Guess Who’s Benefiting Most from the Telephone Consumer Protection Act (TCPA)? Spoiler Alert: Not Consumers

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June 8, 2016 by Lisa Brammer

The TCPA was enacted in 1991, 25 years ago. It was written, in part, as a way to protect consumers from being inundated with unwanted and costly telemarketing calls on their cellphones. Back then, the constraints imposed on automated calls to wireless numbers made a lot of sense. Remember, in 1991 mobile devices were, for the most part, a luxury and consumers were often charged for every call made and received—wanted or not. Telephone calling campaigns made to cellphones could really wreak havoc on someone’s wireless bill. Besides, consumers could always be reached on their ubiquitous landlines.

Fast-forward 25 years and a lot has changed in the world of mobile devices. Back then, in 1991, only 3 percent (3 out of 100) of Americans had cellular phone subscriptions. In 2014, that number skyrocketed to 110 out of 100—an increase of 3,567 percent! The first text was sent in 1992 and by 2011 Americans were sending 6,000,000,000 (6 billion) text messages daily (an average of 35 sent or received text messages per phone customer per day).  Did you know that more than 50 percent of all U.S. households no longer have a landline?  And when talking about younger adults (25 to 30) that number increases to 70 percent. Let’s face it, the way we communicate today has changed drastically since the early 1990’s and the law should reflect these changes.

According to a white paper written by ACA International, The Imperative to Modernize the TCPA: Why an Outdated Law Hurts Consumers and Encourages Abuse Lawsuits, the number of TCPA related lawsuits increased a whopping 948 percent from 2010 to 2015. Damages in a TCPA lawsuit are set fairly high and add up quickly in class action lawsuits—which, in part, explains the drastic increase in TCPA proceedings.

Even though the Act was originally initiated to stop aggressive telemarketers from harassing consumers, it now has been applied to a range of industries, oftentimes without regard to the legitimacy of the communication. TCPA lawsuits go far and wide, a few of the most notable include: Capital One, Wells Fargo, Life Time Fitness, and Walgreens. Believe me when I say, ‘the TCPA has far reaching tentacles.’  I even read about a class action lawsuit filed earlier this year against Sabre (Hawaiian Airlines).  The chief complainant in the suit alleged that Sabre sent her an unsolicited text message from their flight notification service. Evidently, she did not respond to the text, nor did they send her any additional messages, but never-the-less a lawsuit ensued. This particular case ended up being dismissed because the court determined that the plaintiff had ‘given consent’ to the text message by providing her phone number when booking the flight. But in many other cases courts have issued judgments in favor of the plaintiffs.

The thing is, according to the ACA International’ white paper, outcome of these class action lawsuits usually benefit the plaintiff’s attorney way, way more than the consumers. In 2014, the average attorneys’ fees for a TCPA class action settlement were $2.4 million, while the individual consumer received a measly $4.12.

The white paper states, “The problem has been exacerbated by the Federal Communications Commission (FCC), the agency responsible for implementing the TCPA, whose broad interpretation of the statute has failed to provide a pathway to compliance for businesses using modern communication technology.

“It is no wonder that there are so many businesses that rely on effective communications with their customers coming together to call for TCPA reform. This includes credit agencies, universities, retailers, banks, and utility companies. They all want relief from abuses of an outdated law,” said ACA CEO Patrick J. Morris.

In its white paper, ACA advocates for clarity in the law that would allow for the use of up-to-date communication technology in today’s marketplace. The TCPA needs to be able to protect consumer privacy interests without impeding legitimate business operations.

Founded in 1950, United Credit Service, Inc. is a full service, licensed revenue cycle management and debt collection agency in Wisconsin providing effective, customized one on one management and recovery solutions for our business partners. Visit our website at http://www.unitedcreditservice.com, call 877-723-2902 or check out our YouTube video.

 

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