October 29, 2014

Lawsuit Abuse? There’s an App for That

Since the creation of the Apple App Store in 2008, cellphone apps have become a ubiquitous part of everyday life. We have wealth management apps, navigation apps, even dating apps.

Now, we have “Block Calls Get Cash”—an Android app being marketed by Lemberg Law, a self-described consumer protection law firm. The firm says the app can help those who download it determine whether they have a claim under the Telephone Consumer Protection Act (TCPA), in which case they could win up to $1,500 per robodial or debt collection call.

The app’s website boasts that with no out-of-pocket cost for the app or legal fees, its users will “laugh all the way to bank”: “Lemberg Law has helped more than 10,000 consumers recover more than $30 million. Now it’s your turn!”

If this “free money” sounds too good to be true, that’s because it is.

The reality is that the TCPA is a severely outdated law which plaintiffs’ lawyers now exploit to make fast cash for themselves, no matter the broader costs to consumers and well-intentioned businesses, and to the integrity of the country’s civil justice system.

While the TCPA at its core is a consumer protection statute, plaintiffs’ lawyers have manipulated the law not only through the use of abusive tactics to drum up the filing of TCPA cases, but also by expanding the scope of the statute beyond its original intent.

The TCPA was signed into law in 1991, during a time when cell phones still resembled bricks and lacked the ability to text, let alone the capacity to access the Internet at 4G speeds. Fax machines were ascendant, and email did not become widespread until the mid 1990s. The law was intended to deal with abusive telemarketing, and to create a Do Not Call list for telemarketing.

The original intent of the law was as a quick and easy tool to avoid costly lawyers by going right to state small claims courts for any violations because such courts involve smaller sums of money and often do not require—or even allow—the participation of attorneys. Yet, we now see the law being used to levy huge class action lawsuits extracting millions of dollars from businesses for sending transactional communications to reassigned or wrong numbers, and even when such communications are sent to patrons who legally consented to receive them.

Through September 2014, 1,908 TCPA lawsuits have been filed in 2014—an increase of 29.9% over this time period last year. Recently, Capital One settled for a record-setting $75 million for allegedly using an automatic telephone dialing system—or “autodialer” —to call customers with outstanding debts to the company. The attorneys will seek one-third of that fund for their efforts ($25 million), with millions of consumers to divide up the rest, leaving no one with any real benefit other than class counsel.

Numerous TCPA class action lawsuits of this sort have been brought against businesses, big and small. In one case, a plaintiff who received a reassigned phone number originally belonging to a former employee of Rubio’s Restaurant, a regional California-based restaurant chain, waited until over 800 food safety text messages intended for the employee were received before bothering to contact the company. The alerts amounted to statutory damages of approximately $500,000, a relative fortune for what amounted to a misdialed number.

The U.S. Chamber Institute for Legal Reform argued in comments submitted to the FCC on September 24th that such cases fall outside the intent and original vision of the TCPA.

There is no simple fix for businesses to verify the continued accuracy of mobile phone numbers provided to a company, and companies should be able to contact their customers with transactional and informational calls. Meanwhile, one wrong call can be the basis of a class action lawsuit alleging millions of dollars in statutory damages and seeking discovery into every single call placed by that company to its customers going back four years. The risks of financial and reputational ruin strong-arms businesses into entering sometimes massive settlements even where there is no evidence of wrongdoing.

Business’ fear of TCPA lawsuits will ultimately harm consumers—both financially and in terms of convenience—because of the diminished value of the services. To be sure, no one likes unsolicited calls and texts, but what about the ones we do want?

When traveling home for the holidays, most people appreciate a text notice of a flight delay or cancellation from an airline. Or when someone has forgotten to pay a bill, a reminder before service is discontinued can save that consumer fees and costs involved with reconnection. But lawsuits may eventually cause businesses to discontinue such communications.

“Block Calls Get Cash” may come wrapped in a techie “consumer protection” banner, but it is nothing more than old-fashioned legal exploitation—enriching plaintiffs’ lawyers while driving up the costs for the rest of us.

The Lemberg Law app is nothing more than a high-tech way for them to go fishing for lucrative lawsuits. If consumers want to go fishing, may we suggest a better app: Gone Fishing: Trophy Catch, also available for Android, looks to be a greatly rewarding alternative.

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