Any casual observer of tech policy has likely heard of patent trolls, companies that acquire patents with the intent to sue potential violators rather than actually produce a product. These litigious conspirators hurt innovation by dragging inventors and small businesses to court over often bogus claims.
A similar legal scheme has taken flight in recent years with telemarketers. Yet it has received very little attention — likely because, well, nobody likes being solicited on the phone. Nonetheless, the negative consequences are the same as with patent trolls: harming vulnerable entrepreneurs and businesses trying to make a honest living.
The issue traces back to a revision the FCC made in its rules surrounding the Telephone Consumer Protection Act. Enacted by Congress in 1991, TCPA established the National Do Not Call Registry and other rules about when and how telemarketers can solicit on the phone. In 2012, the FCC tightened the rules further by requiring that companies “obtain express written consent from consumers before robocalling them.” Finally, in 2015, the FCC clarified that telemarketers are liable for fines if they dial a reassigned phone number that they had obtained consent to call from its previous owner — even if they do not know that the number had been reassigned.
While most Americans would likely agree that the broad strokes of the TCPA are reasonable protections against scammers, this last rule revision has created a golden opportunity for legal trolls. Sue-happy consumers have taken advantage of the reassignment loophole to profit, sometimes collecting hundreds of thousands of dollars in settlements since each violation comes with a fine of up to $1,500 per call.
According to Forbes, one New Jersey man, Jan Konopca, has collected approximately $800,000 in settlements from more than 30 lawsuits he’s filed. Another woman, Melody Stoops, “stockpiled more than 35 phones with different numbers with the hope that debt collectors would call her in an effort to reach the person who previously used the phone number.” Casey Blotzer allegedly let family members and their friends use her phone number when entering financial transactions. Jason Alan posted his many phone numbers online as being registered to his various business enterprises, then filed suit against those who called them.
The detrimental effect has been felt in a number of industries. Several health clubs, for example, have been targeted recently, including Gold’s Gym, 24 Hour Fitness, Town Sports International, Work Out World, and Crunch Fitness. One company, Life Time, ended up settling for a whopping $15 million.
There’s no doubt that the TCPA has a function to fulfill, protecting American consumers from being pestered and potentially defrauded by nefarious actors. However, it should not give cause for legal trolls to plunder decent businesses by taking advantage of honest mistakes.
The FCC itself has admitted that businesses cannot “in every case identify numbers that have been reassigned.” Thus, every time a business makes a call to a customer who has given them previous consent to advertise their services, they are effectively taking a risk of being sued — harming their marketing efforts and potentially their bottom line.
Congress and the FCC must revise the TCPA to close this loophole while keeping intact reasonable protections against excessive telemarketing — lest the problem of legal trolls in the industry becomes as bad as it is with patents.
Casey Given (@CaseyJGiven) is a contributor to the Washington Examiner’s Beltway Confidential blog. He is the executive director of Young Voices.
