Telemarketers Pay Millions in Class Actions

November 3, 2014 Published Work
Connecticut Law Tribune, Vol. 40, No. 44

Class actions claiming violations of the Telephone Consumer Protection Act create potentially crippling exposure for companies that, without prior express consent, use an auto-dialer or prerecorded or artificial voice message to contact customers by phone, or those that send faxes or text messages. With statutory damages of $500 to $1,500 per violation, no statutory cap on the maximum recovery and detailed—and sometimes downright surprising requirements —liability can add up fast. Alleged damages in the tens of millions of dollars are not uncommon. Capital One just entered into a proposed $75 million class settlement; Bank of America has agreed to pay $32 million to resolve six class actions filed against it. With so much money at stake, the TCPA has created a booming class-action industry.

TCPA Basics

Congress passed the TCPA in 1991, before the advent of the national do-not-call registry, when telemarketing was a booming business. At that time, according to congressional findings, over 300,000 solicitors were calling more than 18 million Americans every day. The TCPA aimed to protect consumers from unwanted calls and faxes, particularly those that imposed a cost on the consumer, such as calls to cellphones or pagers. The TCPA vested the Federal Communications Commission with enforcement and rule-making authority. Under that authority, the FCC has, for example, concluded that text messages constitute calls and are governed by the TCPA. The FCC has issued many detailed rules and orders since 1991 that have fleshed out requirements under the act. It is critically important for businesses to be familiar with not just the TCPA, but also to regularly review the FCC's evolving implementing rules. This is particularly important because the TCPA creates a private right of action not just for violations of the statute itself, but also for violation of FCC regulations promulgated under the law.