Is There Now a ‘Good Faith’ Defense Under the TCPA?

In “Living Vicariously — and Dangerously — under the TCPA” (DRMA Voice, March 4, 2014) I discussed legal developments swirling around the explosion of litigation under the Telephone Consumer Protection Act (TCPA). One was when a merchant claiming “innocence” of TCPA violations by its telemarketing vendor might be able to escape liability for the telemarketer’s actions under principles of agency or vicarious liability. The question of whether innocence or “honest mistake” can be a basis for avoiding liability under the TCPA — traditionally looked upon as a “strict liability” statute — has popped up in another context as well.

Telemarketers can call or text consumers who have provided their telephone numbers and expressly consented in writing to be contacted. They trust that the number given belongs to the person who is providing it and that the number has been correctly entered. What happens, however, when the number is later reassigned to someone else (which happens about 37 million times a year), or the wrong number was provided in the first instance, either by accident or deliberately? Should the telemarketer be at fault under the TCPA, even though it held an honest, good faith belief that it had the requisite consent to make the call?

The nearly uniform response of courts to this question has been a clear “Yes!” The TCPA prohibits auto-dialed marketing calls without the prior express consent of the “called party.” Who or what constitutes a “called party” is unclear because neither Congress nor the Federal Communications Commission (FCC) has defined the term. Without guidance, courts have strictly interpreted “called party” to mean only the current subscriber of the telephone number, and not, in instances where the number has been reassigned, the prior holder who had consented to be called and who was the intended recipient of the call. Even though a telemarketer has no way to know a phone number has been reassigned, courts have reasoned that consent to call a number is not forever and that any previous consent expires when the number is reassigned.

For the first time, a court has broken from the pack and held that a company that reasonably believes it is authorized to call a phone number is not liable for violating the TCPA. In Chyba v. First Fin. Asset Management Inc., the plaintiff alleged that she had not consented to receive calls from the defendant debt collector concerning a debt owed to Enterprise Rent-A-Car. The defendant produced a rental agreement that confirmed the debt and contained plaintiff’s phone number. Undeterred, the plaintiff still denied giving Enterprise her number or consent for Enterprise or anyone acting on its behalf to call it. Rejecting her claim, the court granted summary judgment to the debt collector under a “good faith” defense. The court stated that although the plaintiff did not give Enterprise or the debt collector direct consent to call the number provided in the rental agreement:

“It is sufficient that Defendant had a good-faith basis to believe that Plaintiff had
provided consent to the creditor on whose behalf Defendant sought to collect a
debt … even if Plaintiff is correct in stating that she never gave Defendant or
Enterprise consent to call, and there was no actual prior consent from her,
Defendant is not liable for acting in good faith upon the information provided to it.”

While Chyba is the only case to date to recognize a good faith defense to a TCPA claim — and was decided in the narrow, fact-specific context of debt collection — the result it reached is sensible and seems inherently fair. With a solid factual basis for believing they have the necessary consent to place a marketing call or send a text offer to a consumer, telemarketers of all stripes should not be subject to TCPA liability and civil penalties.

The FCC is considering a petition now to exempt from liability telemarketers who obtain prior express consent to call a phone number and then make informational calls to it without knowledge it has been reassigned. Hopefully the petition will be granted, and it will be a signal to the courts to permit a good faith defense in all telemarketing contexts. Chyba provides the opening. TCPA defendants should take full advantage of it and include a good faith defense wherever they feel they have one.

Talking about Direct Response, FTC, Online Marketing

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