The Wireless Conundrum

By Michael A. Benoit

Anyone familiar with Washington knows the federal legislative process (among other things) is messy. Congress has a general idea of what it wants to accomplish, but it has neither the platform, the background, nor the skill to focus on the details. This is not meant as a slight — Congress quite rightly recognizes that it should leave the details to the professionals. In most cases, this means the regulatory agencies.

Case in point — the Telephone Consumer Protection Act (TCPA). It makes it unlawful for any person “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 or an artificial or prerecorded voice … to any [wireless device] for which the called party is charged for the call.”

The Federal Communications Commission (FCC) issued a declaratory ruling stating that “the provision of a cell phone number to a creditor, e.g., as part of a credit application, reasonably evidences prior express consent by the cell phone subscriber to be contacted at that number regarding the debt.” Sounds reasonable, no? If I give you my cell number on a credit application (and it may be the only number I have), should I not reasonably assume that you might want to use it to contact me if I stop paying? Do I care if you’re using an autodialer or prerecorded message?

Well, according to the U.S. District Court for the Northern District of California, only if you’ve first beaten me over the head. Last May, in Leckler v. CashCall Inc., the court rejected the ruling of the FCC and found that, as a matter of law, the FCC’s interpretation was “manifestly contrary to the plain language” of the TCPA, and “unreasonable, and therefore … not deserving of deference.” Why? Because the creditor didn’t say that it might use an autodialer or leave a prerecorded message when contacting the delinquent consumer at the cell number she provided on her application and in other documentation.

The court agreed that the FCC could define or interpret the “prior express consent” standard in the TCPA because Congress didn’t (leaving it to the professionals, no doubt). It also agreed that it must give the FCC’s interpretation “controlling weight” unless it was “arbitrary, capricious, or manifestly contrary to the statute.” Here’s where things went south.

The court concluded that the FCC’s interpretation was “manifestly contrary” because it would allow consent to be “implied” if a consumer included his or her cell phone number on a credit application without any indication that doing so would constitute valid consent to be called at that number with an autodialer or prerecorded message. So, unless the credit application clearly tells me that if I give you a cell number that I consent to your use of an autodialer to call that number or leaving a prerecorded message, you’re out of luck and I may have a claim against you. Or worse, a class action.

I get the court’s argument. I just don’t agree that FCC’s sensible interpretation was “manifestly contrary.” The statute reasonably can be read to accommodate the FCC’s interpretation. Using the court’s logic, you can’t even use an autodialer or prerecorded message to alert your customer on his or her wireless device of possible fraud or identity theft.

So, what’s a creditor to do? In law school they taught us always to state the obvious. So for now, get out your bat and make sure that it’s painfully obvious in your applications that your debtor consents to your using autodialers to call, and/or leaving prerecorded messages at, any number the debtor provides, whenever he or she provides it (and whether you do it or not). And hope other courts are more enlightened.

Michael Benoit is a partner in the Washington, D.C., office of Hudson Cook LLP. He is a frequent speaker and writer on a variety of consumer credit topics. He can be reached at 202-327-9705 or mabenoit@hudco.com. Nothing in this article is intended to be legal advice and should not be taken as such. All legal questions should be addressed to competent counsel.