As an anti-telemarketing law sponsored by former U.S. Senator Fritz Hollings (R-SC) reaches its 25th anniversary, some are worried the law is outdated and being used to generate costly litigation against U.S. small businesses.
The Telephone Consumer Protection Act (TCPA), sponsored by Sen. Hollings and signed into law by President George H.W. Bush in 1991, was intended to regulate telemarketers using automatic dialing systems. With the emergence of cell phones, text messaging and phone numbers reassigned to new customers, however, other businesses have increasingly become the targets for lawsuits.
Becca Wahlquist, an attorney for Snell & Wilmer, recently told Palmetto Business Daily that it is rare these days to see TCPA litigation brought against its original intended target—the abusive telemarketer.
“Many businesses don’t even know the TCPA exists until they are handed their first lawsuit,” Wahlquist said. “Even businesses calling to confirm appointments or collect a payment are falling victim.”
Instead, every American business, from large to small, finds itself at risk of having to defend against a TCPA lawsuit, which Wahlquist said has become a “destructive force that threatens companies with annihilation for technical violations that cause no actual injury or harm to any consumer."
"TCPA litigation will continue to expand and to threaten well-meaning businesses," she said.
Businesses that have found themselves in court due to alleged TCPA regulations include T-Mobile, Bank of America and North Star Location Services.
With an increase of TCPA lawsuits across the country, it has gotten severe enough that there is an increasing call for real reform of the 25-year-old law.
To make the situation worse, in July, the FCC issued an order Wahlquist called “atrocious for businesses.” The FCC's order set up rules that put businesses at fault if they call a customer number that was reassigned to another person without the business’ knowledge, Wahlquist said. Also, businesses are only allowed one wrong number call and can be held accountable, even if the recipient of the call does not tell them they have called a wrong number.
The most contentious part of the FCC order is that the customer can retract consent at any time.
“There have been instances where people have not let the business know they were calling an incorrect contact and let the calls continue to let the fines build up for a lawsuit,” Wahlquist said. “Another example is that a customer can tell a business to contact them at another number, then when they call that number, the owner of that phone can sue the company. The 1991 law was never meant for situations like this.”
Wahlquist said the flaws in applying the TCPA in the current telecommunications environment are obvious.
“The ‘balanced’ approach directed by Congress to deal with certain telemarketing phone calls has been replaced by a badly unbalanced one," Wahlquist said. "All too often, the statute has been interpreted in ways that threaten legitimate businesses engaged in normal commercial activity with massive liability for communications far removed from the kind of harassing, cold-call telemarketing that motivated the TCPA’s enactment.”
Wahlquist said the issue is getting enough attention that it's time to implement reform.
"The only way to really remedy this is to promote legislative change and implement a damages cap," Wahlquist said.
Until then, Wahlquist advises all businesses to become aware of the TCPA law and FCC order to protect themselves as much as possible.
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