The number of consumer claims filed since the Great Recession has skyrocketed. These claims include alleged violations of an “alphabet soup” of federal and state consumer protection statutes. These statutes allow prevailing plaintiffs to recover some combination of actual damages, statutory damages, and even attorney’s fees. They also present a minimal risk of liability for defense costs if the plaintiff does not prevail, which makes these types of claims enticing for plaintiffs’ attorneys.
The Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692 et seq. (FDCPA) and Florida’s state law equivalent, the Florida Consumer Collection Practices Act, Fla. Stat. §§ 559.55 et seq. (FCCPA), were enacted to protect individuals from harassing debt collection behavior. Violations of the FDCPA continue to top the list of complaints received by the Consumer Financial Protection Bureau. See WebRecon LLC, 2016 Year in Review: FDCPA Down, FCRA & TCPA Up, (last checked May 17, 2017). The most common complaint received is based on collection attempts that continue despite the debt not being owed by the complainant. See id. In addition to any actual damages suffered, successful plaintiffs can recover statutory damages of up to $1,000 for individual claims. See 15 U.S.C. § 1692k(a)(2)(A) and Fla. Stat. § 559.77(2).
The Fair Credit Reporting Act, 15 U.S.C. §§ 1681 et seq. (FCRA) was enacted to prevent negative or detrimental reporting of inaccurate credit information. Like the FDCPA and FCCPA, the FCRA permits a successful plaintiff to recover statutory damages of up to $1,000. See 15 U.S.C. § 1681n(a)(1)(A).
The FCRA may sound familiar because it was the center of the recent Supreme Court case, Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 194 L. Ed. 2d 635 (2016). Spokeo involved the issue of whether a technical violation – with no actual injuries attributed to the purported violation – permits a plaintiff to bring a claim directly before the United States Supreme Court. The ruling, that the appellate court failed to determine whether the alleged violations caused a concrete injury required for Article III standing, continues to be used by both the plaintiff and defense side for similar statutory claims. In fact, the Spokeo opinion already has been cited in more than 650 written opinions since its issuance a little less than a year ago.
Despite the availability of statutory damages, the driving force behind most of these cases is the attorney’s fee provisions that entitle a successful plaintiff to an award of their reasonable attorney’s fees. See, e.g., Dish Network Service L.L.C. v. Myers, 87 So. 3d 72, 76 (Fla. 2d DCA 2012)(“[I]n this type of statutory fee case where the damages are relatively small, as the lawsuit progresses, it quickly becomes a larger monetary asset for the law firm than for the client.”).
In most instances, these consumer-oriented statutes do not have a reciprocal attorneys’ fee provision if the defendant prevails. Instead, to recover their fees incurred in defending the action, defendants must meet a higher burden and show that a claim asserted by a plaintiff lacked a justiciable issue of law or fact or that the claim was filed in bad faith or for the purposes of harassment. See Fla. Stat. § 559.77(2), 15 U.S.C. § 1692k(a)(3), and 15 U.S.C. § 1681n(c); see also Tucker v. CBE Group, Inc., 710 F. Supp. 2d 1301, 1307-08 (M.D. Fla. 2010) (holding that award of attorney’s fees appropriate when plaintiff failed to dismiss claims despite discovery in case contradicting most of the allegations contained in the complaint); Rhinehart v. CBE Group, Inc., 714 F. Supp. 2d 1183, 1185-86 (M.D. Fla. 2010) (same); Conner v. BCC Fin. Mgmt. Servs., Inc., 597 F. Supp. 2d 1299 (S.D. Fla. 2008) (finding that, among other things, the failure to file substantive responses to the motions for summary judgment demonstrated that the case was “clearly frivolous”). The number of cases awarding defendants their fees and costs are far outnumbered by cases denying such requests. Given the heightened burden required for a defendant to recover its fees and costs, the possibility of a defense award does not appear to be a deterrent.
Unlike most statutes designed to protect consumers, the Telephone Consumer Protection Act, 47 U.S.C. § 227 (TCPA) does not provide an attorney’s fee award to a prevailing plaintiff. As such, one might expect fewer claims to be asserted under this statutory provision because there is no assurance that attorneys could recover their fees. Intriguingly, however, the number of TCPA claims has continued to rise over the past 10 years. According to a report from WebRecon LLC covering the credit industry alone, the number of TCPA claims grew from 14 in 2007 to more than 4,800 in 2016. See WebRecon LLC, 2016 Year in Review: FDCPA Down, FCRA & TCPA Up (last checked May 17, 2017).
Another distinction between the TCPA and other consumer protection statutes lies in the amount of statutory damages that can be awarded. Whereas the FDCPA, FCCPA and FCRA cap statutory damages at $1,000, the TCPA has no limit for individual claims. The value of a TCPA claim can be directly proportional to the number of violations. For “autodialer” calls, the TCPA provides for the greater of actual monetary loss or $500 per violation. See 47 U.S.C. § 227(b)(3)(B). In most instances, the actual monetary loss incurred by a particular individual, if any, is negligible, so most cases fall within the realm of the $500 per call award. If, however, the defendant is found to have willfully or knowingly violated the TCPA, such damages may be trebled at the discretion of the court, resulting in statutory damages of up to $1,500 per call. See 47 U.S.C. § 227(b)(3). Accordingly, it is easy to see how a single calling campaign can quickly reach into the thousands or tens of thousands of dollars.
There have been a number of aggressive attorneys who have used the TCPA to assert class action claims. It has been well publicized in recent years that large class action awards have been obtained against well-known banks, insurance companies, and retailers alike – with many awards reaching the tens of millions of dollars. In most of these situations, the class members – those who are actually aggrieved – receive far less than what they would have received if they had asserted individual claims. The varying interpretations of certain terms in the TCPA from jurisdiction to jurisdiction have helped to fuel more TCPA filings.
The Federal Communications Commission (FCC) has the authority to interpret the TCPA and implement regulations. Since the enactment of the TCPA in 1991, the FCC has issued Declaratory Rulings intended to provide guidance as to how the TCPA is to be applied and interpreted. The FCC also receives petitions regarding the TCPA, and many request that the FCC define certain terms within the TCPA, such as “called party” and “autodialer,” to help businesses better understand the risks they face. Much to the chagrin of many of the petitioners, the FCC has used these opportunities to broaden the TCPA’s reach. For instance, the agency ruled that a “called party” is the subscriber or recipient and not the “intended party” as many petitioners suggested. Further, the FCC has ruled that just about any telephone device used by businesses today will qualify as an “autodialer.” Similarly, the FCC has ruled that text messages constitute calls for purposes of the TCPA. While these interpretations may not have been what the petitioners wanted, the FCC’s actions did provide some clarity to terms that were subject to varying degrees of interpretation depending on the jurisdiction in which the business was located.
The TCPA requires companies to have written consent from consumers for any telemarketing calls. If businesses call a wireless number using an autodialer or prerecorded voice for non-marketing purposes, though, the consent may be written or oral. It should be noted that the FCC has ruled that consent can be revoked by a consumer at any time and through any reasonable means. Because the TCPA is a strict liability statute, businesses should review their policies with respect to placing calls to consumers to ensure compliance with the TCPA.
While many businesses could easily be confused by the alphabet soup of federal and state consumer protection statutes, it is clear that claims based on these statutes are not slowing down any time soon. As such, businesses should take a close look at whether their actions implicate any of these statutes to assess potential liability and, if appropriate, take the necessary steps to minimize exposure.