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FCC Settles With Large Mobile Telephone Company In Connection With Hidden Third-Party Charges
On October 8, the FCC announced a $105 million settlement – the largest in the agency’s history – with a mobile telephone company to resolve allegations that the company engaged in unauthorized billing practices. According to the FCC, the company charged customers for third-party services, such as subscriptions for ringtones, wallpapers, and certain premium text messages, for which they did not sign up. Many customers contested the charges, only to discover that the company either refused to issue refunds or refunded them for only one or two months. Under the terms of the settlement, which the FCC negotiated with the FTC and the attorney generals of the 50 states and the District of Columbia, the company must pay $80 million to the current and former customers affected by its billing practices, $20 million to the state governments involved in the settlement, and $5 million to the U.S. Treasury.
Senate Confirms FHA Commissioner and Other Key Agency Nominees
On December 30, the Senate confirmed Carol Galante as Assistant Secretary of Housing and Urban Development and Federal Housing Administration Commissioner. Ms. Galante, who was nominated for the position in October 2011, has been serving in an acting role. Her confirmation was made possible after certain Senators, including Bob Corker (R-TN), who had expressed concerns about the pace of reforms at the FHA, secured a commitment from Ms. Galante to (i) place a moratorium on the full drawdown reverse mortgage program, (ii) substantially increase underwriting criteria for borrowers with FICO scores between 580 and 620 by establishing a meaningful maximum debt-to-income ratio, (iii) increase the down payment requirement and the insurance pricing for loans between $625,000 and $729,000, and (iv) increase underwriting requirements for borrowers who have been foreclosed upon within the last seven years. On January 1, as described in media reports, the Senate confirmed Joshua Wright as FTC Commissioner and Mignon Clyburn as FCC Commissioner, and also confirmed Richard Berner for the new position of Director of the Treasury Department’s Office of Financial Research.
Ninth Circuit Upholds Class Certification in TCPA Case
On October 12, the U.S. Court of Appeals for the Ninth Circuit upheld provisional class certification for a plaintiff debtor, who claimed that a debt collector had violated the Telephone Consumer Protection Act (TCPA) by using an automatic dialer to place calls to plaintiff and other debtors’ cellular telephone numbers obtained via skip-tracing, and where the debtors also had not expressly consented to be called. Meyer v. Portfolio Recovery Assocs. LLC, No. 11-56600, 2012 WL 4840814 (9th Cir. Oct. 12, 2012). The debt collector argued, in part, that typicality or commonality issues should preclude class certification because some debtors might have agreed to be contacted at their telephone numbers, which were obtained after the debtors incurred the debt at issue. Citing a recent FCC declaratory ruling, the court noted that prior express consent is deemed granted only if the debtor provides a cellular telephone number at the time of the transaction that resulted in the debt at issue. The court thus rejected the debt collector’s argument, and held that debtors who provide their cellular telephone numbers after the time of the original transaction are not deemed to have consented to be contacted under the TCPA. In addition, the court upheld the district court’s grant of a preliminary injunction to the plaintiff, finding that he had established a likelihood of success on his TCPA claim and had demonstrated irreparable harm based on the debt collector’s continuing violations of that statute.
FCC Seeks Comments on Mobile Device Privacy, Data Security
Recently, the FCC released a request for public comment on the privacy and data security of personal information on mobile devices. The request focuses on the amount and types of consumer information that may be collected by carriers. For example, the FCC lists a series of factors, including (i) the degree of control that the service provider exercises over the design, integration, installation, or use of the software that collects and stores information, (ii) the manner in which the collected information is used, and (iii) the role of third parties in collecting and storing data, and asks which, if any, are relevant to assessing a wireless providers obligations under the Communications Act and the Commissions implementing rules. The FCC will accept public comments for 30 days from publication of the request in the Federal Register. In 2007, the FCC similarly solicited comments and revised its rules under the Communications Act to tighten data security requirements and address pretexting.