As originally published in Law360
At its June 18, 2015, open meeting, a sharply divided Federal Communications Commission made good on Chairman Tom Wheeler’s recent promise to bolster the Telephone Consumer Protection Act’s already strict rules and to bring about “one of the most significant FCC consumer protection actions since it established the Do-Not-Call Registry with the FTC in 2003.” While plaintiffs’ class action lawyers are likely to applaud the new measures, businesses are concerned that the new rules could unfairly restrict legitimate communications with customers.
Congress enacted the TCPA in 1991 to address what it perceived as the growing problem of unsolicited telemarketing with technologies such as fax machines, pre-recorded voice messages and automatic dialing systems. The TCPA requires anyone making a call to a wireless line using autodialer or pre-recorded voice-call technologies to obtain the “called party’s” “prior express consent,” and, following a 2012 FCC decision, “prior express written consent” for calls that introduce advertising or constitute telemarketing. Similarly, under that ruling, calls to residential lines using an artificial/pre-recorded voice that introduce advertising or constitute telemarketing require the called party’s prior express written consent.
The TCPA provides a private right of action under which a plaintiff may recover the greater of actual monetary loss or $500 per violation. A court may treble the amount of damages upon a finding of a “willful or knowing” violation. The TCPA places no cap on damages for claims brought individually or as a class action.
As the FCC has observed, “Congress did not expect the TCPA to be a barrier to normal, expected and desired business communications.” Indeed, at the June 18 open meeting, Alison Kutler, acting chief of the FCC’s Consumer and Governmental Affairs Bureau, reiterated that the FCC “has consistently endeavored to protect consumers without inhibiting business interests.”
Yet, in the past several years, class action plaintiffs’ lawyers have exploited the law to sue airlines, media companies, pharmacies, restaurants, financial institutions and other legitimate, consumer-facing businesses that use telephone systems to carry on day-to-day communications with their customers. This has resulted in numerous settlements and judgments, often in the millions or tens of millions of dollars. Unsurprisingly, business leaders and others had called on the FCC and Congress for relief.
It appears that business concerns were largely ignored in the report and order adopted at the FCC’s June 18 meeting, which has not yet been released. Rather, in resolving a number of outstanding petitions, the FCC announced a series of new measures designed to make the TCPA more stringent. The expected measures are summarized below; the quotations are taken from an oral transcript of staff and commissioner statements at the June 18 proceedings.
FCC Addresses Text Messages Under the TCPA
According to the staff presentation at the open meeting, the report and order reiterates that “text messages are ‘calls’ under the TCPA, making autodialed text messages subject to the [TCPA] consent requirement just like any other ‘robocall’ to a wireless number, and consumers are equally protected from telemarketing and informational calls to their wireless numbers that they don’t want to receive.” The report and order is expected to further clarify that “an Internet phone text message or an email addressed to a wireless phone number and converted to a text message is covered by the TCPA.”
Unexpectedly, the decision will clarify the TCPA rules that became effective in October 2013. In particular, the report and order will provide that “a one-time, on-demand text sent in response to a consumer request does not require separate consent” and will “grant a limited waiver of the written consent rules” for a caller to obtain “updated consent from consumers to get written consent.”
FCC Clarifies Consumers’ Right to Revoke Consent
The TCPA does not define the term “prior express consent.” In its 1992 order, the FCC ruled that “persons who knowingly release their phone numbers have in effect given their invitation or permission to be called at the number which they have given, absent instructions to the contrary.” And in a subsequent declaratory ruling, the FCC stated that “autodialed and pre-recorded message calls to wireless numbers provided by the called party in connection with an existing debt are made with the ‘prior express consent’ of the called party” and, therefore, “such calls are permissible” under the TCPA. The FCC reasoned that “the provision of a cellphone number to a creditor, e.g., as part of a credit application, reasonably evidences prior express consent by the cellphone subscriber to be contacted at that number regarding the debt.”
The TCPA does not contain any provision addressing whether “prior express consent” can be revoked. While some courts have expressed the view that once provided, consent under the TCPA cannot be revoked, those cases are increasingly in the minority, and the trend is to construe the TCPA as permitting revocation of consent, despite the absence of any express provision. See, e.g., Gager v. Dell Fin. Servs., 727 F.3d 265, 274 (3d Cir. 2013).
The report and order is expected to clarify that “consumers who previously consented to ‘robocalls’ may revoke that consent at any time and through any reasonable means.” In addition, “being on an acquaintance’s wireless phone contact list is not consent to receive ‘robocalls’ from providers of third-party applications downloaded by the acquaintance.” Further, “consent survives when a phone number is ported from wireline to wireless.”
FCC Allows for “Robocall” Blocking Technology
The forthcoming report and order is expected to clarify that “nothing in the Communications Act or the [FCC’s] rules prohibits carriers or other service providers from implementing call-blocking technology.” As such, “wireline and wireless carriers, as well as [Voice Over Internet Protocol] carriers are free to provide consumers with services and technologies to block unwanted ‘robocalls.’”
FCC Clarifies Consent Required from Actual “Called Party” and With Respect to Calls to Reassigned Numbers
At least two federal courts of appeals had previously held that TCPA consent must come from the “called party,” or someone acting on that person’s authority, and that the “called party” is the “current subscriber” to the wireless number called. See Soppet v. Enhanced Recovery Co. LLC, 679 F.3d 637, 643 (7th Cir. 2012); Osorio v. State Farm Bank FSB, 746 F.3d 1242, 1251 (11th Cir. 2014).
The report and order will clarify that “the TCPA requires the consent of the ‘actual called-party,’ the ‘subscriber’ to a phone number, or the ‘customary user’ of that number, not the intended recipient of the call.” FCC staff suggested that callers will “have an incentive to use best practices such as database checks or email confirmation to ensure they are actually calling the [correct] person and not another” to whom the number has been reassigned. The item will clarify, however, that “it is reasonable for the caller to have one opportunity to call a number to learn whether it has been reassigned before facing liability” under the TCPA.
FCC Weighs in on Definition of “Automatic Telephone Dialing System Archives”
The TCPA defines ATDS as “equipment which has the capacity to store or produce telephone numbers to be called, using a random or sequential number generator; and to dial such numbers.” The FCC has taken the position that a “predictive dialer” is an ATDS and, therefore, covered by the TCPA to the extent that it has the capacity to dial numbers randomly or sequentially. The FCC defines a “predictive dialer” for these purposes as equipment that dials numbers and predicts when an agent will be available to take calls and, when paired with certain software, has the capacity to store or produce numbers and dial those numbers at random, in sequential order, or from a database of numbers. Several courts have taken an expansive view of the FCC’s position, and have found that a dialing system may be considered an ATDS so long as there is a theoretical possibility that the system may have the capacity to dial numbers randomly or sequentially. Other decisions have taken a more pragmatic view, and have declined to find the existence of an ATDS where the relevant system would require significant modification to “have the capacity” to dial randomly, sequentially, or in a predictive fashion.
The FCC appears to have rejected those common-sense court decisions, finding instead, in the report and order, that “if dialing equipment has the capacity, even with some modification, to dial random or sequential numbers, it is an autodialer.” As a result, “consumer consent is required for voice calls and texts made with an autodialer even if the caller is not currently or presently dialing random or sequential numbers, but is instead calling a set list of numbers.” The report and order purports to clarify, however, that “the term ‘capacity’ in the definition of ‘autodialer’ is not unbounded or so broad as to make any equipment that can dial a number an autodialer.”
FCC Provided Limited Exceptions for Consent with Respect to Calls Made in “Urgent Circumstances”
Apparently, the report and order will “grant exemptions from the TCPA consumer consent requirement for time-sensitive financial alerts and health care-related calls that are free to the consumer. The exemptions are subject to strict conditions to protect consumer privacy, including prohibitions on telemarketing and debt collection content and a requirement that each message provide a way to opt out of future messages.”
FCC Commissioners Offer Sharply Worded Dissenting Views
The FCC adopted the report and order by a 3-2 vote, over the strong objections of its two Republican commissioners. For example, Commissioner Ajit Pai dissented, stating in part that “[r]ather than focus on the illegal telemarketing calls that consumers really care about, the order twists the law’s words even further to target useful communications between legitimate businesses and their customers.” And Commissioner Michael O’Rielly dissenting in part, stated that while “[t]oday’s order has been hailed as protecting Americans from harassing robocalls and faxes, … [t]hat is a farce. Instead, the order penalizes business and institutions acting in good faith to reach their customers with modern technologies.”
Finally, in a scathing rebuke to the process that led to the June 18 decision and to FCC leadership, Commissioner O’Rielly referred to the process as “a new low I’ve never seen in politics or policymaking.” O’Rielly continued, “While being] led to believe we were working together to find resolution … instead we are deceived to produce one of the most slanted documents I’ve ever seen and I will not be so naive to trust again certain people in leadership positions at the [FCC].”