Pinn v. Consumer Credit Counseling Foundation, Inc.

Background

Kelly Pinn brought one claim under the Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227(c)(5), on behalf of herself and a proposed class. She alleged that her residential telephone number had been registered on the national Do Not Call registry for more than ten years. In April 2022, she received multiple unsolicited telemarketing calls from the same spoofed number. During the last call, a caller initially identified himself as calling from “Credit Associates,” asked about Pinn’s financial situation, and then connected her with an advisor who identified herself as being from Consumer Credit Counseling Foundation (CCCF).

Pinn alleged that the advisor said her debts would be consolidated through the defendants’ program. After the call, CCCF sent her an email promoting a “Debt Management Plan Summary” under which consumer loans would be consolidated at a 5.95% interest rate. Pinn alleged that she had never provided her telephone number to the defendants or their agents, had not given permission to call, had no established relationship with them, and had not asked them to call.

The defendants were CCCF, National Budget Planners of South Florida, Inc. (NBP), and Ishwinder Judge. The opinion states that CCCF is a Florida corporation doing business in California and that it operates as a nonprofit offering credit counseling services and debt management plans. It states that NBP is a Florida corporation registered in California as having the same office as CCCF. The opinion identifies Judge as CCCF’s Chief Executive Officer, Secretary, and Chief Financial Officer, and describes Pinn’s allegations about his ownership and role as allegations made on information and belief.

Motion and parties’ positions

The defendants moved under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint contains enough legally sufficient facts to state a claim. They argued that the calls were made to promote CCCF’s nonprofit debt-counseling services and therefore fell within the TCPA regulation’s exception for calls made by or on behalf of a tax-exempt nonprofit organization.

Pinn argued that the exception did not categorically protect the defendants because the complaint alleged that CCCF acted as a conduit for for-profit businesses. She alleged that the defendants used CCCF’s nonprofit status to facilitate for-profit businesses, including businesses involving debt-consolidation loans, payment processing services, and educational materials. She also alleged that the products or services of an unidentified for-profit business were packaged or sold with CCCF’s debt-counseling services.

Court’s analysis

The TCPA and its implementing regulations generally prohibit telephone solicitations to residential telephone subscribers whose numbers are registered on the national Do Not Call registry. The regulations define “telephone solicitation” as a call made to encourage the purchase or rental of, or investment in, property, goods, or services, subject to specified exceptions. One exception covers calls by or on behalf of tax-exempt nonprofit organizations.

The court explained that Federal Communications Commission orders had warned that the nonprofit exception could not be used to disguise a commercial venture. Those orders stated that a call selling debt-consolidation services is commercial even if the consumer is also referred to a nonprofit for counseling. The court also found persuasive a prior district court decision holding that the nonprofit exception did not apply at the pleading stage where a nonprofit allegedly acted as a conduit for a for-profit company’s marketing.

Applying that reasoning, the court held that the first amended complaint plausibly alleged that the call involved a for-profit entity and was not solely intended to promote CCCF’s own products or services. The allegations that the advisor discussed debt consolidation and that CCCF later sent Pinn a debt-management-plan summary supported a reasonable inference that the call promoted debt-consolidation loans or other commercial offerings. The court noted that Pinn might ultimately be unable to prove the connection between CCCF and for-profit businesses or prove that the call had a commercial purpose, but those issues could not be resolved on the allegations accepted as true at this stage.

Disposition

The court denied the defendants’ motion to dismiss the first amended class action complaint. The opinion does not state that the proposed class was certified, and the ruling did not resolve whether Pinn will ultimately prove the TCPA violation.