Managing Your TCPA Risk

The risk associated with dialing cell phone numbers has reached unprecedented levels. The Telephone Consumer Protection Act (TCPA) has become the weapon de jure among consumers and their attorneys. Unprotected debt collectors risk debilitating harm. Gone are the days where honest, hard working, ethical debt collectors may ignore the dangers of using dialing technology to contact consumers. The penalties available to successful TCPA plaintiffs are draconian, between $500 and $1,500 per call. It is not “if” the lawsuit happens, it is “when.” The time is now to put forward a deliberate effort to manage your TCPA risk. This article provides ideas on how to do just that.
The TCPA, 47 U.S.C. §227, makes it unlawful “to make any call (other than a call made for emergency purposes or made with the prior express consent of the called party) using any automatic telephone dialing system [ATDS] or an artificial or prerecorded voice . . . to any telephone number assigned to a cellular telephone service, . . . ” This section of the TCPA is commonly recognized as the “cell phone prohibition” – collectors simply may not use an ATDS to call a cell phone. The two exceptions to this general prohibition are calls made for an emergency purpose and calls made with the prior express consent of the called party. Yes, most debt collectors firmly belief paying their account immediately is very much an emergency, but that is not how the courts have interpreted this section of the law! This leaves the only remaining exception, prior express consent, for collectors to work with. Or does it? There are more ways to skin this cat to reduce your TCPA risk than simply relying on consent. This author’s approach to managing risk is an “arrow and quiver” approach – the more defense arrows contained in a collector’s quiver the better equipped he’ll be to ward off attacks and protect the village. Here are some arrows for your quiver:

Know The Source: The Federal Communications Commission (FCC) has determined prior express consent exists if the source of a telephone number is the called party. This makes it important for collectors to know the source of each telephone number in their collection system. Collectors should have the ability to immediately identify all telephone numbers included in the original placement file from their clients. Special phone fields should be used to identify these numbers versus the numbers a collector may discover through the skip tracing process or from third party data vendors. A debt collector should always be able to easily determine the source of each telephone number he is calling.

Flagging: Collectors can easily mark an account as “disputed.” They should just as easily be able to mark a telephone number as “consent,” meaning they have consent to call the number using their dialer. No matter how consent is obtained, dialers should be prohibited from dialing cell phone numbers unless the telephone number has a corresponding consent flag associated with it.

Scrubbing: The very first step in preventing a dialer from calling a cell phone number without proper consent is to know the number is a cell phone number. A collector must be able to identify cell phone numbers in his database. The marketplace is replete with vendors who can analyze all telephone numbers in a collector’s portfolio and identify each cell phone number. Some hosted dialer companies do it for free. Collectors can create separate fields for cell numbers, flag them, create screen pops, or identify cell numbers a variety of other ways using existing functionality in their collection software. The key is knowing which numbers are cell phones.

Know Who: Collectors need to know who they are calling. Collectors should demand from their clients and data vendors the proper identity of the subscriber of each telephone number in the collector’s portfolio. Considering the extreme sophistication of today’s dialing systems, data sources, phone number porting capabilities, cell phone identification services, and even global positioning services, there is simply no good reason a debt collector should have to place a call without knowing who is going to answer. Cell phone calls to unintended recipients are a growing source of lawsuits against debt collectors across the country. Recycled and ported cell phone numbers are the cause. Know who you’re calling – before you call.

Human Intervention: The FCC believes predictive dialers fall under the TCPA’s definition of ATDS. This interpretation of the law has gotten some traction in the courts as well. See, Griffith v. Consumer Portfolio Serv., 2011 U.S. Dist. LEXIS 91231 (N.D. Ill. Aug. 16, 2011). Despite the actual language of the TCPA, the FCC has suggested a machine that has the capacity to dial telephone numbers without human intervention falls under the definition of ATDS. No matter the name, power dialer, predictive dialer, progressive dialer etc., the FCC believes human intervention in the dialing of the telephone number makes a difference in determining whether the machine a collector uses to dial telephone numbers falls under the definition of ATDS. Introducing an element of human intervention in the process of dialing a cell phone number gives collectors another arrow in their quiver of defenses, so they may argue they are not using the kind of machine described in the statute.

Dialer Lobotomy: Give your dialer a lobotomy. The term automatic telephone dialing system means “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.” A key ingredient of an ATDS is the use of a “random or sequential number generator.” Despite how the case law is developing in this area, see Griffith, a machine which does not contain a random or sequential number generator should not fall under the definition of ATDS. Collectors do not use random or sequential number generators. Removing this functionality from a dialer gives collectors yet another defensive arrow to argue they are not using the kind of machine described in the statute.

Beefy Contracts: The written agreement between a debt collector and its client can be a good source of risk reduction, or at the very least some anesthetic to ease the pain. Collectors should insist on certain representations and warranties from their clients about the telephone numbers the client provides, such as: (1) the source of the numbers, (2) whether the client has proper consent to call the number, (3) that such consent has not been revoked, and (3) the type of phone number. Fair and balanced indemnity and defense obligations are also important to the collector’s overall risk management plan. If a client’s warranties or representations turn out to be incorrect, the agreement needs to provide adequate remedy to the collector for the consequences caused by a collector’s reliance on that incorrect information. Collectors may also consider requiring creditors to provide a copy of the underlying credit agreement with the consumer as an exhibit to the collection agreement. For the reasons described in the next section, collectors can find many sharp arrows hidden in the underlying credit agreement between the creditor and consumer.

Credit Agreements: The underlying credit agreement between the consumer and the creditor can also be the source of considerable risk reduction. Collectors should educate and encourage their creditor clients to include prior express consent language in the very agreement which forms the basis of the debt. The FCC has suggested this very same approach. The idea is the consumer’s credit contract includes terms which clearly and expressly give the creditor consent to call the consumer’s cell phone. Ideally, consent would be introduced into the origination process of the credit obligation, through language in a cardholder agreement, a separate medical services intake form, by a separate consent document or contract addendum, or by any other tangible method by which the consumer’s affirmative prior express consent can be memorialized. Strong arbitration clauses and class action waivers contained in a consumer’s credit agreement also serve as deadly sharp arrows in a collector’s quiver. Collectors might encourage their clients to include properly written arbitration clauses and class action waivers in credit agreements with consumers.

Vendor Dialing: Collectors who outsource their dialing function should know how their vendors are dialing cell phone numbers. Generally speaking, the behavior of an “agent” can get the “principal” in trouble. To the extent dialer vendors are considered agents of their collector (or creditor) clients, the vendor’s behavior can very possibly get the collector (or creditor) in trouble. If collectors do not understand how their vendors are dialing cell phone numbers then it will not be very easy for them to assess risk and manage it. If you are not dialing your own telephone, then know how your vendors are dialing for you.

Insurance: Collectors should know whether they have insurance coverage for a TCPA claim. For those that don’t, consider it. For those that do, dust off those policies and read them. Check the exclusions. Contact your agent. Insurance coverage for TCPA claims could mean the difference between solvency and insolvency. Know your deductible and whether it changes for class action claims. Investigate how your own insurance company has handled TCPA claims in the past for other insureds. Ask. Investigate. Know your policy.

State Considerations: In addition to the TCPA, some states have their own versions of the TCPA or other state laws which regulate the use of dialing technology under certain circumstances. Risk managers should identify these states, know those laws, and make sure their company’s processes accommodate the nuances of state laws which regulate the use of dialing technology.

Consent: Last but certainly not least, obtain consent! Sounds easy. But how? The number of ways a collector can obtain proper consent from a consumer to call their cell phone using a dialer is limited only by their own imaginations. From inbound IVRs, to live agent scripting, to click through web site consent, to screen pops on collection platforms, risk managers should consider how their organization can best incorporate a mechanism for obtaining consent into their own workflow processes. Perhaps the most important element of any “consent campaign” is documenting the consent. The most effective consent is (1) properly given by a consumer, (2) easy for a collector to know whether they have it, and (3) easy for risk managers and executives to know where it came from based on the regular documentation processes used by their organization. Almost as important to a collector is knowing what consent is not. Just because a consumer calls a collector from their cell phone does not mean the consumer is consenting to be called at that number by a collector’s dialer. Train your people and program your system to recognize telephone numbers which do not yet have consent associated with them and ask the caller for consent. In general, third parties i.e. family, friends, commanding officers, neighbors etc. may not be the source of consent to call a consumer’s cell phone.

The thought of scrubbing out half (or more) of the phone numbers contained in a debtor collector’s dialer queue as “no consent cell numbers” is enough make any collector immediately run to the edge of the nearest tall bridge. The thought of being liable to consumers for at least $500 for every call made to each of those telephone numbers; however, will most certainly cause that same collector to jump! Don’t be caught off guard with TCPA risk. Take steps now to assess your TCPA risk and reduce it. It’s not “if,” it’s “when.”