Court: Consumer Cannot Unilaterally Revoke Contractually Agreed-Upon TCPA Consent

June 23, 2017

On June 22, 2017, the 2nd U.S. Circuit Court of Appeals found that the Telephone Consumer Protection Act (TCPA) does not permit a consumer to revoke its consent to be called when that consent forms part of a bargained-for exchange. The decision in Reyes v. Lincoln Automotive Financial Services will significantly impact litigation under the TCPA and provide another defense to companies facing TCPA litigation.

Under the TCPA, any party wishing to contact a consumer via live or prerecorded calls must obtain express consent before doing so. The TCPA is silent, however, as to whether (and, if allowed, how) a consumer may revoke such consent once it is given. The 2nd Circuit reviewed two other circuit decisions and a Federal Communications Commission ruling that prior express consent is revocable under the TCPA, but found that those rulings were narrow, covering only situations wherein a consumer had “freely and unilaterally given his or her informed consent to be contacted” and later revoked consent.

The 2nd Circuit distinguished the case before it because the plaintiff had entered a lease agreement with the defendant, and thus his consent was not “freely and unilaterally given” but rather was given as “bargained-for-consideration in a bilateral contract.” Relying on the common law rules regarding consent, as applicable to contracts, the court reasoned that where consent is given in exchange for consideration and is incorporated into a binding legal agreement — in this case, a lease agreement — consent is not unilaterally revocable. The court distinguished this from cases in which a plaintiff voluntarily provides her number to a business in connection with a loan or insurance application, likening such exchanges to common law tort consent, which is gratuitous.

Accordingly, because the TCPA did not expressly provide for unilateral revocation, and the common law regarding consent was well established at the time Congress drafted the TCPA (thus removing any actual ambiguity), the 2nd Circuit found that where consent is given through a bilateral contract, mutual revocation is required. 

The court also rejected the plaintiff’s claim that the express consent provision of his lease agreement was not an essential term and thus consent was revocable. Because a contract term does not have to be essential to be enforceable, and parties are generally held to all terms to which they agreed, the plaintiff’s claim necessarily failed, the court said.

The 2nd Circuit’s decision will impact TCPA litigation regarding revocable consent where the parties have entered a bilateral contract that expressly provides for consent to be called utilizing an automatic telephone dialing system. First, lenders now have a strong defense against any revocation arguments, which may present dispositive issues at the outset of litigation. In addition, determining the content of the agreement may present unique and individualized issues assisting with the defense of class action litigation.

Second, and from an operational perspective, lessons can be learned about drafting agreements and ensuring that contracts include express consent to receive calls to preserve this defense for any future litigation.