PayPal Will Tweak User Agreement To Clarify Proposed Autodialing Provisions

The changes to PayPal’s terms as originally proposed drew the ire of government regulators, including the Federal Communications Commission and the New York Attorney General. These regulators, as well as numerous consumer groups, asserted that PayPal’s proposed changes would conflict with the Telephone Consumer Protection Act (TCPA) and its provisions prohibiting autodialed or prerecorded calls to consumers without obtaining consumers’ prior express consent.

The provision PayPal intended to adopt provided in relevant part that “[y]ou consent to receive autodialed or prerecorded calls and text messages from PayPal at any telephone number that you have provided us or that we have otherwise obtained. We may place such calls or texts to … contact you with offers and promotions.”

Even for prerecorded or autodialed informational calls or texts, e.g., messages providing information about the status of a customer’s current order, this provision would have been problematic. FCC decisions and federal case law are relatively uniform in holding that a consumer still has to voluntarily release his or her specific telephone number to satisfy the prior express consent requirement for informational calls. That is, PayPal could not get a consumer’s cell phone number from a third-party list provider if the consumer refuses to answer debt collection calls placed to the landline telephone number the consumer gave to PayPal.

As for prerecorded or autodialed telemarketing calls or texts, since October 16, 2013, the FCC’s TCPA regulations require companies to obtain consumers’ “prior express written consent” through a separate agreement.  That is, unilateral terms of service that the consumer must agree to in order to complete a transaction will not suffice.

Under the FCC’s regulations for autodialed and prerecorded telemarketing calls, companies should obtain from consumers an agreement that has all of the following characteristics and features:

• The agreement must be in writing;
• The agreement must bear the signature of the person who will receive the advertisement/telemarketing calls/texts (but this can be satisfied by an electronic signature, key press, or other electronic means of affirming consent);
• The language of the agreement must clearly authorize the seller to deliver or cause to be delivered ads or telemarketing messages via autodialed calls or prerecorded messages;
• The written agreement must include the telephone number to which the person signing authorizes advertisements or telemarketing messages to be delivered; and
• The written agreement must include a clear and conspicuous disclosure informing the person signing that:
  • By executing the agreement, the person signing authorizes the seller to deliver or cause to be delivered ads or telemarketing messages via autodialed calls or prerecorded messages; and
  • The person signing the agreement is not required to sign the agreement (directly or indirectly), or agree to enter into such an agreement as a condition of purchasing any property, goods, or services.

Given these requirements, PayPal’s General Counsel wrote that she wanted to “clear up any confusion” created by the proposed User Agreement provision above and reaffirm that the PayPal “will not use autodialed or prerecorded calls or texts to contact [PayPal’s] customers for marketing purposes without prior express written consent” and PayPal customers will not need “to consent to receive autodialed or prerecorded calls or texts” to use PayPal.