A recent decision of the U.S. District Court for the Northern District of Illinois holds that prerecorded cellular telephone calls from a debt collector are covered by the Telephone Consumer Protection Act’s (TCPA) exception for calls made with the called party’s consent if the consumer has agreed to receive such calls from the creditor.

The TCPA prohibits non-emergency prerecorded calls to a cell phone unless the call is “made with the prior express consent of the called party.” In Frausto v. IC System, Inc., decided on August 22, 2011, the plaintiff had entered into an agreement with the creditor providing that, by giving the creditor his cell phone number, he had consented to receive auto-dialed and prerecorded calls from the creditor at that number. The plaintiff argued that his consent authorized only calls from the creditor, not the debt collector. The district court rejected the plaintiff’s argument.

In granting summary judgment in favor of the debt collection firm, the court relied on a 2007 declaratory ruling by the Federal Communications Commission (FCC) concluding that “calls placed by a third party collector on behalf of [a] creditor are treated as if the creditor itself placed the call.” According to the court, even if the agreement limited use of the plaintiff’s cell phone number to the creditor, the FCC’s ruling made it clear that the debt collection firm, for purposes of the TCPA, was the creditor when it called the plaintiff.

The court also rejected the plaintiff’s argument that he had revoked his consent because he presented no evidence that, after receiving calls, he had sent written notice to the debt collection firm demanding that the calls cease. In addition, the court was unwilling to consider the plaintiff’s argument that he did not provide “consent” as defined under the Minnesota Collection Agencies Act because he first made that argument in responding to the debt collection firm’s motion for summary judgment.

We continue to see an avalanche of class actions against companies alleging TCPA violations.  In part, this is because penalties are draconian. Violations can yield damages equal to a minimum of the greater of $500 or actual damages, triple damages for willful violations, and unlimited class action liability.

Ballard Spahr’s Consumer Financial Services Group is nationally recognized for 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). In addition to having vast experience in defending all manner of TCPA and Fair Debt Collection Practices Act lawsuits, the Group has counseled a number of clients on establishing auto-dialing and monitoring protocols. 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; Martin C. Bryce, Jr., 215.864.8238 or bryce@ballardspahr.com; or Mark J. Furletti, 215.864.8138 or furlettim@ballardspahr.com.

 


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