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Companies Seek FCC Help to Block Consumer Lawsuits

November 26, 2014

Fenwick & West litigation chair Rodger Cole was featured in a Daily Journal story regarding banking, healthcare and other industries appealing to the Federal Communications Commission (FCC) for exemption from provisions of the Telephone Consumer Protection Act (TCPA), in the wake of a significant increase in the number of consumer lawsuits filed against these companies in recent years.

According to WebRecon LLC, a company that tracks consumer litigation trends, the number of TCPA lawsuits filed by consumers was up 69 percent last year and up 28 percent so far this year. Many of the suits involve calls, texts and faxes to consumers from the companies.

Lawyers for the companies argue that the TCPA was never intended to prevent companies from communicating with their customers about pertinent business matters. But thus far many courts have been unsympathetic to this argument.

"We all have financial applications on our cell phones, calendars on our cell phone. It just makes sense to communicate through text message on cell phones," Cole said, adding, “But if you do, you have a plaintiffs' class action. And you're facing catastrophic liability.”

This liability risk has led companies to seek clarification from the FCC. “Because the courts have said, ‘This is the black letter language of the statute,’ a lot of companies and groups have gone to the FCC to petition for clarification or exemption,” Cole noted.

Obtaining prior consent from consumers is one way companies may try to address the problem in future. Cole told the Daily Journal, "I think going forward, if you sign up for a new bank account, or make an order on an online commerce site, or have some other relationship with a business, businesses are likely to get consent.”

But the prior-consent approach does not help companies contend with customers already using services.  "The problem is if you signed up with a bank account 10 years ago, before this issue really exploded onto the American litigation scene. We didn't have iPhones 10 years ago; we couldn't have been asking for consent at the time. That's the problem a lot of companies are facing," Cole added.