elderly out of bed; they hound us until we want to rip the telephone out of the wall.” While the Senator may have slightly overstated the case, the reality is many consumers continue to feel harassed by these non-stop calls and their frustration has made TCPA litigation one of the hottest areas of consumer class-action lawsuits. Credit unions have not been exempt from this trend.

The legislation he sponsored was codified as 47 USC §227. This law makes it unlawful for any person to make any call other than for emergency purposes using “any automatic telephone dialing system or an artificial prerecorded voice unless the person has an established business relationship with the recipient.” Seems simple enough except the statute defines an Automatic Telephone Dialing System (ATDS) 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.”

Melanie Glasser was upset enough by her marketing phone calls from Hilton that she agreed to be the named plaintiff in what she hopes will become a class-action lawsuit. Glasser v. Hilton Grand Vacations Co., LLC., 341 F. Supp. 3d 1305, 1306 (M.D. Fla. 2018), This case does not deal with whether or not she gave Hilton consent to call her. Instead it centers on the type of equipment the company used when it made the allegedly offending phone calls. The company openly admits to using a new computerized telephone calling system specifically designed to comply with the TCPA in a way that allowed it to automate much of the calling process. Its Intelligent Global Connect dialing system uses software to determine who is going to get called but requires an employee to press a button before each call is completed. The plaintiff argues that this is a distinction without a difference but the case was dismissed by the federal district court. It concluded that because “human intervention is necessary for the numbers to be dialed, the equipment and consequently the calls being made is not covered by the TCPA.” The case is now up on appeal and the briefs read more like patent applications than an examination of appropriate marketing practices.

Although this case is only binding in the 11th Circuit,  If this ruling is upheld it will give businesses including credit unions clear-cut guidance as to what type of equipment does and does not comply with the TCPA.

It is also another great example of why all sides need to come back to the table and fix this out-of-control statute once and for all. Personally, I feel that the goal of the statute is worthwhile. People shouldn’t be inundated with unsolicited offers for things they don’t want. The problem is that, as drafted, the trigger for TCPA compliance is the equipment being used and not how it is being used. As a result, almost all businesses including all but the smallest of credit unions either use or will be using equipment that makes them subject to the TCPA even if they never use that equipment for the type of mass marketing, computer generated automated calls the statute was designed to prevent.

We also need some more commonsense guidance as to what constitutes consent but I’ve run out of space for today’s blog.

April 11, 2019 at 9:19 am Leave a comment

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

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.

October 5, 2018 at 9:00 am 1 comment

Four Things You Should Know To Start Your Credit Union Week

Kudos to our good friends at CUNA for joining in a petition seeking clarification from the FCC about when exactly the TCPA applies. Although I continue to get the sense that credit unions are not paying as much attention to this issue as they should, the general public is getting more annoyed by the growth unsolicited phone calls and now is no time to be in the dark about the circumstances under which your credit union may find itself on the receiving end of a class action lawsuit.

As I explained in this previous blog, the Telephone Consumer Protection Act (TCPA) applies to telephone equipment which has the capacity to store or produce telephone numbers to be called, using a random or sequential number generator; and to dial such numbers.” An amendment by the FCC extended this definition to include equipment which could be modified to do these tasks. Fortunately, a Federal court struck down the more expansive definition but now it’s time for the FCC to clarify once again what type of equipment triggers the TCPA.

Interest Rates Remain Steady Despite Record Low Unemployment

If your job is to anticipate how quickly interest rates are going to rise, you can be forgiven for being more than a little confused by recent economic trends. Friday’s announcement by the Department of Labor that the unemployment rate dipped below 4% means that it is at levels not seen since the days of the .com bubble and moving into territory that would have made Eisenhower proud. At the same time, we aren’t seeing a surge in wage growth. While this is good news for those of you guarding against interest rate spikes, it certainly has economists scratching their heads. Here’s the heading of a research note from Fullerton Markets this morning: Data shows slacks remain in US labor market despite drop in unemployment rate. Say what? There is slack in an economy with near record unemployment? We may not know what’s going on in the economy for decades to come, but this is further evidence that there are some fundamental shifts taking place that no one fully understands.

It’s Official, Senator Gillibrand Introduces Post Office Banking Bill

New York’s Senator, Kirsten Gillibrand officially unveiled legislation that would permit people to bank at their local post office. Perhaps now my local branch will start staying open at times when I can actually get to it. According to this article, services to be offered by the Post Office include small dollar savings and checking accounts and transactional services including debit cards. If you want to know what I think of the aspiring President’s proposal, here’s another blog for you.

DACA Issues Come To The Surface

With the continuing legal and political wrangling over the future of the Deferred Action for Childhood Arrivals program, my guess is that you will see more and more litigation dealing with claims of discrimination against individuals currently protected under the program who are in danger of losing their legal immigration status. The latest example I’ve seen is this lawsuit brought against Bank of America, by a job applicant who says he was denied his “dream job” because of his DACA status. I also checked this morning and a fascinating case alleging that Wells Fargo discriminated against DACA students by refusing to provide them student loans and/or credit cards is still being litigated.


May 7, 2018 at 9:08 am Leave a comment

Why Friday Was A Good Day For Your Credit Union

It just got a little safer to call or text your members.

Although the ADA has captured most of the industries’ attention, it’s the Telephone Consumer Protection Act that will ultimately have the biggest impact on your operations, at least if regulators get their way. A statute that was intended to deter telemarketers from interrupting your day with unwanted solicitations has morphed into a litigation tripwire, potentially applicable to almost all businesses in America including your CU.

For almost three decades the TCPA has, with limited exceptions dealing with the collection of government debt and emergencies, made it illegal for persons to make phone calls or send texts without first getting the receiver’s permission when communicating with the help of an Automatic Telephone Dialing System (ATDS.)

What exactly is an ATDS? The TCPA defines it 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.” 47 U.S.C § 227(a) (1). In 2015 the FCC further refined this definition with a declaratory ruling explaining that an ATDS is any device that can potentially make random or sequential number generated calls with modifications. Just about every smartphone meets this definition since software can be downloaded giving it this capability.

This means that, unless they still use a rotary, just about every time your employees use a phone, chances are the TCPA is applicable. They better have to have a member’s permission before calling them or be willing to pay a $500 fine for each violation.

On Friday The Federal Court of Appeals DC ruled that the FCC went too far. CUNA and the bankers submitted a brief in opposition to the 2015 clarification.

“The Commission’s interpretation of the term ‘capacity’ in the statutory definition of an ATDS,” the Court decided, is “utterly unreasonable in the breadth of its regulatory inclusion. Nothing in the TCPA countenances concluding that Congress could have contemplated the applicability of the statute’s restrictions to the most commonplace phone device used every day by the overwhelming majority of Americans.”

That’s the good news. The bad news is I have read the decision twice and if I were a credit union, I wouldn’t change my call policies anytime soon. We are a long way from getting regulatory clarity as to when the TCPA applies and to what equipment. As the Law360 blog put it in its headline this morning:

“DC Circ. Delivers Relief, But Not Clarity, With TCPA Ruling”

March 19, 2018 at 10:01 am 3 comments

Are You Complying With These Two Acronyms?

The CU Times is reporting this morning that the number of ADA website compliance lawsuits filed against credit unions has more than doubled in the last month to at least 23 and is likely to grow even more in the coming weeks. It’s good that credit unions are paying attention to these lawsuits but I’m afraid that the industry is in danger of shifting from neglectful indifference to an unproductive frenzy when it comes to reacting to this litigation.

In contrast, today is the final day to submit initial comments in support of CUNA’s petition to the Federal Communications Commission, requesting that credit unions be given greater flexibility to contact their members on their cell phones without fear of violating the increasingly confusing requirements of the Telephone Consumer Protection Act (TCPA).

The ADA has gotten the lion’s share of attention in this battle of the acronyms. This makes sense in the short-term since, unlike the TCPA, every credit union with a website could potentially be sued. But in the medium to long-term it’s actually the TCPA proposal from which credit unions have the most at stake. Here’s why:

First, the crux of the ADA lawsuits is that websites are public accommodations which must be accessible to disabled persons such as the visually impaired. The lawsuits claim credit unions can comply with these reasonable accommodation requirements by ensuring that their websites satisfy the requirements of the World Wide Web Consortium. This sounds like a big deal but it’s time for everyone to take a deep breath. First, there is a good chance that, depending on the age of your software, you may find that your ability to comply with these requirements is already embedded in your system.

Second, in a worst case scenario, if a credit union finds itself facing an exorbitant cost to satisfy these lawsuits, it could always argue that compliance measures would cause it an undue burden.

Third, we are still dealing with an evolving area of the law. It’s possible that clear-cut guidance will ultimately preempt many of these lawsuits. In short, I firmly believe that we will look back in a year or two from now and realize that complying with the ADA was not a big deal.

In contrast, the TCPA is an absolute mess and getting worse by the day. It is a fast growing area of consumer law litigation that threatens to make it difficult to communicate with our members using this cutting edge piece of technology called a cell phone.

CUNA’s petition would exempt from TCPA liability informational calls made by credit unions to their members’ wireless numbers, so long as such communications are either made to a wireless subscriber with whom the credit union has an established business relationship or, alternatively, the subscriber is not charged for the call under the subscriber’s wireless plan.

Trust me, even if your credit union doesn’t come within the jurisdiction of the TCPA today, it will in the near future. Mass marketing and auto dialing used to be limited to huge companies and banks. Today, even the smallest credit unions can afford technology which makes them subject to the TCPA and its trip wires. The problem is that whereas the ADA has no statutory damage provisions, the TCPA does. This means that whereas two firms are bringing most of the ADA lawsuits according to the CU Times, I would bet you that there are dozens of firms seeking to start TCPA class actions.



November 6, 2017 at 9:09 am Leave a comment

TCPA Gets Even More Complicated

TCPA Gets Even More Complicated

The Court of Appeals for the 11th Circuit yesterday, revived a lawsuit by a consumer who claimed a bank violated the Telephone Consumer Protection Act by refusing her request that she not be called on her cell phone during work hours. This could be an operational nightmare.

First a quick refresher: The TCPA generally makes it unlawful for any business to make non-emergency calls using an automatic telephone dialing system without the receiving party’s prior consent. In recent years, Courts have ruled that consumers can orally revoke this consent. Schweitzer v. Comenity Bank addressed the issue of whether a consumer could partially revoke a bank’s authority to make automated phone calls.

The case involved a consumer who was delinquent on her credit card payments. When she got the card, she consented to allow Comenity Bank to call her cell phone. Normally I try to summarize these cases as briefly as possible but I can’t resist transcribing a chunk of the dialogue between the bank’s employee and our delinquent card holder. He couldn’t have teed this up any better for litigation if he was a law school professor. When she fell behind on her credit card payment, the bank called her on her cell phone and asked her to make a $35.00 payment. The following exchange took place:

Schweitzer said the following:

Unfortunately I can’t afford to pay [my past due payment] right now. And if you guys cannot call me, like, in the morning and during the work day, because I’m working, and I can’t really be talking about these things while I’m at work. My phone’s ringing off the hook with you guys calling me.

The employee replied that “[i]t’s a phone system. When it’s reporting two payments past due, it’s a computer that dials. We can’t stop the phone calls like that.”

The trial level court that reviewed the case dismissed the consumer’s lawsuit because she had clearly consented to the bank’s use of her cell phone. Furthermore, while the TCPA permits consumers to withdraw their consent, the rule of thumb has been that such withdrawals have to be complete. In this case, our consumer did not request that she no longer receive any phone calls, just that she not receive phone calls at specified times.

However, the 11th Circuit ruled that banks and other creditors should have the operational ability to know when a consumer has partially restricted their phone calls. I hope you can see now why this ruling is so potentially troubling. Currently, it is only directly binding on those of you who do work in states under the jurisdiction of the 11th Circuit but this decision is persuasive authority that could be adopted by other courts and is certainly something of which your collections people should be aware.

More Bad News on Taxi Medallions

This goes into the “don’t shoot the messenger” category but if your credit union is involved with taxi medallions, you should all take a look at the credit union watch blog’s latest analysis of the medallion industry available at: The news is not good and Keith’s analysis of industry trends has been spot-on.

August 11, 2017 at 9:06 am Leave a comment

Two Cases You Need To Know About

Today’s blog highlights two recent decisions, one that will interest your Compliance/IT department and another that will peak the curiosity of your HR folks.

A decision by the 9th Circuit yesterday underscores yet again the broad reach of the Telephone Consumer Protection Act (TCPA). We recently did a blog on this, but I get the sense that most people, including financial institutions, are still in denial. Chances are your credit union has to comply with the TCPA.

In Flores v. Adir Int’l, LLC, No. CV1500076ABPLAX, 2015 WL 4340020, at *4 (C.D. Cal. July 15, 2015, defendant repeatedly received generic text messages from the debt collector, even after he requested that the texts no longer be sent. He sued under the TCPA, which makes it illegal to contact consumers without their permission with the use of an automatic telephone dialing system (ATDS). He argued that the unsolicited texts demonstrated that the debt collector was using an ADTS to contact him, without his permission and was therefore violating the law. In tossing this claim the Federal District Court held that “Plaintiff’s own allegations suggest direct targeting that is inconsistent with the sort of random or sequential number generation required for an ATDS.” In other words the district court assumed, as have many businesses, that the TCPA outlaws automated dialing.

Yesterday, the court of appeals for the 9th Circuit on the west coast reversed this decision. In a concise memorandum it explained why the district court got it wrong. Dialing equipment does not need to dial numbers or send text messages “randomly” in order to qualify as an ATDS under the TCPA. Rather, “the statute’s clear language mandates that the focus must be on whether the equipment has the capacity “‘to store or produce telephone numbers to be called, using a random or sequential number generator.”

By the way, this decision has nothing to do with the fact that the persistent texter was a debt collector. As explained in a previous blog, unless you use “old fashioned” roto- dialers at your credit union, chances are your system qualifies as an ATDS. Every time a member is contact the TCPA is in play.

Second Circuit Allows “ Gender Stereotyping” claim To Move Forward

This is the one that your HR person should take a look at. The court of appeals for the 2nd Circuit, which has jurisdiction over New York, yesterday ruled that an employee could bring a successful discrimination claim by proving he was victimized by “ gender stereotyping “ in the work place.

Matthew Christenson, an openly gay man sued his employer, an International Advertising Agency, alleging that his supervisor engaged in a pattern of humiliating harassment targeted at his “femininity and sexual orientation.” The harassment included graphic illustrations on an office white board.

The case has drawn attention because Christenson explicitly asked the court to rule that employers can be sued for discrimination based on sexual orientation under Title VII of the Civil Rights Act of 1964. The second circuit was unwilling to go this far, but allowed the case to go forward if the employee could prove he was the victim of gender-stereotyping.

In a splintered 1989 decision, the Supreme Court held that an employer who made an employment decision based  on the belief that a woman could not be aggressive,  had acted on basis of gender discrimination under Title VII. (Price Waterhouse v. Hopkins, 490 U.S. 228, 109 S. Ct. 1775, 104 L. Ed. 2d 268 (1989).


Remember that discrimination on the basis of sexual orientation is already illegal based on New York State law.


Don Draper beware!

March 29, 2017 at 9:32 am Leave a comment

Reach Out and Touch Someone At Your Own Risk

The long reach of the Telephone Consumer Protection Act of 1991 was highlighted last week by two Congressional hearings and a joint letter issued by our trade Associations and the bankers strongly opposing a petition to make this onerous law even more difficult to comply with. Believe it or not, this may be the single biggest compliance issue your credit union should be monitoring.  If you don’t think your credit union is impacted by the TCPA, you’re likely wrong.

The TCPA and its regulations prohibit any call to a land line or cell phone that uses an automatic dialing system, artificial or pre-recorded voice that is made without the prior express consent of the called party. According to the FCC, which administers the law, this prohibition now applies to texts.  The key to understanding the TCPA’s reach is to understand that it applies to calls made by your employees with    equipment with the capacity “to store or produce telephone numbers to be called using a random sequential number generator” and the ability to dial such numbers.  Arguably, the only phone that doesn’t meet this definition is that roto dialer wasting away in the back of your garage.  The fact that you don’t autodial your members or bombard them with prerecorded messages is irrelevant.

Traditionally, businesses such as banks and creditors could demonstrate that a member implied consent to receive calls by, for example, including their phone number on a credit application. (See In the Matter of Rules & Regulations Implementing the Tel. Consumer Prot. Act of 1991, 23 F.C.C. Rcd. 559, 559 (2008)).  Remember that the implied consent standard does not apply to advertisements or telemarketing.

Why has this statute become such a big issue?  Combine this level of nuanced compliance requirements with restrictions on text messages sent to an ever growing number of smart phones and you have a classic legal speed trap.  There were a mere 14 TCPA lawsuits in 2008.  This increased to more than 1,900 in 2014 followed by a 32% increase of such lawsuits to a total of 4,860, including 30 with settlements of over a million dollars.  No wonder then, as pointed out in the joint letter, the expansive definition of auto dialer has even led credit unions and other financial institutions to stop texting messages to members who previously received them.  

While some of this may ultimately be an overreaction, the issue gets even more complicated now that a petition has been filed with the FCC, which would have the effect of making it more difficult to prove that a member has consented to receive TCPA communications.  Specifically, petitioners are requesting that the FCC issue a rule requiring that all calls subject to the TCPA only be authorized with express consent from the receiving party.  The fact that a member has previously put his number on that credit application would no longer constitute consent.     

This proposal would be great for trial lawyers, but lousy for consumers for whom the cell phone has become an electronic appendage, and financial institutions which, as pointed out in the joint comment letter, often have to make live contact with members to comply with federal law.  By the way, the implied consent standards just apply to informational, as opposed to marketing, phone calls.

The good news is that the FCC is poised to take a decisive shift away from many of its more onerous interpretations, now that the Trump Administration can appoint the head of the commission.  Still, this is yet another example of how regulations have over taken the statutes that they are intended to implement.  It is time for Congress to revisit the TCPA.  The problem is that a statute was written when there was an estimated 8 million Americans using cell phones.  Today the number of cell phones exceeds the US population, with many adults having more than one cell phone.


March 14, 2017 at 9:24 am Leave a comment

Should you be able to autodial that delinquent homeowner?

Right now it’s illegal for you to autodial a delinquent homeowner without their consent but that may be changing and not everyone is happy.

I’ve previously blogged about the Telephone Consumer Protection Act.  It   generally requires a caller to obtain the prior express consent of the called party when:  making a non-emergency telemarketing call using an artificial or prerecorded voice to residential telephone lines.

The problem is that the TCPA was passed in the dark ages of 1991 when prerecorded computer generated phone calls sounded like…well prerecorded computer generated phone calls.  Today’s technology makes these phone calls as soothing as talking to the HAL 9000  And they provide an awfully convenient way for a major holder of mortgages to reach out and touch someone.

So last year congress amended the TCPA to permit autodialing  without consent  ”if they are  made solely pursuant to the collection of a debt owed to or guaranteed by the United States” which certainly covers loans being serviced on behalf of the GSE’s.

But in its comment letter the FHFA argued that all residential mortgage servicers should be exempt from the TCPA’s prohibition.  This touched a nerve with Ohio  Democratic  Senator  Sherrod Brown, whose name is mentioned as a possible VP pick for Hilary Clinton.  He is quoted in yesterday’s American Banker as  expressing concern that” the FHFA is pushing to subject Americans to more computer-generated phone calls and texts rather than ensuring servicers offer foreclosure alternatives.” Ouch.

Meanwhile, on June 16, the Mortgage Bankers Association petitioned the FCC to exempt all mortgage lenders from the consent requirements as applied to delinquent homeowners.  It argues that the TCPA’s prohibition makes it more difficult for lenders to comply with federal and state regulations requiring lenders to reach out to delinquent homeowners.

Stay tuned. HAL may soon be making phone calls on your behalf.

No Blog tomorrow. Enjoy the holiday.

June 30, 2016 at 9:18 am 1 comment

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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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