Lawsuits surge against robo-callers

New telemarketing regulations requiring companies to obtain written consent before placing robocalls to consumers' cell phones are likely to generate a flood of litigation, experts and observers of the industry say.

Class action lawsuits filed under the Telephone Consumer Protection Act (TCPA) are already on the rise under previous regulations. New, more restrictive rules that took effect in recent days are expected to lead to a spike in new suits.

“Everyone is getting sued right now under the TCPA, and the new regulations are just going to make it worse,” said Becca Wahlquist, a partner Manatt, Phelps & Phillips, LLP

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The Federal Communications Commission (FCC) rules, which previously allowed firms to make automated telemarketing calls with only oral consent, now require “prior express written consent” under changes that took effect in mid-October.

The new restrictions cover all autodialed and prerecorded calls to cellphones, and all prerecorded calls to landlines. Written consent can be made via a Web-based form, an email or text message, according to the rule.

Still, the rules broaden the scope of potential litigation in an arena that has already attracted increasing numbers of class action suits.

Over the last two years, the number of lawsuits claiming TCPA violations increased by roughly 40 percent, from 824 in 2011 to 1,332 so far this year, according to WebRecon, a firm that tracks litigation data.

“We’re seeing a dramatic increase,” WebRecon CEO Jack Gordon said. “It’s a great opportunity for people who see it and are willing to exploit it.”

The FCC is also doing away with an exemption to the consent requirements that allowed telemarketers to place prerecorded calls to residential lines belonging to consumers “with whom the caller has an established business relationship.”

“Taken together, today’s actions offer consumers greater protection from intrusive telemarketing calls,” the FCC said upon introducing the regulations.

The more stringent requirements are designed to bring FCC regulations in line with the Federal Trade Commission’s rules. They include an exemption allowing healthcare-related agencies to place prerecorded calls in accordance with the Health Insurance Portability and Accountability Act of 1996 (HIPAA).

Proponents of the new regulations say the rules would provide certainty for businesses, shielding them from penalties for accidental violations.  In the past, they argue, it was not always clear what constituted an established relationship with consumers, and a written record would be difficult to dispute.

But Wahlquist, who defends companies in TCPA lawsuits, said smaller businesses might have no idea they are violating and thus be subject to litigation.  

“It’s hard for me to see this as a good thing for businesses because I just see the litigation as being out of control,” she said, noting there is no cap for damages on TCPA cases.

Others argue that the FCC should go further and outlaw unsolicited text messages sent to voters in the waning hours of political contests.

"We believe if consumers are receiving text messages that they did not opt-in to receive, it is spam,” said Scott Goodstein, founder of Revolution Messaging and a former external online director for the Obama presidential campaign.

“The FCC should clarify that these messages are a violation of the current TCPA prohibitions as soon as possible,” he said.