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ABC's of the TCPA, Part 1
By Mark E. Ellis

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A. INTRODUCTION

The Telephone Consumer Protection Act (“TCPA”) is a hot topic today in the collection industry.  Lawsuits alleging violations of the TCPA are increasing, and because statutory damages may be awarded under the TCPA for each violation and without any cap, such suits threaten collectors with potentially ruinous liability through class action litigation.  (See, e.g., Foreman v. Data Transfer, Inc. (E.D. Pa. 1995) 164 F.R.D. 400, 404-405.)  The TCPA potentially imposes amalgamated damages against debt collectors in a way not permitted under other statutory schemes designed to regulate collections.  See, e.g. FDCPA, 15 USC 1692k(a)(2)(B) (capping statutory class action damages at $500,000 or 1% of the collector’s net worth).  When one considers that $500, or even $1,500, in statutory damages may be imposed for each violative cell phone call under the TCPA, it becomes readily apparent that even a few hundred, much less thousands (or millions) of calls, may lead to truly ruinous damages if an “adding-machine” approach is taken to the statute’s interpretation.
           
The ironic part of the current TCPA “scare” is that collectors sued in California arguably possess more protection than collectors in other states.  The reason is that even though the TCPA was enacted as a federal statute by Congress, its enforcement and interpretation is nonetheless subject to state law limitations, as well as state law defenses and procedural rules.  Indeed, the legislative history of the TCPA, and its plain language, both indicate that a limited right was granted to individuals to file small claims actions only, with no attorneys (and hence no attorneys fees) and no class actions.

This article attempts to pierce the rhetoric that has grown up around the TCPA, and to put its “urban legends” into perspective.  Please note this article is not designed to be a comprehensive analysis, but rather it is intended to provide CAC members, and their attorneys, with a brief overview, and to act as an “A B C” primer.

B. THE PRIMARY PURPOSE OF THE TCPA WAS TO REGULATE ADVERTISING BY PHONE AND FAX TELEMARKETERS, NOT DEBT COLLECTORS

The TCPA was enacted into law on December 20, 1991 (Telephone Consumer Protection Act of 1991, Pub L. No. 102-243, 105 Stat. 2394 (1991)), and is codified at 47 U.S.C. § 227.  Express Congressional intent in passing the TCPA was to “protect the privacy interests of residential telephone subscribers” by placing certain restrictions on the use of unsolicited, automated phone calls made by telemarketers who were “blasting” out advertising by the use of both “facsimile machines and automatic dialers.”  (See, e.g. Senate Report No. 102-178, October 8, 1991, 1991 U.S.C.C.A.N. 1968.)  The Legislative history shows that in enacting the TCPA, the Legislation was adopted as a response to the “increasing number of consumer complaints” regarding “telemarketing calls and communications.”  Id. at 1969.

1. Congress Sought to Minimize “Random” Calls Tying up Private Phone Lines and Fax Machines.

In crafting the TCPA, Congress sought to address and regulate telemarketing communications being indiscriminately broadcast over telephone lines where the telemarketer had no existing relationship with the recipient, and where the communications ignored the recipients’ privacy interests.  Congress noted that “[h]aving an unlisted number does not prevent those telemarketers that call numbers randomly or sequentially.”  (Senate Report No. 102-178, October 8, 1991, at *2.)   The legislative history reflects concerns that random and indiscriminately dialed calls tied up telephone lines, even those “reserved for emergency purposes, such as hospitals and fire and police stations.”  Id.  Congress intended the TCPA to address the problems created when automated dialers dialed telephone numbers in sequence, “thereby tying up all the lines of a business and preventing any outgoing calls.”  Id.

2. Repeated Telemarketing Calls and Blasted Faxes Were Considered an Invasion of Privacy Under the TCPA.

Senator Fritz Hollings, the original bill’s sponsor, remarked that indiscriminate “calls are the scourge of modern civilization.  They wake us 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 right out of the wall…. These calls are a nuisance and an invasion of our privacy.”  (Congressional Record – Senate Proceedings and Debates of the 102nd Congress, First Session.  July 11, 1991137 Cong. Rec. S9840, S9874.) 

But Senator Hollings nonetheless stressed: “This bill is purely targeted at those calls that are the source of the tremendous amount of consumer complaints at the FCC and at the State commissions around the country—the telemarketing calls placed to the home.”  Id. (Emphasis added.)  In passing the TCPA, Congress relied on surveys wherein consumers responded that the two most annoying things were (1) “phone calls from people selling things” and (2) “phone calls from computers trying to sell something.” (Telephone Consumer Protection Act of 1991, H.R. Rep. 102-317, November 15, 1991, at p. 11.)

3. The TCPA Was Intended to Eliminate the Imposition of Advertising Costs to Recipients Who Had No Prior Relationship With the Caller.

A third factor considered by Congress related to the “cost shifting” that was the by-product when telemarketers sent unsolicited advertisements to fax machines causing the recipient to incur the cost of printing the advertisement; the history also noted the same problem relating to cellular telephones, where the called party was forced to incur an actual charge by an advertising call.  (See Congressional Record – Senate Proceeding and Debates of the 102nd Congress, First Session, supra, 137 Cong. Rec. at S9874.)

4. The TCPA Was Not Intended to Apply to Otherwise Lawful Debt Collection

After the TCPA Legislation was adopted, the Federal Communications Commission (FCC), the federal body tasked with enforcing and interpreting the TCPA, issued a formal Order, entitled “Notice of Proposed Rule Making” on April 17, 1992 (hereinafter, the 1992 TCPA Order).  This Order initially and originally interpreted the TCPA and the implementing Regulations related thereto. 1 In the 1992 TCPA Order, the FCC wrote: “The overall intent of Section 227 is to protect consumers from unrestricted telemarketing . . .”  (1992 TCPA Order at ¶ 19, p. *3.)  But, the 1992 TCPA Order also specifically recognized that some businesses, such as debt collectors, used various types of telephone dialers, including “automated” and/or "predictive" telephone equipment that could fall within the TCPA.  Nonetheless, the FCC commented that, to the extent the practice of using automated equipment complied with other State or Federal debt collection laws (such as, presumptively, the FDCPA and the Rosenthal FDCPA), this "non-telemarketing use of auto dialers [was] not intended to be prohibited by the TCPA." (1992 TCPA Order, ¶ 15, emphasis added; bracketed language added.)

Indeed, the 1992 TCPA Order carefully distinguished the telemarketing conduct sought to be regulated by the TCPA from the “commercial” conduct of debt collectors:

[I]n all debt collection circumstances, a prior or existing business relationship took place between the caller and the called party or the calling party is acting in an agency capacity for the creditor. . . [A] debt collection call that otherwise complies with all applicable collection statutes, is a commercial call that does not adversely affect the privacy concerns the TCPA seeks to protect.  (1992 TCPA Order at ¶ 16.) 

Again and again, the FCC in later orders continued to recognize that debt collection calls were viewed differently from telemarketing communications for the very reason that (1) collection calls “do not transmit an unsolicited advertisement,” and (2) because “debt collection calls are not directed to randomly or sequentially generated telephone numbers, but instead are directed to the specifically programmed contact numbers for debtors.”  (In the Matter of Rules & Regulations Implementing The Telephone Consumer Protection Act of 2008, CG Docket No. 02-278, FCC 07-232 (1/4/08) ¶¶ 9-12 (hereinafter, 2008 TCPA Order). 2 Moreover, the FCC has flatly ruled that “calls solely for the purpose of debt collection are not telephone solicitations and do not constitute telemarketing.”  Id., at ¶ 11.

In short, the Legislative history of the TCPA discussed above, the FCC's historical interpretations of the TCPA, as well as its own implementing regulations which interpret the TCPA, 3 all demonstrate that the TCPA was aimed at curbing unsolicited telemarketing communications made by the use of so-called “automatic telephone dialing systems” directed to private residential homes, under circumstances where the communications invade the recipient’s privacy and lead the recipient to incur costs.  But the TCPA was not designed to deter (1) legitimate (non-telemarketing) commercial calls, (2) calls to individuals with whom the caller, directly or indirectly, possessed an established business relationship, and/or (3) calls made with the consent of the recipient. 4

Nonetheless, in its 2002 and 2008 TCPA Orders, the FCC seemingly ignored its own history and the previous distinctions between telemarketing and other types of commercial communications such as debt collection. For example, in the 2008 TCPA order, the FCC explicitly observed: “The plain language of section 227(b)(1)(A)(iii) prohibits the use of autodialers to make any call to a wireless number in the absence of … the prior express consent of the called party. We note this prohibition applies regardless of the content of the call, and is not limited only to calls that constitute ‘telephone solicitation.’” 2008 TCPA Order, 11 (emphasis added). This is the FCC’s current position today.

C. THE PROVISIONS OF THE TCPA RELEVANT TO DEBT COLLECTORS AND CALLING

As most relevant to collectors calling cell phones, the TCPA, at 47 U.S.C. § 227(b), provides:

(b)  Restrictions on use of automated telephone equipment
       (1) Prohibitions
       It shall be unlawful for any person within the United States, or any person outside the United States if the recipient is within the United States
             (A) To make any call (other than a call made with the prior express consent of the party called) using any automatic telephone dialing system or an artificial or pre-recorded voice
                   (i)  to any emergency telephone line. . .
                   (ii)  to the telephone line. . .of a hospital …
                   (iii)  to any telephone number assigned to a paging service, cellular telephone service, specialized mobile radio service, or other radio common carrier service, or any service for which the called party is charged for the call
               (B)  to initiate any telephone call to any residential telephone line using an artificial or prerecorded voice to deliver a message without the prior express consent of the party, unless the call. . .is exempted by rule or order by the Commission. . .(Emphasis added.)

The plain language of 47 USC § 227(b)(1)(A) makes clear a violation of the TCPA occurs when an autodialed call is made to a cell (wireless) phone without the prior express consent of the called party.  (2008 TCPA Order, ¶ 9; see also 47 C.F.R. 64.1200.)   In short, the elements that must be established to prove a prima facie violation of the cell phone provisions of the TCPA are:

(1) A call to a cell (wireless) phone by either:
       (a) using an “automatic telephone dialing system,” and/or
        (b) leaving an artificial or pre-recorded message.
(2) Where the call is made without the prior express consent of the recipient, and
(3) Where the recipient is charged for the call.

D. WHAT IS AN AUTOMATIC TELEPHONE DIALING SYSTEM (“ATDS”)?
An essential requirement of a TCPA claim is that the phone call be sent to a cell phone by use of auto dialing technology which either (1) utilizes a so-called “random or sequential number generator” or (2) automatically leaves a prerecorded, as opposed to a live, message.  These restrictions, arise from the Congressional finding that “automated or pre-recorded telephone calls were a greater nuisance and invasion of privacy than live solicitation calls.”  2008 TCPA Order, at ¶ 17

Consequently, the heart of the TCPA’s restrictions focus on the regulation of calls made by the use of a so-called “automatic telephone dialing system” (“ATDS”).  TCPA47 U.S.C. § 227(a)(1)

1. What Constitutes An ATDS Under Federal Law?

The term “automatic telephone dialing system” (“ATDS”), as defined under the TCPA, is a highly specific term of art.  The TCPA defines an 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.”  TCPA, 47 U.S.C. §§ 227(a)(1)(A) and (B)

The mere fact that a dialer automatically pulls a number out of a database and calls the phone number, should not be considered as having been made by an automatic telephone dialing system.  (In the Matter of Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, Notice of Proposed Rulemaking and Memorandum Opinion and Order, 17 FCC rcd. 17459, 17465 N. 96 (Sept. 18, 2002)); but compare 2008 TCPA Order, ¶¶ 12-14.)

The ATDS provision of the TCPA was designed to address the type of telephone solicitation that Congress found to be especially abusive, namely automated calling devices which are able to “generate” millions of telephone numbers, and which are then automatically dialed without any human control.  When dialed sequentially, this technology has the capability to tie up all of the lines assigned to a particular business or individual -- for example, 283-8820, 283-8821, 283-8822, and so forth, (because often business or individuals have multiple phone numbers that vary only by one or two sequential digits). 

In the Appendix to the Senate Hearings on the TCPA is a document entitled “Why the Legislation Is So Important.”  See S. Hrg. 102-918, at 68 (Oct. 10, 1991).  Specific problems identified relate to automatic dialing systems which generate and dial numbers in sequence, thereby tying up all the lines and preventing any outgoing calls.  Id.  In the “Background and Need” Section of a Congressional Report accompanying the TCPA House bill, the history noted a ban on automatic telephone dialing systems was necessary because such systems:

are programmed to dial sequential blocks of telephone numbers, including those of emergency public organizations and unlisted subscribers. Since an [automatic telephone dialing system] can “seize” a recipient’s telephone line once a phone connection is made and may not release the line when the recipient hangs up, they can result in an intrusive and potentially dangerous use of telecommunication equipment.

H.R. REP. No. 101-633, at 3 (1990); see also Telemarketing/Privacy Issues: Hearing Before the Subcom. On Telecomm. And Finance, 102d Cong. 2 (1991) (Statement of Rep. Markey, Chairman).

What constitutes an ATDS subject to regulation under the TCPA has spawned considerate debate.  The FCC itself has not helped to clarify the issue by asserting that virtually any automated dialing device qualifies – ignoring the requirement in the TCPA itself that defines an ATDS be reference to “a random or sequential number generator.”  47 USC § 227(a)(1).  Clearly despite the FCC’s statements to the contrary, not every phone system with an automated dialing capability qualifies as an ATDS subject to the TCPA.

Although interpretive case law is sparse, one federal court sitting in California has clearly held that not every call sent through the use of automated calling equipment, or a predictive dialer, qualifies as an “ATDS” under the TCPA.  Instead the court ruled that only the subset of calls automatically dialed by the use of “a random or sequential number generator” was covered by the TCPA.  Satterfield v. Simon & Schuster (N.D. Cal. 2007) 2007 WL 1839807 at *5-6.  Significantly, the District Court rejected the FCC’s own interpretation that every predictive dialer qualified as an ATDS.  It concluded that the FCC’s broad interpretation was not entitled to deference as it was manifestly at odds with the definition of an ATDS contained inside the statute. 

The federal judge instead ruled that only equipment (whether or not automated or predictive) that contains “a random or sequential number generator” qualifies as an ATDS subject to the TCPA requirements.  Id.  Because most phone systems used by collectors do not use such number generating technology (even if they contain predictive dialers), they are not covered by the TCPA.  The Satterfield decision has been appealed, and an appellate decision is currently pending.

2. What Constitutes An ATDS Under California Law?

Separate and distinct from the TCPA, California’s Public Utilities Code § 2871, et seq., simultaneously regulates the use of automatic dialing equipment in California.  The TCPA itself expressly provides any the right to sue under its provision remains dependant on that claim “otherwise being permitted by the laws or rules of the court of a State.” 47 U.S.C. § 227(b)(3) (emphasis added).  As such, the TCPA grants only a “permissive authorization” (that is, a limited right) for a litigant to bring an action in state court.  See, e.g., Foxhall Realty Law Offices, Inc., v. Telecommunications Premium Services, Ltd. (2nd Cir. 1998) 156 F.3d 432, 438.  Indeed, the Ninth Circuit Court of Appeals has observed that depending on a particular states own laws, “a litigant may find that there is no remedy [under the TCPA] in state court.”  Murphy v. Lanier (9th Cir. 2000) 204 F.3d 911, 914 (bracketed language added). 

Under Public Utilities Code § 2871, an automatic dialing device is defined as “automatic equipment which incorporates a storage capability of telephone numbers to be called or a random or sequential number generator capable of producing numbers to be called and the capability, working alone or in conjunction with other equipment, to disseminate a prerecorded message to the telephone number called.”  In other words, like the TCPA, Public Utilities Code § 2872 prescribes restrictions regarding the use of the dialing technology.  But, § 2872(f) provides an exception for:

any automatic dialing-announcing device that is not used to randomly or sequentially dial telephone numbers but that is used solely to transmit a message to an established business associate, customer, or other person having an established relationship with the person using the automatic dialing-announcing device to transmit the message, or to any call generated at the request of the recipient. Public Utilities Code § 2872(f); (emphasis added).

Consequently, under California law, a debt collector’s cell phone contact to a debtor on behalf of a client (who, in turn,  has an “established relationship” with the debtor) is expressly permitted.  Cal. Pub. Util. Code § 2872(f).  And, as discussed, any right or remedy available to a plaintiff under the TCPA is limited in accordance with California’s specific laws governing the same conduct. Murphy, supra, 204 F.3d at 914.  In my view, because California law expressly permits a debt collector to call cell phones on behalf of entities that have an established relationship with the debtor, a debtor who is called using an ATDS has no private remedy available to him under the TCPA.  Ibid.


FOOTNOTES

1. In 1992, the FCC enacted its original implementing regulations pursuant to an explicit grant of authority from Congress, as set forth in 47 USC § 227(b)(2) (“The commission shall prescribe regulations to implement the requirements of this subject.”) The FCC’s Regulations construing the TCPA are set forth at 47 CFR § 64.1200, et seq. Since 1992, the FCC has periodically issued newer interpretive regulations and orders. The last interpretive order was promulgated on January 4, 2008.
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2. See, e.g., 2008 TCPA Order, at footnotes 17 and 18; 1995 TCPA Reconsideration Order, ¶ 17 (“We have specifically noted that ‘prerecorded debt collection calls [are] exempt from the prohibitions on [prerecorded] calls to residences as . . .commercial calls. . .which do not transmit an unsolicited advertisement.”). See also 1992 TCPA Order, ¶ 39 (“With respect to concerns regarding compliance with both the [Fair Debt Collection Practices Act] and our rules in prerecorded message calls, we emphasize that the identification requirements will not apply to debt collection calls because such calls are not autodialer calls (i.e., dialed using a random or sequential number generator) and hence are not subject to the identification requirements for prerecorded messages in 64.1200(e)(4) of our rules”). Return To Text

3. See, e.g., 47CFR § 64.1200(a)(2)(iii) (there is no liability under the TCPA for most calls made for a commercial or business purpose which do not include an unsolicited advertisement or solicitation).  See also 47 CFR § 64.1200(a)(2)(ii)Return To Text

4. The TCPA also established what is commonly known as the national “do not call list” whereby residential telephone subscribers may “opt out” of receiving unsolicited telemarketing calls at their home.  See 47 CFR § 64.1200(e)(2). Return To Text

The above article and all articles in this website are not intended to be legal advice. Readers should consult an attorney to determine how the law applies to their particular circumstances. Also, please understand that the law constantly evolves and changes. Certain of the decisions and legal propositions quoted in the above article may be out of date or superseded. Questions or comments about the above article can be directed to its author, Mark E. Ellis.

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