Debt Collector Could Be Liable for Autodialing

(CN) - A debt-collection company must go to trial for using an autodialing system to call and text frustrated consumers, a federal judge ruled.

Consumer Portfolio Services, a subprime auto-finance lender, places debt-collection calls with "predictive-dialing" software that regulates the dialer's call rate to improve efficiency.

In a federal lawsuit, Roslyn Griffith and Jerret Cain claimed that Consumer Portfolio Services contacted their cellphones with unauthorized calls and text messages. The Telephone Consumer Protection Act prohibits companies from making such contacts via an "automatic telephone dialing system."

Consumer Portfolio Services moved for summary judgment, claiming that its predictive-dialing technology is not illegal. While the act bans dept collectors from using equipment that stores or produces numbers using a "random or sequential number generator," Consumer Portfolio Services says its dialer cannot perform these "now obsolete" functions.

U.S. District Judge John Grady rejected the motion for summary judgment, noting that the Federal Communications Commission has found that "a predictive dialer falls within the meaning and statutory definition of 'automatic telephone dialing equipment' and the intent of Congress."

"CPS's interpretation of FCC orders, which it supports by quoting portions of those orders out of context, is a transparent attempt to win through litigation a battle that other companies lost before the FCC," Grady wrote, referring to Consumer Portfolio Services.

The FCC defined "automatic telephone dialing systems" as "equipment that utilizes lists or databases of known, nonrandom telephone numbers," according to the Aug. 16 ruling.

"That is precisely how CPS's equipment operates," Grady wrote. "The dialer automatically dials numbers and routes answered calls to available collectors. Even assuming that CPS's equipment can only function in this way, and cannot generate and dial random or sequential numbers, it is still an 'automatic telephone dialing system.'"

The judge clucked at Consumer Portfolio Services' apparent insistence that the FCC "cannot have meant what it said" since such orders would be legally inconsistent.

"This is not the appropriate forum to challenge the validity of the FCC's orders," Grady wrote. "Our role is to apply the FCC's orders to the facts."

By regulating equipment instead of dialers, "the FCC plainly intended to prevent companies from circumventing the statute," according to the 11-page decision. Consumer Portfolio Services had argued vainly for a stricter interpretation of the statute that would impose liability only if the dialer actually stored telephone numbers or predictive dialing software.

Grady also rebuffed the argument that the act regulates telemarketers only, not debt collectors.

In prior orders, the FCC said "this prohibition applies regardless of the content of the call, and is not limited only to calls that constitute 'telephone solicitations.'"

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