TCPA and FDCPA Class Action Targets New Kind of Business: Digital Rights Enforcers

The long-running legal battle between movie and music studios and consumers that illegally download their products got a novel twist late last week when a consumer attorney filed a class action lawsuit against a company tasked with enforcing the studios’ claims. The suit says that the company is acting as a debt collector and has violated the TCPA and FDCPA.

The case, Reif, et. al v. Rightscorp, was filed Friday in U.S. District Court for the Central District of California. In addition to asserting TCPA and FDCPA claims, the suit alleges violations of the Rosenthal Fair Debt Collection Practices Act, California’s version of the FDCPA commonly called the Rosenthal Act.

Ever since file-sharing service Napster rose to prominence at the turn of the century, producers of premium content that is easily digitized have fought to enforce their copyright claims. But only the best capitalized firms can afford the legal battles, most often Hollywood studios and major record labels.

After a series of high-profile (and high-dollar) legal wins over high volume file sharers in the mid-2000s, studios shifted their strategy to go after smaller “abusers.” Part of that strategy now is to engage with copyright enforcement firms that go after consumers on a one-on-one basis. Rightscorp is one such company.

Rightscorp, and similar companies, ask Internet service providers (ISPs) to forward notices to their customers when an alleged violation is detected. The notices often contain a settlement offer: $20 per pirated file or risk the prospect of facing a massive lawsuit that can often run well into six figures and higher. After the notices are sent, Rightscorp typically follows up directly with consumers with phone calls, often to cell phones.

In the lawsuit filed Friday, the plaintiffs contend that Rightscorp operates exactly like a debt collection agency and should be subject to regulation under the FDCPA. And because the firm uses an automated dialing system to make its call, it is also subject to rules under the TCPA.

The TCPA cause of action in the suit is relatively straightforward: Rightscorp used an artificial and/or prerecorded voice in calls to the cellular telephones of Ms. Reif and the other members of the TCPA Class, such as the call made to Ms. Reif’s cell phone by a pre-recorded voice on September 17, 2014. On information and belief, Rightscorp caused equipment having the capacity to dial numbers without human intervention to be used to make telephone calls to the cellular telephones of Ms. Reif and the other members of the TCPA Class. Rightscorp has, therefore, violated Section 227(b)(1)(A)(iii) of the TCPA.

The alleged FDCPA violations are more wide-ranging. The suit claims violations of § 1692d(5) for repeatedly calling the plaintiffs, § 1692e(5) for threatening to “escalate” a consumer’s case if they do not accept the settlement offer, § 1692e(10) for allegedly representing that a consumer’s ISP could shut off their service if they didn’t pay, § 1692(e)(11) for failing to disclose themselves as a debt collector, and a host of § 1692g(a) violations for lack of required information in written communications to consumers.

The case may or may not have legs, but the digital file-sharing community has been very vocal about the suit today in light of the filing. It is very interesting, however, that other types of businesses are being targeted using statutes that debt collectors have been grappling with for years.