By Ray Birch
CHICAGO—An old-fashioned sounding law—the Telephone Consumer Protection Act (TCPA)—has some new-fashioned implications that credit unions need to be giving attention to avoid potential litigation, according to one attorney.
“As credit unions are aware, the Telephone Consumer Protection Act is a federal law that regulates telephone solicitations, telemarketing, text messages and unsolicited fax advertisements,” explained Molly McGinley, a partner at Honigman LLP. “It has been the subject of substantial litigation—and attention from credit union trade groups—concerning the scope of the law, particularly when it comes to what constitutes an autodialer. Calls and text messages that are sent using an autodialer are subject to additional consent requirements under the TCPA. The TCPA also includes certain exceptions for health care messages sent by HIPAA-covered entities and their business associates.”
Decision in Facebook Case
McGinley reminded that on April 1, 2021, the Supreme Court issued its decision in the Facebook, Inc. v. Duguid case, narrowing the scope of the definition of autodialer under the TCPA.
“The decision impacted numerous cases where plaintiffs had alleged that calls and text messages violated the TCPA because the defendant did not obtain the required consent under the TCPA,” McGinley stated. “Courts have now determined under this more narrow definition that the technology at issue in such cases does not constitute an autodialer and dismissed the claims or entered judgment against the plaintiff.”
Following the Facebook decision, Florida enacted Florida Senate Bill 1120, effective July 1, 2021, which amended the Florida Telemarketing Act and the Florida Do Not Call Act, “essentially creating a mini-TCPA,” McGinley told CUToday.info. “With a private right of action, the Florida bill covered a more expansive scope of autodialing technology than the TCPA, meaning that certain calls and messages could violate the Florida ‘mini-TCPA’ that would not otherwise violate the TCPA. Also, the Florida mini-TCPA does not include the TCPA’s health care message exceptions.”
Class Actions Filed
The result? McGinley said many class actions have been filed under the Florida mini-TCPA against companies located throughout the U.S., and some of these complaints allege nationwide putative classes.
Other states, including Washington and Oklahoma, also have enacted mini-TCPA laws that cover calls and text messages that would not fall within the scope of the TCPA, she said.
“On June 30, 2022, Michigan introduced the Telephone Solicitation Act, which similarly would go beyond the scope of the TCPA, include additional restrictions for such calls and texts, and carry significantly amplified penalties in comparison to the TCPA,” McGinley explained.
Molly McGinley
McGinley said that when the Supreme Court issued the decision in April of 2021, which narrowed the focus and scope of the autodialer technology that's covered by the federal law, plaintiffs appear to be focusing more on pursuing state laws with private rights of action, “which may cover technology used to send text messages or place telemarketing calls that would not otherwise be covered by the federal law,” she said.
Plaintiffs Getting ‘Active’
“Plaintiffs are becoming active in that area as additional states are coming out with their own mini-TCPAs to pursue claims that may not be valid under the federal law,” McGinley said.
“Under the Florida state law there are certain exemptions for credit unions, so, certain aspects of the statute may not apply to them. But credit unions need to consult carefully with council on that because it's complicated,” she said.
McGinley emphasized credit unions must pay careful attention to the state TCPA laws to understand their rules and what exemptions apply to CUs, and which ones do not. She said the number of state TCPA laws are growing.
“For example, Oklahoma and Washington have recently enacted TCPA laws. And, we have Michigan that has a proposed law. Each of those is slightly different. So, the kinds of communications that may be covered under each of those laws varies slightly,” McGinley explained.
Can’t Afford Not to Act
What credit unions can’t afford to do, according to McGinley, is feel secure and safe from potential suits because they have a “robust” TCPA compliance program that’s based on federal law.
“Anytime there's potential litigation, there's risk, and the cost associated with that could be significant. For example, the Florida law has a private right of action which allows a plaintiff to bring a class action on behalf of all consumers that receive similar calls in Florida,” McGinley said. “They could request damages of $500 per violation, very similar to the federal law. But in Michigan, the proposed law is even more stringent. Companies could be facing damages of $25,000 for every violation. And that penalty would increase to $50,000 if the violation is with respect to a vulnerable individual—for example, someone 75 years or older, or someone who is disabled…You're looking at significant potential penalties under the state laws.”
McGinley noted the first class action lawsuits under Florida’s new mini-TCPA started in mid-2021.
“And have just steadily increased,” she said. “Credit unions need to keep track of these new state telemarketing laws as they come out.”