The anecdotes speak for themselves. We’ve seen time and time again how staggeringly high settlements and judgments are in Telephone Consumer Protection Act (TCPA) litigation, and how creative professional plaintiffs and entrepreneurial lawyers can be.
But a new report from the TCPAland blog shows just how expensive TCPA litigation actually is.
Based on data from WebRecon, TCPAland found that the average cost of a TCPA settlement this year was $6,600,000. That’s stunningly high for a law that was intended to be applied mostly in small claims courts. Former U.S. Senator Fritz Hollings (D-SC), a sponsor of the 1991 law, said it was originally intended to help consumers get a set amount of cash in small claims court without an attorney.
But the TCPA is being used by the trial bar to bring major lawsuits. The report found that TCPA class action lawsuit filings are up 21 percent this year over last year. There’s a big difference between small claims and class actions.
The cost to settle this kind of high-dollar litigation can bankrupt a small business. An Illinois federal judge recently ruled that the CEO of a medical supply company was personally liable for $7.8 million in TCPA violations.
While technology has changed a lot since 1991, the TCPA hasn’t, meaning it’s easier than ever to file lawsuits. Look no further than a recent Philadelphia Inquirer story on a 21-year-old college student who has filed at least 45 such suits. According to the story, he’s run elaborate schemes to generate the lawsuits, like one in which “he placed an order, froze the credit-card payment so the company would call back, and sued the same day.”
These stats illustrate how crazy a year it’s been for TCPA litigation. Perhaps the biggest development was the D.C. Circuit’s decision to strike down the Federal Communications Commission’s definition of automated telephone dialing system in the spring. This sparked a number of court decisions trying to find a new definition, including the Ninth Circuit’s recent Marks v. Crunch decision that some say expanded it greatly.
Until the law is clarified and modernized, the abuses will continue and the costs will keep rising. The FCC should clarify the meaning of an automated telephone dialing system in accordance with the plain language of the TCPA, and Congress should act quickly to restore common sense to a clearly broken law.
