Friday, January 25, 2019

TCPA, FDCPA Complaints Show Decrease in 2018

According to WebRecon's December 2018 Report, TCPA and FDCPA complaints showed a substantial decrease in 2018.  WebRecon reports that, in comparison to 2017, FDCPA suits decreased 7.8% in 2018 and TCPA suits decreased 13.2% in 2018.  According to WebRecon, "FDCPA complaints are at their lowest point since 2008."  Picking up the slack were FCRA suits which increased 4.3%.  Interestingly, complaints to the  CFPB increased 5.9% in 2018 despite a more business friendly CFPB regime.  For further analysis, please check out WebRecon's blog which provides monthly analysis for the industry at WebRecon.

Tuesday, January 22, 2019

Text messages to a Gym Member Did Not Require Express Written Consent Under the TCPA

By: Caren Enloe and Zachary Dunn
Text messages from a gym to its member were informational in nature and therefore did not violate the TCPA, a district court in Louisiana ruled late last month. The case, Suriano v. French Riviera Health, Spa, Inc., 2018 U.S. Dist. LEXIS 216018 (E.D. La. Dec. 20, 2018), centered on five text messages sent by French Riviera Health Spa (the “Gym”) to Suriano. The five text messages read as follows:
  1. Dear member, Welcome to Riviera Fitness! Where your fitness is our strength. We’re excited to have you as a member. Have a great workout!
  2. Dear member, We offer a variety of classes and small group training. Click here (, for class schedules.
  3. Dear member, Become your best self with.our Personal Trainers. Ask us for info on our PT program. (
  4. Follow us on social media! Facebook ( Instagram (
  5. Dear member, Did you know that we have a blog? Each month we post workout tips, testimonials and much more!
Suriano had recently joined the Gym and, in doing so, provided his phone number in multiple places on his application. However, Suriano had not provided prior express written consent to receive advertising or telemarketing messages.
The issue before the court was whether the five text messages were telemarketing or advertising messages requiring prior express written consent to receive such messages. In 2012, the FCC issued new regulations requiring prior express written consent for messages contained telemarketing and advertising content. The 2012 regulation defined advertisement as “any material advertising the commercial availability or quality of any property, goods, or services,” and telemarketing as “the initiation of a telephone call or message for the purpose of encouraging the purchase or rental of, or investment in, property, goods, or services.” While advertising and telemarketing messages require express written consent to comply with the TCPA, messages that are informational in nature only require a lesser threshold of prior consent which may be obtained by simply providing the number at issue in the application process.
In Suriano, the consumer provided prior consent by providing his cell number in multiple places on the Gym application; however, he did not provide prior express written consent to receive telemarketing and advertising messages.  After examining each of the messages to determine if they were telemarketing or advertising messages, the court concluded that all five messages were informational. Messages one, two, and five, the court held, were “plainly informational in nature,” as they were a welcoming message, a link to classes and training schedules, and a link to a blog containing workout tips, respectively.
The other two messages – messages three and four – were a closer call. The court considered the third message (encouraging Suriano to sign up for personal trainers) and noted that, under some circumstances, it could be considered an advertisement for its personal training services. However, since Suriano had already paid for six months of personal training sessions from the Gym, the court reasoned that message three “merely encouraged [Suriano] to take advantage of the personal training services for which he already paid.” Finally, the fifth message was informational because it simply encouraged Suriano to follow the Gym on social media. While the court noted that the Gym’s social media pages “in all likelihood do have a promotional aspect,” message five was not advertising or telemarketing under the relevant 2012 regulatory definitions of those terms. Finding all five messages to be informational, the court dismissed Suriano’s complaint.
Takeaways from Suriano
Suriano serves as a reminder that service providers must be careful in crafting text messages to their customers. Whether messages are considered advertising or promotional can be highly fact specific and will focus on the facts and circumstances regarding the individual consumer involved. Messages should be crafted such that they are informational in nature unless the service provider obtains express written consent to send advertising and telemarketing material.

Wednesday, January 9, 2019

Fifth Circuit: Mortgage Servicing Rules Apply to Servicers Only

In a case of first impression, the Fifth Circuit has held that the CFPB’s Mortgage Servicing Rules only apply to servicers and do not impute liability to the lender.  In Christiana Trust v. Riddle, the consumer alleged that the prior and current servicers of her mortgage violated the Mortgage Servicing Rules by failing to evaluate her loss mitigation application as required by 12 C.F.R. 1024.41(c)(1).  Riddle contended that the original lender, Bank of America, was vicariously liable for its servicer’s violation.  The Fifth Circuit affirmed the dismissal of the claims against Bank of America in part because it held that “Bank of America, as a matter of law, is not vicariously liable for the alleged RESPA violations of its servicers.”  Christiana Trust v. Riddle, 2018 U.S. App. LEXIS 36217, *7 (5th Cir. Dec. 21, 2018).

In reaching its conclusion, the Fifth Circuit looked at the express language of both the Mortgage Servicing Rules and the source statute, RESPA.  The Court noted that the regulation only imposes duties on servicers.  See 12 C.F.R. 1024.41(c)(1) (if a servicer receives a complete loss mitigation application… a servicer shall…”) (emphasis added).  Likewise, a servicer’s obligation to comply with the Mortgage Servicing Rules derives from RESPA which provides that only “a servicer of a federally related mortgage shall not… fail to comply with another obligation found by the Bureau of Consumer Financial Protection, by regulation, to be appropriate to carry out the consumer protection purposes of this chapter.”  12 U.S.C. §2605(k)(1)(E) (emphasis added).  The Court was further persuaded by the fact that 12 U.S.C. §2605 imposes liability on “whoever fails to comply with this section” rather than a more broad class of interested parties.  The Court concluded that “[b]ecause only ‘servicers’ can ‘fail to comply’ with 12 U.S.C. §2605(k)(1)(E), only servicers can be “liable to the borrower’ for those failures.”  Id. at *8.

The opinion is a good news for lenders as there is now some precedent that lenders cannot be held vicariously liable for their servicers’ violations of the Mortgage Servicing Rules.  At least in the Fifth Circuit, lenders are provided with some insulation from liability.