Since its adoption, the Telephone Consumer Protection Act (TCPA) has periodically been attacked as unconstitutional on grounds that it violates the First Amendment right to free speech due to its content-based restrictions. Until today, those attacks have generally failed, leaving defendants with the threat of potentially crippling statutory damages. Today, the Fourth Circuit announced that part of the TCPA, an exemption for calls to collect government debts, is unconstitutional and will be stricken from the Act.

Generally speaking, and among other restrictions, the TCPA makes it unlawful to call or text a cell phone using an automatic telephone dialing system (ATDS) or artificial or prerecorded voice without the prior express consent of the called party. As part of the Bipartisan Budget Act of 2015, Congress created a content-specific exemption that allowed ATDS calls to be placed if they were to collect a government-backed debt (the “debt-collection exemption”). In other words, a debt collector calling to collect on certain government backed mortgages or student loans were exempt from the act, but the same debt collector would not be exempt if calling to collecting on a non-government backed loan.

Content-based laws must satisfy the strict scrutiny test of the First Amendment. This means that content-based exemptions, such as the debt-collection exemption, are presumptively unconstitutional and may be justified only if the government can show that the restriction is narrowly tailored to serve a compelling state interest. The Fourth Circuit Court of Appeals, in overturning the District Court’s decision, held that the debt-collection exemption does not meet that standard, and is therefore unconstitutional.

This decision was announced in the case of American Association of Political Consultants, Inc. (AAPC) et. al v. Federal Communication Commission (FCC). The Fourth Circuit agreed with the AAPC that the debt-collection exemption was content based, and consequently that strict scrutiny test was appropriate. As explained by the Court:

Under the debt-collection exemption, the relationship between the federal government and the debtor is only relevant to the subject matter of the call. In other words, the debt-collection exemption applies to a phone call made to the debtor because the call is about the debt, not because of any relationship between the federal government and the debtor… In these circumstances, the debt-collection exemption to the automated call ban constitutes a content-based speech restriction.

The Court also concluded that the debt-collection exemption fails strict scrutiny because it is under-inclusive as it authorized many of the calls that the TCPA was enacted to prohibit. They also found that there was no compelling government interest, as the exemption cut against the privacy interests that Congress sought to safeguard by the TCPA.

Although the Court held that the debt-collection exemption was unconstitutional, it did not invalidate the entire statute as the appellant and many defendants in pending lawsuits had hoped. Instead, it determined that the appropriate remedy was to sever the exemption, leaving the rest of the statute intact.

Despite the Fourth Circuit’s decision, the battle over the constitutionality of the TCPA continues. The Ninth Circuit is currently considering a similar constitutional challenge to the TCPA in Gallion v. Charter Commc’ns Inc., in which oral argument was held on March 11.

The Fourth Circuit’s opinion in AAPC highlights the ongoing struggle over the scope and application of the TCPA.  As we’ve blogged about before, the FCC is believed to be on the cusp of issuing a new order on the definition of ATDS under the Act, which definition has been a hotbed of litigation and regulatory challenges.  We will continue to monitor developments and post updates on this site.

The FTC announced yesterday that it will accept comments and hold a series of public hearings on consumer protection, privacy, and competition policy and enforcement.  The hearings will take place during fall and winter of this year and will evaluate whether recent changes in the economy, technology, or international landscape require adjustments to how the Commission approaches consumer protection, privacy, and competition issues.

The hearings are modeled off of hearings held in 1995 under then-Chair Robert Pitofsky.  Those hearings took place amidst the early growth of the internet and e-commerce, featuring panels such as, “The Newest Medium for Marketing: Cyberspace,” “Privacy in Cyberspace,” and “The Changing Role of the Telephone in Marketing.”  The 1995 hearings featured panelists from large companies including Walt Disney, General Electric, and Coca-Cola, along with consumer group representatives, regulators, academics, and attorneys from private law firms.  The hearings culminated in a two volume report on the state of consumer protection and competition policy.

In announcing the 2018 hearings, FTC Chair Joe Simons noted that “the FTC has always been committed to self-examination and critical thinking, to ensure that our enforcement and policy efforts keep pace with changes in the economy.”  Simons served as Director of the Bureau of Competition immediately after Pitofsky’s tenure as Chair under then-Chair Tim Muris – and alluded to Pitofsky, Muris and former Chair Kovacic in his statement announcing the hearings.  Simons’ statement also expressed his view that “[t]his project reflects the spirit, style, and, most importantly, broad scope of that effort,” and characterized the efforts as an “all-agency” project that will entail significant efforts from the Bureaus of Consumer Protection, Competition, and Economics, the Office of the General Counsel, the Office of International Affairs, as well as the Office of Policy Planning. Continue Reading FTC Examining How Consumer Protection and Privacy May Be Affecting Innovation and Competition; Seeking Input and Will Hold Policy Hearings to Address

While the sudden death of Supreme Court Justice Antonin Scalia creates an immediate vacancy on the bench, it also likely leaves the high court’s docket in limbo on a number of key consumer class actions awaiting the Court’s decision.

Many predict that President Obama will not be able to replace Scalia before the 2016 Presidential election, meaning that the seat may be vacant for the remainder of the term.  Democrats have been urging the President to immediately nominate a successor, with Republicans imploring the President to give that right to the next Commander-in-Chief.  Senate Majority Leader Mitch McConnell has stated that the Senate should not confirm a replacement until after the 2016 election.

Until a successor is confirmed, it means that the Supreme Court will be comprised of four reliable liberals, three reliable conservatives, and one Justice Kennedy, who typically leans to the right but has often acted as the Court’s swing vote.  With only eight justices, it is likely that we will see a number of important cases end in a 4-to-4 split this year, including several key cases relating to consumer class actions.  In the case of a tie, the appeals court decision will be upheld, no precedent will be set, and the Supreme Court traditionally will not issue an opinion.

Here’s a brief rundown of how Scalia’s passing may affect three key consumer class actions in front of the Court this term.

Case: Spokeo Inc. v Robins (Docket No. 13-1339)
Issue: Whether Congress may confer Article III standing upon a plaintiff who suffers no concrete harm, but alleges a private right of action based on a bare violation of a federal statute.
Outcome in a split:  Plaintiff’s win – would make a bare violation of a federal statute sufficient to confer Article III standing, thereby making it easier for plaintiffs to move forward in litigating cases alleging statutory violations. Continue Reading Scalia’s Death Leaves High Court in Limbo on Three Key Consumer Class Actions

On Wednesday, May 20, 2015, the FCC’s Enforcement Bureau issued its first enforcement advisory in the post-Open Internet Order  era.  Not surprisingly, the Bureau’s first advisory addressed the consumer privacy obligations of broadband providers.  In the Advisory, the Bureau reminded broadband Internet access service (“BIAS”) providers that they will need to take “reasonable, good faith steps to protect consumers’ privacy” pursuant to Section 222 of the Communications Act when the 2015 Open Internet Order goes into effect on June 12, 2015.  The Advisory also advises broadband providers to seek informal FCC guidance regarding particular practices during the initial implementation of the order.

In the 2015 Open Internet Order, the Commission applied the consumer privacy protections of Section 222 of the Communications Act to BIAS providers.  Section 222 regulates:

  • Proprietary Information. Section 222(a) establishes a duty of telecommunications carriers to protect the confidentiality of proprietary information of and relating to carriers, equipment manufacturers, and customers.
  • Carrier Proprietary Information. Section 222(b) prohibits carriers who receive proprietary information from other carriers for the purpose of providing telecommunications from using that proprietary information for other purposes, including marketing.
  • Customer Proprietary Network Information. Section 222(c) defines CPNI and establishes situations where carriers may use CPNI without obtaining additional consent.

As the Bureau noted in its Advisory, although the 2015 Open Internet Order applied Section 222’s substantive obligations to BIAS providers, it forbore from applying Section 222’s “telephone-centric” implementing rules.  In the coming months, the Commission will conduct a separate rulemaking to adopt CPNI rules for BIAS providers.  Until then, BIAS providers are subject to the obligations of Section 222, without any specific implementing rules.

In the Advisory, the Bureau warned that, during this gap period, BIAS providers should “employ effective privacy protections in line with their privacy policies and core tenets of basic privacy protections.”  Rather than focusing on what the Bureau referred to as the “technical details” of the provider’s practices, the Bureau announced that its focus will be on whether providers are taking “reasonable, good-faith steps” to comply with Section 222.  In other words, it seems, for now, the Bureau will be looking more at efforts and less at outcomes in its enforcement.

The Advisory also encourages BIAS providers to seek informal guidance from the Enforcement Bureau.  It stated that both informal guidance, and advisory opinions as provided in the Open Internet Order are available.  The Bureau cautioned that no provider “is in any way required to consult with the Enforcement Bureau,” but such consultations would, in and of themselves, “tend to show that the broadband provider is acting in good faith.”  This may prove to be a significant stance, particularly if the provider is operating or using customer information in ways that later prove to be controversial.  BIAS providers should carefully consider their options to obtain guidance in connection with a particular use of customer information once the rules take effect.

In light of this Enforcement Advisory and the 2015 Open Internet Order, all BIAS providers should conduct a review of their customer privacy practices and public-facing policies.  Such a review would be an important starting point in demonstrating “reasonable, good-faith steps” to comply with Section 222.

Last week, a court preliminarily approved the largest class action settlement alleging violations of the Telephone Consumer Protection Act (TCPA).  Capitol One, along with three debt collection agencies, agreed to pay more than $75 million to settle a consolidated class action lawsuit alleging that the companies used an automatic telephone dialing system (ATDS) and/or artificial prerecorded voice to call consumers’ cellular telephones without the prior express consent of those called.  

Under the TCPA, prior express consent is required for any non-telemarketing call – such as a debt collection call – made to a mobile phone using an ATDS and/or an artificial prerecorded voice.  (A higher standard – prior WRITTEN express consent – is required to make calls to cell phones using an ATDS or a prerecorded voice for any telemarketing).

In addition to alleging that the companies never received prior express consent, certain plaintiffs alleged that (1) their cell phone was called concerning another person’s Capitol One account; (2) Capitol One was repeatedly asked to stop calling, but calls continued nonetheless; and (3) Capitol One obtained plaintiffs’ cell number from a third party via skip tracing. 

The settlement is a good reminder of the repercussions that may follow when a company has not closely reviewed and ascertained the sources from which it obtains phone numbers, whether any are cellular phone numbers and the likelihood that such numbers still belong to the customer (or have since been disconnected and reassigned), and are matched with the correct type of consent to be called.  Even slight oversights in this area are exposing a number of companies to claims of potential violations (and massive financial exposure) under the TCPA.

In its February 4, 2013 opinion, the California Supreme Court continues to shape the scope of California’s Song-Beverly Credit Card Act, a consumer protection statute that prohibits the collection of personal identification information (“PII”) from consumers as part of a credit transaction.  In its decision, the Court held that the Song-Beverly Act does not apply to online purchases in which the product is downloaded electronically.

A class action suit alleged that Apple, Inc. violated the Song-Beverly Act by requiring consumers purchasing media downloads through Apple’s iTunes store provide their telephone number and address to complete the credit card purchase.  Apple argued that the Song-Beverly Act does not apply to online transactions and, among other things, imposing its requirements would undermine the prevention of identity theft and fraud.

In a 4-3 decision, the Court ultimately agreed with Apple.  The Court’s rationale for excluding online transactions from the scope of the Song-Beverly Act included:

  • When examining whether the Act should be applied to technology that was not envisioned by the legislature when drafting the Act, the plain meaning of the Act’s text is not decisive.
  • While the Act was enacted to protect consumer privacy, it was not intended to be without regard to exposing consumers and retailers to undue risk of fraud.  Certain safeguards against fraud available at brick-and-mortar stores are not available to online retailers selling an electronically downloadable product.
  • The enactment of the California Online Privacy Protection Act of 2003 clarified that existing law (including the Song-Beverly Act) did not directly regulate the privacy practices of online businesses.

The decision provides some comfort for businesses that operate online stores for the sale of electronically downloadable products—PII can be collected as part of the transaction.  However, the decision expressly excludes online transactions that do not involve electronically downloadable products.  The Court also notes that the California legislature may wish to revisit consumer privacy and fraud prevention in online credit card transactions.  Businesses will want to continue to monitor developments in this space.

For a more detailed look at Song-Beverly Act litigation, see our recent article here.

This post was written by Alysa Z. Hutnik

Plaintiffs filed a class action lawsuit against Papa John’s, arguing that a text message campaign conducted by the company’s franchises violated the Telephone Consumer Protection Act. According to the complaint, the franchisees sent text messages to customers without their consent, in violation of the TCPA. Under the law, a plaintiff can recover between $500 to $1,500 for each message sent without consent, depending on whether the violation is willful.

As we’ve noted in previous posts, the number of lawsuits involving text message campaigns has increased dramatically in recent years. Part of the increase is because many companies aren’t paying attention to legal requirements. But the increase is also largely because class action attorneys have come to see these cases as an easy way to make money. For example, a recent case involving text messages sent by Jiffy Lube settled for $47 million. These attorneys will seize on any violation — no matter how minor — as an opportunity to force a settlement.

Most of the recent lawsuits could have been avoided if the text message campaigns if the campaigns had been carefully reviewed prior to launch. Sometimes, there’s a tendency to try to skip that step in order to cut costs and launch quickly, but the recent string of multi-million dollar settlements demonstrates that’s a very short-sighted approach. It will cost exponentially less time and money to do things right from the start. If you’re planning a new campaign, get your legal team involved early in the process. 

On August 14, 2012, New York Governor Andrew Cuomo signed legislation, which will regulate all telemarketers doing business in the State and strengthen consumer protections relating to pre-recorded telemarketing messages. Introduced on June 12, 2012 by Assembly member Didi Barrett (AD 103), the new law aligns significantly with those provisions of the federal Telephone Consumer Protection Act and the Telemarketing Sales Rule, particularly with respect to the requirements relating to obtaining a consumer’s “express written consent” to receive pre-recorded telemarketing messages. The bill has an effective date 90 days after passage.

The new substantive provisions relate to express written consent requirements and heightened opt-out mechanisms. Under the new law, telemarketers may not deliver a pre-recorded message without the express written agreement of the consumer that (1) was obtained only after the telemarketer’s clear and conspicuous disclosure that the purpose of the agreement is to authorize telemarketing calls to that customer; (2) was not executed as a condition of purchasing any goods or service; (3) evidences the willingness of the consumer to receive telemarketing sales calls from a specific seller; and (4) includes the consumer’s telephone number and signature.

Continue Reading New York Enacts Legislation To Strengthen Consumer Protections Against Telemarketers

A consumer recently filed a class action lawsuit against the Pittsburgh Penguins alleging that the team’s text message campaign violates federal law. The consumer claims that when he signed up to receive text messages, the terms and conditions governing the promotion stated: “By subscribing, you consent to receiving, from time to time, further text messages from us which may include offers from us, our affiliates, and partners. Available on participating carriers. Maximum of 3 messages a week.”

Although the terms stated that subscribers would receive a maximum of three messages per week, the consumer claims he received five messages in the week between March 11 and March 17, 2012, and four messages in the week between March 18 and March 24, 2012. The consumer argues that the two additional messages he received during the first week and the one additional message he received during the second week were sent without consent and, thus, in violation of the Telephone Consumer Protection Act.

Companies need to ensure they carefully draft the terms for their text message campaigns and that their campaigns are run in a manner that conforms with those terms. This case demonstrates that even a small deviation can result in a lawsuit.


A plaintiff recently filed a class action lawsuit against Google and its subsidiary, Slide, alleging that the companies violated the Telephone Consumer Protection Act by sending text messages to consumers without their consent.

Google and Slide recently released Disco, a “group texting” service that allows consumers to send text messages to up to 99 people at the same time. Message recipients can also respond via text to all members of the group simultaneously by sending a single message. Messages can quickly accumulate, and the named plaintiff alleges he received more than 100 text messages in a single day. According to the complaint, members of a group do not provide consent to be part of the group or receive messages; instead, group members must opt-out if they want to stop receiving group messages.

As we’ve noted before, various courts have generally held that companies must obtain express consent before they can send text messages to consumers. In this case, the defendants are likely to argue that they did not send the messages themselves, but that argument has yet to be tested. Companies should check with their counsel before sending text messages or implementing any promotion that allows consumers to send text messages to determine what consents may be necessary.