Tough Luck to Debt Collectors That Autodial

CHICAGO (CN) - Debt collectors can be held liable for autodialing a number that has been reassigned to an innocent "bystander," the 7th Circuit ruled.

The case involved a section of the Telephone Consumer Protection Act, well-known for limiting junk-fax transmissions, which curtails the use of automated dialers and prerecorded messages to cellphones.

Cellphone providers usually bill customers based on talk time, which includes messages left to voicemail.

"An automated call to a landline phone can be an annoyance; an automated call to a cell phone adds expense to annoyance," Chief Judge Frank Easterbrook wrote for a three-judge panel of the 7th Circuit.

But some creditors hire bill collector to go after the outstanding debts of customers who have consented to receiving phone calls by supplying creditors with their phone numbers. If a customer has changed his phone number, however, an unrelated person receives the bill collector's repeated messages from automatic dialers.

"A human being who has called cell number would realize that customer was no longer the subscriber," Easterbrook wrote. "But predictive dialers lack human intelligence and, like the buckets enchanted by the Sorcerer's Apprentice, continue until stopped by their true master. Meanwhile bystander is out of pocket the cost of the airtime minutes and has to listen to a lot of useless voicemail."

In this case, AT&T hired Enhanced Recovery Corp. to collect on two of its customers' bills. AT&T gave Enhanced Recovery the cellphone numbers of the delinquent customers, but the telecom later canceled those customers' subscriptions and reassigned the numbers to Teresa Soppet and Loidy Tang.

Soppet and Tang received 18 and 29 calls, respectively, from Enhanced Recovery, all of which were intended for the previous subscribers. The pair filed a class action, seeking the statutory penalty of $500 per call.

U.S. District Judge Matthew Kennelly certified the class, ruling that the current subscriber's consent alone can give bill collectors the right to make automated calls.

Kennelly then asked the 7th Circuit to weigh in, noting that no other federal appeals court has addressed the issue.

The 7th Circuit sided with the class, rejected Enhanced Recovery's argument that consent requirement actually refers to the "intended recipient" of the call.

TCPA requires the consent of the "called party" for auto-dialing techniques to be permissible, according to the ruling.

The statute uses the phrase "called party" seven times, the Easterbrook noted.

"Four unmistakably denote the current subscriber (the person who pays the bills or needs the line in order to receive other calls); one denotes whoever answers the call (usually the subscriber); and the others ... have a referent that cannot be pinned down by context," he wrote (parentheses in original).

"Enhanced Recovery starts with the proposition that consent is effective until revoked and infers that customer's consent thus must last until Bystander, the new subscriber, revokes it," Easterbrook added.

"The idea that one person can revoke another's consent is odd. Anyway, there can't be any long-term consent to call a given cell number, because no one - not customer, not bystander, not even the phone company - has a property right in a phone number."

Rather than resting on the text of the statute, Enhanced Recovery focused on the increased number of people moving from landlines to cellphones. The increased risk of predictive-dialer use will drive up the expense of debt collections, it argued.

Easterbrook declined to engage in this argument, however, instead urging Enhanced Recovery or the bill collectors' trade association to lobby Congress for changes.

"Courts do try to avoid imputing nonsense to Congress," the decision states. "This means, however, modest adjustments to texts that do not parse. It does not mean - at least, should not mean - substantive changes designed to make the law 'better.' That would give the judiciary entirely too much lawmaking power."

The 7th Circuit suggested other calling options as well, such as having a person first confirm the correct subscriber before switching to a predictive dialer, using a reverse lookup to identify the current subscriber to a number, or seeking an indemnity agreement from the creditor for incorrectly called customer.

TCPA has been criticized by bill collectors and advertisers for its harsh penalties. The act allows unlimited class action liability and prescribes triple damage awards for willful violations.

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