Businesses that have not already done so should consult with counsel regarding "consent to be called" provisions in their consumer contracts in the wake of the decision by the U.S. Court of Appeals for the Second Circuit denying a rehearing in Reyes v. Lincoln Automotive Financial Services.

The Reyes decision marked a turning point in Telephone Consumer Protection Act (TCPA) litigation by holding that consent to be called under the TCPA cannot be revoked when that consent is part of the bargained-for exchange memorialized in the parties' contract. In Reyes, an automobile-lease agreement expressly authorized the lessor to contact the lessee using prerecorded or artificial-voice messages, text messages, emails, and/or automatic telephone-dialing systems.

Relying on the bilateral nature of contract law—where one party cannot unilaterally alter a contract term without the mutual assent of the other party—the Second Circuit reasoned that TCPA consent cannot be unilaterally revoked by the consumer when the consent is provided as part of a bargained-for exchange.

Although the Second Circuit is the only circuit court to directly address this issue, the 2014 decision of the U.S. Court of Appeals for the 11th Circuit in Osorio v. State Farm Bank, in which the court stated that the plaintiffs were free to orally revoke consent "in the absence of any contractual restriction to the contrary," suggests that it would have reached the same conclusion.

The consent in Osorio was implied when the plaintiff's roommate orally provided the plaintiff's cell phone number to the defendant—not as part of a bargained-for agreement. As such, the case held that consent can be revoked, but it did so in a different context—when consent was given gratuitously, rather than as part of a bargained-for exchange.

Ballard Spahr's TCPA Task Force assists clients in navigating the complex and challenging issues that arise under the TCPA. The Task Force, which comprises regulatory attorneys and litigators, defends clients against TCPA class and individual actions, and counsels on TCPA compliance and avoiding liability, including reviewing policies and practices and helping to design text message, prerecorded, and autodialed-call campaigns. It also assists clients in commenting on regulatory proposals and handling scrutiny from regulators, including preparing for examinations, responding to investigations, and defending against enforcement actions.

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, and its skill in litigation defense and avoidance, including pioneering work in pre-dispute arbitration programs.

Copyright © 2017 by Ballard Spahr LLP.
(No claim to original U.S. government material.)

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, including electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of the author and publisher.

This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.