Tuesday, June 23, 2015
Last week, the Federal Communications Commission acted to approve a number of proposals that update the TCPA (Telephone Consumer Protection Act), popularly known as the "Do Not Call" law that prohibits companies from interrupting consumers' dinner time conversations with pesky telemarketing calls. They closed a number of existing loopholes and clarified that phone companies can now block robocalls and robotexts to cell phones. The ruling also makes it easier for consumers who have previously consented to withdraw consent.
So what does this have to do with contracts? We all know how easy it is to consent to online terms. PayPal does, too. PayPal recently informed its customers that it was unilaterally amending its User Agreement. As anyone reading this blog knows, there are serious problems with unilateral modification clauses, especially in the context of wrap contracts that nobody reads. Yet, some courts have found that these clauses are enforceable (others have found they are not because they lack consideration and/or notice/assent). PayPal's recent announced modifications caught the attention of the Federal Communications Commission. The FCC Chief expressed concern that PayPal's prospective agreement may run afoul of federal law. The TCPA requires express written consent before any company can make annoying prerecorded telemarketing calls to consumers. The written consent, however, isn't the ridiculous version of consent that suffices as contractual consent in some courtrooms. There are certain requirements including that the agreement be "clear and conspicuous" and that the person is "not required to sign the agreement...as a condition of purchasing the property, goods, or services." In other words, it can't be a "take it or leave it" situation. Pay Pal's amended User Agreement, however, appears to contain "take-it-or-leave-it" language as it doesn't indicate how customers may refuse to consent to receive calls without having their account shut down. Furthermore, unlike contract law where blanket assent is okay, blanket consent is not okay under the FCC rules. (This blog post provides a nice overview of the issues and also notes that eBay (PayPal's soon-to-be former parent) encountered similar problems with the New York Attorney General).
PayPal's agreement is not the only reason the FCC acted last week, but as Bob Sullivan points out in this post here, it may have been the reason it acted so quickly. Expect to see an updated version of PayPal's agreement in the near future.