United States: FCC Issues Sweeping Order Expanding Reach Of The Telephone Consumer Protection Act

On Friday, July 10, 2015, the Federal Communications Commission ("FCC") enacted major changes and clarifications to the Telephone Consumer Protection Act of 1991 ("TCPA"). Approved on a contentious 3-2 vote by the FCC commissioners, the FCC released its Declaratory Ruling and Order ( FCC 15-72) formally stating its interpretation of numerous provisions of TCPA.

The TCPA is a federal statute that aims to increase consumer privacy protections by restricting telemarketing and the usage of automated telephone dialer systems ("ATDS").

In a 147-page ruling, the FCC increased the scope of the TCPA in several areas. Any company that calls consumers at cell phone numbers should be concerned by the implications of the Order. Although the Order contains a few bright spots for businesses, most of the Order enhances restrictions on businesses and their use of dialer systems in the name of increased consumer protection. Significant parts of the FCC ruling are as follows:

  • Definition of an ATDS: Any dialing equipment that "has the capacity to store or produce, and dial random or sequential numbers" is considered an ATDS for TCPA enforcement purposes, even if calls are not made using autodialing functions  but instead are placed in a "manual" mode that involves a human entering the numbers. A telephone system is an ATDS even if additional software components need to be added to make it function as such. The only limitation on this expansive "capacity" definition is that "there must be more than a theoretical potential that the equipment could be modified" into an automatic dialer.

    Although the Order stated that one of the primary goals of the Order was to provide clarity to businesses wishing to comply with the TCPA, the FCC expressly declined to provide specific guidance on what types of systems would be caught up by its definition, including smartphones. The only specific example given of a system that would not be captured by its definition was a rotary telephone. That the FCC referenced decades-old technology to find an acceptable example indicates how broadly the FCC's Order intends to interpret the meaning of ATDS.

    The FCC repeatedly stated that the TCPA's basic rule is a calling party must have express consent of the called party to make an ATDS call to cell phones. It seems clear that the FCC was less interested in providing clarity in what types of systems trigger a consent requirement than it was in creating the broadest possible duty on calling parties to obtain consent from consumers before making calls.

  • Consent revocable at any time and by any means: Many calls using an ATDS are permitted under the TCPA if the calling party has prior express consent to make the call. Consent and potential revocation of consent often become key issues in TCPA lawsuits. The FCC's Order clarified its stance on consent by expanding the manner in which consumers may revoke consent.

    A called/texted party may now revoke consent to be contacted "at any time and through any reasonable means" and callers "may not limit the manner in which revocation may occur." This revocation is effective regardless of prior consent being obtained, and includes both oral and written revocation. The FCC took the position that businesses can mitigate the risk by creating adequate business records and processes to record and respect revocations.

  • "One-call exception" for reassigned numbers: The FCC clarified that "the TCPA requires the consent not of the intended recipient of a call, but of the current subscriber [or customary user of the phone.]" As such, if a phone number legitimately provided by a prior user is reassigned, potential TCPA violations loom when attempting to reach that prior user at the outdated number.

    The FCC provided a one-call exception for reassigned numbers, meaning any ATDS call after the first attempt to a reassigned number is a potential violation. According to the FCC, "callers who make calls without knowledge of reassignment and with a reasonable basis to believe that they have valid consent to make the call should be able to initiate one call after reassignment as an additional opportunity to gain actual or constructive knowledge of the reassignment and cease future calls to the new subscriber." Although this change is couched as a protection for businesses, its efficacy may be limited. The FCC further stated that "[i]f this one additional call does not yield actual knowledge of reassignment, we deem the caller to have constructive knowledge of such." Potential liability looms if a caller does not realize that a number has been reassigned, such as if the call goes unanswered or reaches a generic voicemail greeting.

  • Text messages equivalent to calls: The FCC reaffirmed its 2003 determination that text messages are treated the same as voice calls, and added that Internet-to-phone text messages are equivalent to phone-to-phone text messages under the TCPA.

  • Exempting specific financial and health care related messages: In limited situations, calls to address exigent circumstances, where the calls are "free to the called party," are exempted from the TCPA's consent requirement, such as notifications of fraud, identity theft, data breaches, and money transfers. However, such exemptions are limited to three calls/text messages in a three-day period from a single financial institution and come with conditions such as disclosure of the institution's contact information, ability to opt out, and prohibition on telemarketing.

    Additionally, health care related calls, including time-sensitive information such as appointment confirmations, prescription notifications, and lab results are similarly exempted, limited to three calls/text messages per week, but non-exigent situations such as billing and account communications do not receive similar protection.

    However, the value of these exemptions appears to be limited, as the exemptions only apply to non-telemarketing calls placed to numbers provided by consumers. Calling parties already have permission under the TCPA to call numbers provided by consumers. The exemptions appear to be limited to avoiding liability for claims that consumer revoked consent or where the number has been reassigned. The net effect may be to provide limited comfort for calling parties, but not to clear the way altogether for robust pro-consumer calling campaigns for high-value fraud alerts, health information, and so on.

The Order puts in writing the decision made by the FCC at its hearing on June 18, 2015, in response to 21 petitions or letters filed by various companies and trade associations. The Order was passed by a party-line vote, with all three Democratic commissioners in support and both Republican commissioners in opposition.

Emphatic dissents by Commissioners Ajit Pai and Michael O'Rielly noted the recent exponential growth of TCPA litigation and expanded potential for abuse by aggressive plaintiffs' attorneys, the seemingly limitless ATDS definition, and the practical difficulties for businesses in documenting revoked consent and monitoring reassigned phone numbers. According to Commissioner Pai, the expanded definition of capacity turns the TCPA "into an unpredictable shotgun blast covering virtually all communications devices."

Commissioner O'Rielly noted with approximately 100,000 cell phone numbers being reassigned to new users daily, companies acting in good faith will routinely be risking litigation simply by reaching out even to established customers. Additionally, broad language allowing revocation "at any time and through any reasonable means" appears to include all communications with any of a business's employees, even those not in position to relay such a request to a large organization, and opens the floodgates to countless "he said, she said" disputes. As such, Commissioner O'Rielly foretells that the Order will "lead to more litigation and burdens on legitimate businesses without actually protecting consumers from abusive robocalls made by bad actors."

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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