The Telephone Consumer Protection Act broadly regulates how businesses may communicate with their customers, prohibiting, for example, using an autodialer to call or text individuals' cell phones without proper consent. Between 2010 and 2016, actions under the TCPA increased 1,272% according to WebRecon. These suits can have astronomical damages ($280 million in the case of Dish Network).
Mortgage servicers should be especially concerned by the rise in TCPA litigation because one of their primary means of conducting business is to call customers, often with an autodialer. When litigating under the TCPA, few issues have a greater impact on the outcome of the case than whether consent to call exists, including how consent can be revoked.
Ever since the Federal Communications Commission's July 10, 2015 ruling, "[c]onsumers have a right to revoke consent, using any reasonable method including orally or in writing." While an appeal of the FCC's 2015 ruling is pending before the U.S. Court of Appeals for the District of Columbia Circuit (and has been fully briefed and ripe for decision for over a year), the "any reasonable means" standard has created an onerous landscape on all businesses subject to the TCPA. However, two decisions handed down in the second half of this year have greatly impacted the ability of consumers to revoke consent by "any reasonable means."
The Second Circuit Court of Appeals, in Reyes v. Lincoln Automotive Financial Services, held that contractual consent — once given — cannot be unilaterally revoked. That said, Reyes is not panacea for TCPA liability.
First, at present, it is confined to the Second Circuit (though Second Circuit has doubled down on the ruling, denying a petition to rehear the case on Oct. 20, 2017). Second, it applies to businesses who have a contractual relationship with the plaintiff. Third, plaintiffs may argue — like they would in fighting arbitration — that the call must relate to or fall within the scope of the contract and the consent provision under which a business seeks to invoke Reyes. Fourth, certain scenarios, like debt collection, may fall outside of Reyes.
While consent already transfers from a business relationship to debt collection activities, that is a revocable form of consent. Reyes arguably makes that consent nonrevocable if contracted. However, a plaintiff may argue that a contractual default and the subsequent election to pursue default remedies terminates the contract.
Another important Court of Appeals decision comes from the Eleventh Circuit, in Schweitzer v. Comenity Bank, which held that a consumer can partially revoke consent to be called under the TCPA. In Schweitzer, the plaintiff listed her cell phone number when applying for a credit card with Comenity Bank and subsequently failed to make timely payments.
In attempting to collect on the outstanding balance, Comenity allegedly made hundreds of autodialed calls to Schweitzer’s cell phone. Key here, Schweitzer answered at least two of the calls. The first time she allegedly stated, "And, if you guys cannot call me, like, in the morning and during the work day, because I'm working, and I can't really be talking about these things while I'm at work." During the second call, Schweitzer asked: "Can you just please stop calling? I'd appreciate that, thank you very much." According to the lawsuit, Comenity did not stop calling after the first request but did after the second.
In holding partial revocation can be effective under the TCPA, the court noted that common law permits limitations on consent (as do other areas of law like consenting to some but not all searches). According to the court, if a customer could provide limited consent, it follows that a customer could make a limited revocation.
Outside of the holding itself, businesses should take away a number of lessons from Schweitzer. First, the need for responsive feedback loops capturing the revocation of consent and any limitations on such revocation cannot be overstated. Second, the Eleventh Circuit kept alive the possibility that contractual consent, once given, may not be revoked unilaterally. Though Schweitzer did not cite to Reyes, it did note that "absent a contractual restriction to the contrary, the TCPA allows a consumer to orally revoke her consent to receive automated calls." Third, consent already provides hurdles to class certification by creating an individualized question for called parties. Permitting partial revocation of consent opens up and even more nuanced inquiry into whether consent existed for each putative class.
The TCPA is among the most hotly litigated consumer statutes. Understanding in detail how and if consent was captured or revoked is critical. There are sure to be further changes in the legal landscape from the courts and from the new majority of the FCC regarding consent and many other issues (for instance, what is an autodialer, how to handle reassigned numbers). Because of the massive potential liability, mortgage servicers must keep up to date on the ever-changing TCPA landscape.
Gregory Cook, a partner in Balch & Bingham's Birmingham, Ala., office, and chair of the firm's banking and financial services litigation practice, contributed to this article.