Banking and Finance Law Daily Debt-collection exception to TCPA unconstitutional
Friday, June 14, 2019

Debt-collection exception to TCPA unconstitutional

By Wendy Biddle, J.D.

Consumer’s suit alleging violations of the TCPA moves forward against Facebook.

Reversing a district court ruling, the U.S. Court of Appeals in San Francisco has held that a consumer adequately stated a claim under the Telephone Consumer Protection Act (TCPA) by alleging that Facebook used an automated telephone dialing system to store numbers to be called and dialed those numbers automatically. Further, the court struck down the debt collection exception in the TCPA as unconstitutional because it was content-based in nature and violated the First Amendment (Duguid v. Facebook, Inc., June 13, 2019, McKeown, M.).

The consumer claimed that Facebook used an automated telephone dialing system to alert users when their account was accessed by an unrecognized device or browser, as a security precaution. The consumer, however, was not a Facebook customer or user, and received messages from Facebook, even after attempting to stop them. The consumer filed suit, alleging action under the TCPA, which forbids autodialers except in certain circumstances. Facebook challenged the adequacy of the consumer’s claim as well as challenging that the TCPA violates the First Amendment.

TCPA. The consumer alleged that Facebook began sending him text messages indicating that an unrecognized browser was attempting to access his account. However, the consumer did not have a Facebook account, and had no way to log in and either get more information or find a way to stop the messages. Instead, the consumer replied to the text message with the words "Off" and "All off," but the messages continued from January 2014 through October 2014. In his complaint, the consumer alleged that Facebook maintained a database of phone numbers and using a template, programmed its equipment to send automated messages to those numbers each time a new device accessed the associated account.

The appellate court found that the consumer’s allegations plausibly suggested that Facebook used an autodialer system that stored telephone numbers to be called and dial those numbers automatically, sufficient for a claim under the TCPA. Facebook contended that the TCPA is not understood to cover devices that are ubiquitous or commonplace, because that would imply that smartphones would also be covered. The court rejected that argument, finding that the phrase "to be called" in the statute does not need to be the only purpose for storing the numbers, the equipment merely needs to have the capacity to store numbers to be called. Further, the purpose of the TCPA is to protect privacy by restricting unsolicited, automated telephone calls. The messages the consumer received were both unsolicited and automated.

The court also rejected Facebook’s argument that the TCPA makes exceptions for calls made for emergency purposes, and unauthorized device access can be construed as an emergency. But the court noted that emergency calls cannot be targeted to just any person, they are made in situations affecting health and safety of consumers as a group. The court therefore found that the consumer adequately alleged a violation of the TCPA for purposes of overcoming a Rule 12(b)(6) dismissal.

First Amendment. The court noted that prior to an amendment of the TCPA added an exception for debt collection, the act was affirmed as content neutral and consistent with the First Amendment. The debt collection amendment makes exceptions on whether the autodialer communication was made "solely to collect a debt owned or guaranteed by the United States." The government argued that such an exception is relationship-based as opposed to content-based, but the court rejected that argument, finding that the identity and the relationship of the caller to be irrelevant. The court therefore concluded that the exception is content-based.

After finding that the exception is content-based, the court evaluated the content based on the strict scrutiny standard required. The government must show that the TCPA’s differentiation between robocalls to collect a debt owned or guaranteed by the United States furthers a government interest and is narrowly tailored. But the court noted that the government advocated only one interest with the TCPA, protecting personal and residential privacy. Allowing robocalls to collect government debt hinders, not furthers, the government’s interest. Further, the court found that this is contrary to the privacy implications of the TCPA’s consent exception and emergency exception provisions. An unconsented, non-emergency robocall invades personal and residential privacy regardless of whether the purpose is to collect a government debt or sell an unwanted product. The court held that the debt-collection exception is insufficiently tailored to advance the government's interest in protecting privacy.

After finding the provision in violation of the First Amendment, the court evaluated whether the debt collection exception is severable from the rest of the TCPA, and found because the amendment was appended to the 2015 budget bill, the exception did not become so integral that the TCPA cannot function without it. The court therefore severed the exception from the statute, leaving the TCPA as the same content-neutral act that was previously upheld.

4th Circuit ruling. The U.S. Court of Appeals for the Fourth Circuit also held in April that the debt-collection exemption violates the Free Speech Clause of the First Amendment. However, it found that the exemption can be severed from the ban so that the remainder of the ban remains constitutional (American Association of Political Consultants v. FCC, April 24, 2019, King, R.).

This case is No. 17-15320.

Attorneys: Sergei Lemberg (Lemberg & Associates LLC) for Noah Duguid. Elizabeth L. Deeley (Latham & Watkins LLP) for Facebook, Inc.

Companies: Facebook, Inc.

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