While leaving open the possibility that legitimate telephone calls from creditors and debt collectors will be snared by the Truth in Caller ID Act of 2009 (TCIDA), the Federal Communications Commission (FCC), in issuing final rules to implement the TCIDA, signaled that its enforcement activities would be directed against “bad actors [who] are spoofing caller ID information in order to facilitate a variety of malicious schemes.”

The TCIDA, P.L. 111-331 amended the Communications Act of 1934 to prohibit any person within the United States, unless excepted by FCC regulations, “to cause any caller identification service to knowingly transmit misleading or inaccurate caller identification information with the intent to defraud, cause harm, or wrongfully obtain anything of value.” The prohibition applies to calls made using any telecommunications service or Internet protocol-enabled voice service.

The final rules, issued on June 22, 2011, make the TCIDA prohibition applicable to any person who “directly or indirectly” causes a caller ID service to transmit or display misleading or inaccurate information with the requisite intent. In its background discussion accompanying the final rules, the FCC states that “indirect” action is covered “to foreclose those acting with the requisite harmful intent from arguing that they are not liable merely because they have engaged a third party to cause the transmission or display.”

In addition to recognizing in its background discussion that the TCIDA’s focus was on “bad actors,” the FCC also stated that an alteration of caller ID information without the requisite harmful intent does not violate the TCIDA. Nevertheless, some measure of risk remains that a court could interpret the TCIDA to reach legitimate calls. Various key phrases of the TCIDA prohibition, such as “misleading or inaccurate” caller ID information and “wrongfully obtain anything of value,” were not defined by the statute, thereby creating the possibility for the TCIDA to apply to collection calls by creditors and debt collectors simply if the person called could allege some technical violation of federal or state debt collection laws in connection with the call.

The FCC left such phrases undefined and declined requests from commenters to create exemptions to shield persons who engage in caller ID manipulation for legitimate business reasons from TCIDA liability. Indeed, in the background discussion, the FCC confirmed that the calls to which the TCIDA could apply include collection calls when the phone number is displayed as a local number but the call originates from a different area code or from a foreign country. (Click here to read our prior legal alert describing other examples of collection calls to which the TCIDA could apply.)

Although the TCIDA does not include a private right of action, it authorizes state Attorneys General and any other state officers authorized to bring actions on behalf of state residents to bring parens patriae civil actions in federal court to enforce the new prohibition or to impose draconian civil penalties of up to $10,000 per violation, up to $30,000 per day for each day of a continuing violation, or up to $1 million for any single act or failure to act. Civil actions may be filed whenever a state Attorney General or other officer “has reason to believe that the interests of the residents of the State have been or are being threatened or adversely affected” by a violation of the TCIDA or the FCC’s implementing rules. The TCIDA can also be enforced by the FCC and provides that violators are subject to criminal fines and imprisonment.

Ballard Spahr’s Consumer Financial Services Group is nationally recognized for its knack for fairly and effectively presenting industry concerns in comment letters addressed to state and federal regulatory agencies, its guidance in structuring and documenting new consumer financial services products, its experience with the full range of federal and state consumer credit laws throughout the country, and its skill in litigation defense and avoidance (including pioneering work in pre-dispute arbitration programs). The litigators in the Group regularly defend all manner of Telephone Consumer Protection Act and Fair Debt Collection Practices Act cases.  For more information, please contact Group Chair Alan S. Kaplinsky, 215.864.8544 or kaplinsky@ballardspahr.com; Vice Chair Jeremy T. Rosenblum, 215.864.8505 or rosenblum@ballardspahr.com; John L. Culhane, Jr., 215.864.8535 or culhane@ballardspahr.com; Mercedes K. Tunstall, 202.661.2221 or tunstallm@ballardspahr.com; Barbara S. Mishkin, 215.864.8528 or mishkinb@ballardspahr.com; or Mark J. Furletti, 215.864.8138 or furlettim@ballardspahr.com.


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