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TCPA Problems in Illinois: Two New Rulings Deal a Harsh Hand to the Collection Industry

May 23, 2012

A pair of Illinois rulings, one from the 7th Circuit and one from the Illinois Court of Appeals, has the potential to drastically alter the Telephone Consumer Protection Act (TCPA) landscape for the collection industry making a strict liability statute possibly even more onerous. 

Soppet v. Enhanced Recovery Company, LLC,  --- F.3d ---, 2012 WL 1650485 (7th Cir., May 11, 2012)

In Soppet v. Enhanced Recovery Company, LLC,  --- F.3d ---, 2012 WL 1650485 (7th Cir. May 11, 2012), the 7th Circuit held that a person who owns a phone number previously used by another is entitled to bring TCPA claims for calls directed to the prior owner of the phone number. The Soppet Court explained a “called party” as defined by the TCPA refers to the current owner or subscriber of a phone number and any the consent to call a certain number must be given by that person. The Court further added that any consent given by a previous subscriber terminates when the number is reassigned.  

This makes it a TCPA violation to, for example, call a cell phone number that you believe belongs to a consumer based on her consent to be called at that number (as reflected in the consumer’s account file) but that actually belongs to someone else, such as the new subscriber to that cell phone number. According to the Soppet Court, the consent from the consumer does not permit you to call that number if the number has since been reassigned to someone else who has not given his consent. For the collection industry, this means simply relying upon the phone numbers provided in a consumer’s account could result in strict liability violations under the TCPA that could cost $500 or more per phone call plus attorney’s fees.

The Soppet Court understood that its ruling may impact autodialer-users and suggested that they could:

  • Calls to cell phones could be made by real persons because the TCPA does not prohibit real persons from calling cell phones. Once the subscriber’s identity (and consent) has been confirmed, an autodialer can be used for future calls;

  • Scrub cell phone numbers to confirm the current subscriber’s identity before calling;

  • Request the creditor confirm the subscriber’s identity and provide indemnity if they are wrong.

Standard Mutual Ins. Co. v. Lay, 2012 WL 1377599 (4th Dist. Apr. 20, 2012)

The second ruling, Standard Mutual Ins. Co. v. Lay, 2012 WL 1377599 (4th Dist. Apr. 20, 2012), which is in conflict with rulings from other state courts, holds that the TCPA is a penal, not remedial, statute. This means that damages for negligent violations ($500 per occurrence) and intentional violations ($1,500 per occurrence) under the TCPA cannot be paid by insurance companies because they are a penalty and not insurable or recoverable from an insurance company as a matter of law in Illinois. TCPA defendants used to be able to turn to their insurance company for indemnification on TCPA lawsuits. But the Lay Court, relying on Illinois precedent regarding statutory penalties, reasoned that by allowing insurance companies to pay the penalties for TCPA violations, the purpose of the TCPA—to deter future violations (in this case it was fax transmissions, but the ruling applies to any TCPA violation, including calling cell phones)—is frustrated by shifting the payment of punitive damages from the defendants to the insurance companies.

The combination of these two rulings poses new challenges for the collection industry and will likely burden the industry with increased litigation and another costly hoop to jump through in a business that already endures significant regulation and arduous penalties.

Should you have any questions about these rulings or need additional information, please contact Richard Gottlieb, Director of Dykema's Financial Industry Group, at 312-627-2196.

For more information about Dykema’s Consumer Financial Services practice, please contact Richard Gottlieb, or any of the listed attorneys.


As part of our service to you, we regularly compile short reports on new and interesting developments and the issues the developments raise. Please recognize that these reports do not constitute legal advice and that we do not attempt to cover all such developments. Rules of certain state supreme courts may consider this advertising and require us to advise you of such designation. Your comments are always welcome. © 2012 Dykema Gossett PLLC.

As part of our service to you, we regularly compile short reports on new and interesting developments and the issues the developments raise. Please recognize that these reports do not constitute legal advice and that we do not attempt to cover all such developments. Rules of certain state supreme courts may consider this advertising and require us to advise you of such designation. Your comments are always welcome. © 2017 Dykema Gossett PLLC.