SLSA Private Loan Committee Meeting: TCPA Update Kelly Lipinski McGlinchey Stafford PLLC klipinski@mcglinchey.com

Telephone Consumer Protection Act What does it apply to? Automatic telephone dialing systems Artificial or prerecorded messages Calls to landlines Calls to cell phones Who does it apply to? Anyone – not just for telemarketers But life just got a little harder for telemarketers

Telephone Consumer Protection Act TCPA defines “automatic telephone dialing system” 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. As long as the equipment has the capacity to perform both functions, it is considered to be an “automatic telephone dialing system” for TCPA purposes, even if the function is not used.

Telephone Consumer Protection Act “Dual Purpose Calls” 2003 FCC Order explained “if the call, notwithstanding its free offer or other information, is intended to offer property, goods, or services for sale either during the call, or in the future, that call is an advertisement.” Determination of purpose of call should turn, not on the caller’s characterization of the call, but on the purpose of the message. Case-by case determination.

Telephone Consumer Protection Act Dual Purpose Calls” If the purpose of a call is compliance with another statutory requirement, the call should not be considered telemarketing. Example: Calls that offer home loan modifications and refinancing opportunities pursuant to the American Recovery and Reinvestment Act. However, if the purpose is to offer a modification or refinancing but is not required by statute, the call may be telemarketing.

Telephone Consumer Protection Act Conflict between the FCC’s 2012 Report and Order containing the amended regulations and the text of the TCPA and the regulations themselves. Deals with calls to residential landlines using an automatic telephone dialing system. Unclear whether prior express written consent is required for autodialed telemarketing calls to residential landlines if there is no artificial or prerecorded voice message.

Telephone Consumer Protection Act Report and Order: “…we require prior express written consent for all telephone calls using an automatic telephone dialing system or a prerecorded voice to deliver a telemarketing message to wireless numbers and residential lines.” Regulation: No person or entity may initiate any telephone call to any residential line using an artificial or prerecorded voice to deliver a message without the prior express written consent of the called party …

Telephone Consumer Protection Act Effective October 16, 2013 – calls to residential landlines using artificial or prerecorded messages and calls or text messages to cell phones that use ADAD equipment or prerecorded message that contain an advertisement or constitute telemarketing require the called party’s prior express written consent

No Advertisement or Telemarketing Prior Express Written Consent Old Rules New Rules Type of Call Advertisements/ Telemarketing No Advertisement or Telemarketing CELL PHONE CALL Using Automatic Telephone Dialing System OR Artificial or Prerecorded Message Prior Express Consent Prior Express Written Consent LANDLINE CALL Using Artificial or Prerecorded Message No Prior Express Consent Required •Because of Established Business Relationship •Also because no Advertisement or Telemarketing NOTE: Unclear whether prior express written consent is required for calls using automatic telephone dialing system only. •Because no Advertisement or Telemarketing

TCPA: Expansive Liability Nelson v. Santander - Recipients of calls have a private right of action even when not account holder A person who receives a call has a private right of action under the TCPA, even if the person is not the telephone account holder or subscriber. The private right of action under the TCPA is not limited to the subscriber or person named on the bill. Instead, any person who answers or receives the call has a private right of action.

TCPA: Nelson Santander asserted the consumer did not have a right to sue because the TCPA protects the “called party” and should be limited to the person named on the bill, which was the plaintiff’s husband. The court disagreed noting nothing in the statute limits the protections to the owner. Distinct from the rule that an owner is the only party that has the right to provide consent under the TCPA.

TCPA: Nelson Technology that pulls numbers from internal database of numbers is a “predictive dialer” An employee that provides testimony about internal practices and how employer uses devices will be deemed sufficiently competent and qualified. In response to deposition notice that requires testimony regarding certain topics related to Santander’s use of predictive dialers, Santander cannot later assert the employee it offer to provide testimony is not qualified.

TCPA: Nelson Court reiterates that the TCPA considers whether a device has the capacity to store, produce, or call randomly or sequentially generated numbers, not whether it actually does so. Santander used the Aspect system, which offers predictive dialing (algorithm times when an employee will be ready to receive a called number) and preview dialing (employee will select a telephone number on a computer screen and the system calls it). Although the plaintiff did not identify which of the 1,000+ calls were placed using the predictive dialing method, this issue was irrelevant because the Aspect system had the capacity to do so even if most calls were made using the preview method.

Revocation of Prior Express Consent Courts have reached different conclusions regarding the consumer’s ability to revoke prior express consent and, when allowed, whether the revocation must be in writing or verbal. Consumer cannot revoke prior express consent. Gager v. Dell Financial Services, 2012 WL 1942079 (M.D. Pa. May 29, 2012) Oral statement that calls to cell phone are inconvenient is not a sufficient revocation. Cunningham v. Credit Mgmt., 2010 WL 3791104 (N.D. Tex. Aug. 30, 2010) Revocation must in writing. Starkey v. Firstsource Advantage, 2010 WL 2541756 (W.D.N.Y. Mar. 11, 2010).

QUESTIONS Kelly Lipinski klipinski@mcglinchey.com 216.378.4969