Thursday, October 16, 2014

FYI: 2nd Cir Holds Debt Collector Did Not Have "Prior Express Consent" Under TCPA, When Cell Number Was Provided by Non-Customer When Closing Deceased Customer's Account

The U.S. Court of Appeals for the Second Circuit recently held that a debt collector did not have prior express consent to make auto-dialed collection calls to the plaintiff’s cell phone under the TCPA, because the mobile number was obtained during the closure of an account and not “provided during the transaction that resulted in the debt owed.”


A copy of the opinion is also available at:  Link to Opinion


In September 2008, a debtor passed away leaving a $68 balance on her account with her electric power supplier.  The debtor’s relative (“Consumer”) contacted the power company to discontinue service at the debtor’s apartment, providing his mobile telephone number as a requirement in the process. 


After the account went unpaid, the power company hired a debt collector (“Debt Collector”) to collect the debt.  Although Consumer never received any bill for the debtor’s account, Debt Collector placed seventy-two automated telephone calls to Consumer over the course of nine months.


Consumer filed a complaint against Debt Collector, asserting, among other things, violation of the federal Telephone Communication Protection Act of 1991, 47 U.S.C. § 227, et seq. (“TCPA”). 


As you may recall, the TCPA makes it “unlawful for any person … to make any call … using any automatic telephone dialing system or an artificial or prerecorded voice … to any telephone number assigned to a … cellular telephone service.”  47 U.S.C. § 227(b)(1)(A)(iii).  There is no liability for calls  “made with the prior express consent of the called party.”  Id.


The district court granted summary judgment to Debt Collector on all claims, holding that Debt Collector was not liable because Consumer consented to the collection calls when he provided his number to the power company.


On appeal to the Second Circuit, the question before the Court was whether the Debt Collector’s calls were made with Consumer’s “prior express consent” within the meaning of the TCPA.


The Debt Collector argued that Consumer consented to the calls, because he voluntarily provided his mobile number to the power company in connection with the debtor’s account, and did not expressly limit the purpose for which his number could be used.


Relying on rulings by the Federal Communications Commission (“FCC”), the Second Circuit disagreed, holding that Consumer did not provide his prior express consent because the number was not provided “during a transaction that resulted in the debt owned.” 


The Second Circuit noted that the FCC previously ruled that where there is an “established business relationship” – a term that the FCC defines broadly as “a prior or existing relationship formed by voluntary two-way communication” – a business need not obtain specific consent to make auto-dialed telephone calls to a consumer.  See In the Matter of Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, Report and Order, 7 FCC Rcd. 8752 ¶ 34-35 (1992).


However, in 2008, the FCC ruled that “prior express consent [for automated debt collection calls] is … granted only if the wireless number was provided by the consumer to the creditor, and that such number was provided during the transaction that resulted in the debt owed.”  In the Matter of Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, Request of ACA International for Clarification and Declaratory Ruling, 23 FCC Rcd. 559 ¶ 10 (2008).


Relying on this ruling, the Second Circuit held that Consumer did not provide prior express consent to be called because he provided his number long after the debt was incurred, and was not in any way responsible for – or even fully aware of – the debt.  Thus, the Court concluded that Debt Collector’s calls were prohibited by the TCPA, and that the district court erred in granting summary judgment in favor of Debt Collector.


Notably, the Second Court explained in a footnote that its opinion did not decide what the outcome would be if a consumer were to open an account with a creditor and initially provide only his home phone number, but later in the course of the relationship provide a wireless number.  Whether a subsequently given phone number is given as part of a continuing “transaction,” or a transaction separate from the initial one that “resulted in the debt owed,” is a question the Court expressly left for another day. 


In addition, as the Consumer was not an official representative of the deceased customer’s estate, the Second Circuit did not decide whether the outcome of this case would change if he had been. 


Accordingly, the Second Circuit reversed the judgment of the district court and remanded for further proceedings.




Ralph T. Wutscher
McGinnis Wutscher Beiramee LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (312) 284-4751
Mobile: (312) 493-0874


Admitted to practice law in Illinois



          McGinnis Wutscher Beiramee LLP





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