Form of Consent to Robo Calls in PayPal User Agreement Violates the TCPA Warns FCC

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Last week the FCC sent a strongly worded letter to PayPal regarding amendments to the PayPal User Agreement to become effective July 1, 2015. The FCC warned PayPal that the changes may violate provisions of the Telephone Consumer Protection Act (“TCPA”) which restricts the use of autodial, prerecorded, and artificial voice calls, including text messages. The provision of the new PayPal User Agreement that the FCC found objectionable states:

1.10 Calls to You; Mobile Telephone Numbers. You consent to receive auto dialed or prerecorded calls and text messages from PayPal at any telephone number that you have provided us or that we have otherwise obtained. We may place such calls or texts to (i) notify you regarding your account; (ii) troubleshoot problems with your account (iii) resolve a dispute; (iv) collect a debt; (v) poll your opinions through surveys or questionnaires, (vii) contact you with offers and promotions; or (viii) as otherwise necessary to service your account or enforce this User Agreement, our policies, applicable law, or any other agreement we may have with you. The ways in which you provide us a telephone number include, but are not limited to, providing a telephone number at Account opening, adding a telephone number to your Account at a later time, providing it to one of our employees, or by contacting us from that phone number. If a telephone number provided to us is a mobile telephone number, you consent to receive SMS or text messages at that number. We won’t share your phone number with third parties for their purposes without your consent, but may share your phone numbers with our Affiliates or with our service providers, such as billing or collections companies, who we have contracted with to assist us in pursuing our rights or performing our obligations under this User Agreement, our policies, applicable law, or any other agreement we may have with you. You agree these service providers may also contact you using autodialed or prerecorded calls and text messages, as authorized by us to carry out the purposes we have identified above, and not for their own purposes. Standard telephone minute and text charges may apply if we contact you.

Continuing the letter, the FCC then juxtaposed the customer consent requirements of the FCC regulations applicable to auto dialed calls:

• The agreement must be in writing;

• The agreement must bear the signature of the person who will receive the advertisement/telemarketing calls/texts;

• The language of the agreement must clearly authorize the seller (i.e., PayPal) to deliver or cause to be delivered ads or telemarketing messages via autodialed calls or robocalls/robotexts;

• The written agreement must include the telephone number to which the person signing authorizes advertisements or telemarketing messages to be delivered; and

• The written agreement must include a clear and conspicuous disclosure informing the person signing that:

– By executing the agreement, the person signing authorizes the seller to deliver or cause to be delivered ads or telemarketing messages via autodialed calls or robocalls/robotexts; and

– The person signing the agreement is not required to sign the agreement (directly or indirectly), or agree to enter into such an agreement as a condition of purchasing any property, goods, or services.

The FCC then observed the PayPal User Agreement amendments appear to violate the above FCC regulations in the following respects:

• Consent to the receipt of prerecorded/autodialed calls is a condition to using PayPal services and no notification of a right to refuse consent to the calls and still use the service was provided. Violation penalties of up to $16,000 per call.

• The specific phone numbers for which the consumer was providing consent was not included in the User Agreement.

• If any question about consent arises the burden of proof is on the seller to establish proper consent was given.

This aggressive warning to PayPal is consistent with the current FCC Chairman’s stated goal to vigilantly enforce the requirements of the TCPA.  In fact, based upon an FCC pre-meeting “fact sheet” it is believed the agency may issue a declaratory order in its June 18, 2015 open meeting designed to accomplish the following:

Empower Consumers to Say ‘Stop’– Consumers would have the right to revoke their consent to receive robocalls and robotexts in any reasonable way at any time. (Applies to wireless and landline home service.)

Give Green Light for ‘Do Not Disturb’ Technology – Carriers could offer robocall-blocking technologies to consumers. It would give the go-ahead for carriers to implement market-based solutions that consumers could use to stop unwanted robocalls. (Applies to wireless and landline home service.)

Make Clear Reassigned Numbers Aren’t Loopholes – Consumers who inherit a phone number would not be subject to a barrage of unwanted robocalls to which a previous subscriber of the number consented. If a phone number has been reassigned, callers must stop calling the number after one call. (Applies to wireless and landline home service.)

Define an Autodialer – An “autodialer” is any technology with the capacity to dial random or sequential numbers. The rulings would ensure robocallers cannot skirt consumer consent requirements through changes in calling technology design or by calling from a list of numbers. (Applies to wireless.)

Allow Very Limited and Specific Exceptions for Urgent Circumstances – Free calls or texts to, for example, alert consumers to possible fraud on their bank accounts or remind them of important medication refills would be allowed. The proposal is very clear about what such messages can be and what they cannot be (i.e., no marketing or debt collection). In addition, consumers would have the ability to opt out of even these permitted calls and texts. (Applies to wireless.)

Given the signals sent by the PayPal letter and the FCC’s stated objective of tightening TCPA regulations, it is clear there are going to be even more TCPA landmines for businesses to navigate for the foreseeable future. Let us know if we can help with complying with the changing FCC requirements under the TCPA and/or defending against FCC or private actions for alleged TCPA violations.

Bill Latham


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