Tag: Congress

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Attorneys General Express Widespread Support for TRACED Act Reintroduced in the Senate to Stop Illegal Robocall Scams
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Bipartisan Bill Introduced In The Senate To Thwart Illegal Robocall Scams
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In Wake of ACA Int’l, Ninth Circuit Adopts Expansive Definition of ATDS
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Congress Holds Hearings on Abusive Robocalls and Caller ID Spoofing – Possible Legislative or Regulatory Changes Requires Close Watch

Attorneys General Express Widespread Support for TRACED Act Reintroduced in the Senate to Stop Illegal Robocall Scams

By Pamela Garvie, Amy Carnevale, Andrew Glass, Gregory Blase, Joseph Wylie, Molly McGinley, and Hollee Watson

Sen. John Thune (R-SD), member of the Senate Commerce Committee and chairman of the Subcommittee on Communications, Technology, Innovation, and the Internet, and Sen. Ed Markey (D-MA), also a member of the Commerce Committee and author of the Telephone Consumer Protection Act (“TCPA”), recently reintroduced the Telephone Robocall Abuse Criminal Enforcement and Deterrence (“TRACED”) Act, S. 151. The TRACED Act is identical to the version as originally introduced in November 2018 (and previously discussed here). The bill seeks to prevent illegal robocall scams and other intentional violations of the TCPA.

Recently, the attorneys general from all fifty states and four territories wrote a letter expressing support for the TRACED Act to Senators Roger Wicker (R-MS) and Maria Cantwell (D-WA), the Chairman and Ranking Member, respectively, of the Senate Commerce Committee. In the letter, the attorneys general stated that “[w]e believe that this legislation effectively addresses many of the concerns raised by federal regulators, voice service providers, private businesses, consumer advocacy groups, and other interested parties to combat illegal robocalls and spoofing, and we are heartened that it enables the telecom industry, federal regulators, and our offices to take meaningful steps to abate the rapid proliferation of these illegal and unwanted robocalls.”

The TRACED Act would broaden the authority of the Federal Communications Commission (“FCC”) and the Federal Trade Commission (“FTC”) to take aggressive enforcement action against voice service providers on call authentication and other technology solutions. And among other things, the Act would direct the FCC to adopt certain rules that would require voice service providers to implement appropriate and effective call authentication technologies and also establish an interagency working group, consisting of various federal agencies, state attorneys general, and other non-federal entities, to identify and report to Congress on improving deterrence and criminal prosecution of robocall scams at the federal and state levels. The widespread support from the state attorneys general for the Act, along with prior support from the FCC and FTC Commissioners, industry associations, and leading consumer groups, may incentivize Congress to move forward on the Act.

Check this space for further updates on any notable developments regarding the TRACED Act.

Bipartisan Bill Introduced In The Senate To Thwart Illegal Robocall Scams

By Pamela Garvie, Amy Carnevale, Andrew Glass, Gregory Blase, Joseph Wylie, and Molly McGinley

Sen. John Thune (R-SD), chairman of the Senate Commerce Committee, and Sen. Ed Markey (D-MA), a member of the Committee and author of the Telephone Consumer Protection Act (TCPA), recently introduced S. 3655, the Telephone Robocall Abuse Criminal Enforcement and Deterrence Act (the TRACED Act), to prevent illegal robocall scams.  In brief, the bill would extend the statute of limitations for the Federal Communications Commission (FCC) to pursue robocall scammers and others who intentionally violate the law, impose additional penalties on such violators, require call authentication and blocking technologies, and establish an interagency working group to explore further ways to prosecute robocallers who intentionally violate the law.

The genesis of the bill rests with the Commerce Committee’s April 2018 hearing (previously discussed here) on abusive robocalls and caller ID spoofing, and how to combat them.  During the hearing, Committee members and witnesses highlighted the fact that robocalls and ID spoofing have “exploded in recent years” and that “about a quarter of these calls are scam calls.”  Senators agreed that consumer education, aggressive FCC and Federal Trade Commission enforcement actions, and the use of new ID verification and robocall-blocking technologies are important tools in combating these calls, and identified gaps and shortcomings in these tools.  For example, as Chairman Thune said in introducing the TRACED Act, the current “enforcement regime is totally inadequate for scam artists, and we need to do more to separate enforcement of carelessness and other mistakes from more sinister actors.”

To address these gaps and shortcomings, the TRACED Act would:

  • broaden FCC authority to impose civil penalties of up to $10,000 per call on those who intentionally violate the law and to impose criminal fines on such persons;
  • extend the statute of limitations from one year to three years for the FCC to pursue civil actions against those who intentionally violate the law;
  • eliminate the requirement that the FCC issue a citation against such violators before pursuing civil actions, although it would require the FCC to provide notice before initiating such actions;
  • establish an interagency working group led by the Department of Justice in consultation with the FCC, and consisting of various federal agencies, state attorneys general, and other non-federal entities, to identify and report to Congress on improving deterrence and criminal prosecution of robocall scams at the federal and state levels;
  • direct the FCC to adopt a rule that requires voice service providers (defined to include voice-over-Internet (VOIP) providers) to implement appropriate and effective call authentication technologies that enable such providers to verify that incoming calls are legitimate before they reach consumers’ phones;
  • delay implementation of the FCC authentication technology rule if the agency determines after public notice and comment that each voice service provider has established voluntary rules for an appropriate and effective authentication framework and is implementing the framework; FCC Chairman Ajit Pai recently sent letters to companies urging the adoption of such voluntary rules;
  • direct the FCC to adopt rules that provide for (1) a safe harbor for voice service providers from liability for unintended or inadvertent blocking or misidentification of calls, and (2) a process permitting a calling party adversely affected by the authentication framework to verify the authenticity of the party’s calls; and
  • direct the FCC to adopt a rule to help protect subscribers from receiving unwanted calls or text messages from a caller using an unauthenticated number.

With the current Congress scheduled to wrap up business next month, little if any action is expected on the bill this year.  At the same time, the bill is noteworthy, and should not be ignored, for a number of reasons:

First, it is bipartisan bill, and could garner support not only in the Senate, but also in the soon-to-be Democratic-controlled House.  In addition, both the telecom industry and consumer groups issued positive statements on the bill after its introduction.

Second, we expect Sens. Thune and Markey to re-introduce the bill next Congress and we understand that House Energy & Commerce Committee members have expressed interest in the legislation as well.  Sens. Thune and Markey are well-positioned to help pass the bill.  Sen. Thune was just elected the Senate Majority Whip for the next Congress, and although he has to give up his chairmanship of the full Commerce Committee because of Senate Republican term-limit rules, he could decide to chair the Committee’s Communications Subcommittee.  Sen. Roger Wicker (R-MS), the current Communications Subcommittee Chairman, who also cosponsored the bill, is likely to be the next chairman of the full committee.  Further, Sen. Markey could play an influential role not only in the Senate, but also with his former House colleagues on the Energy & Commerce Committee.

Finally, scam robocalls and illegal ID spoofing are clearly a serious problem, and the FCC and Congress support multiple solutions to help combat them.  In the case of the TRACED Act, Sen. Markey said it “will provide every person with a phone much-needed relief” and will do so using “a simple formula: call authentication, blocking, and enforcement.”  As Sen. Thune noted, it also is intended to go after really bad actors and not legitimate businesses.  For this reason, it could help legitimate businesses and help clear the way for future legislation providing badly-needed TCPA reforms.  Yet, as we noted last spring after the Senate hearing leading to the introduction of the bill, there is risk that legitimate businesses could be adversely affected by the bill and that attempts could be made, especially in the Democratic-controlled House, to amend it to expand rather than reform the TCPA.  So, again, businesses should keep a close eye on the legislation.

In Wake of ACA Int’l, Ninth Circuit Adopts Expansive Definition of ATDS

By: Joseph C. Wylie II, Molly K. McGinley, Nicole C. Mueller

The U.S. Court of Appeals for the Ninth Circuit recently adopted an expansive definition of the term “automatic telephone dialing system” (“ATDS”) under the Telephone Consumer Protection Act (“TCPA”).  In Marks v. Crunch San Diego LLC, the panel held that, in light of ACA Int’l, the U.S. Court of Appeals for the D.C. Circuit’s landmark decision interpreting certain provisions within the TCPA (previously discussed here) and based on the panel’s own review of the TCPA, the statutory definition of an ATDS includes devices that store telephone numbers to be called, whether or not the device has the ability to generate numbers randomly or sequentially.  In so holding, the Ninth Circuit splits from a number of other decisions holding that an essential element of an ATDS is the capacity to generate random or sequential numbers.

The TCPA defines ATDS as “equipment which has the capacity–(A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers.”  In ACA Int’l, in brief, the D.C. Circuit invalidated the Federal Communications Commission (“FCC”)’s interpretation of two key questions raised by the statutory definition of an ATDS, namely “(i) when does a device have the ‘capacity’ to perform the two enumerated functions; and (ii) what precisely are those functions?”  In so doing, the D.C. Circuit created uncertainty as to what features or attributes of a dialing system would bring it within the scope of the ATDS definition.

Plaintiff Jordan Marks filed suit against Crunch San Diego LLC (“Crunch”) after he joined the gym and received three text messages over a period of eleven months.  Crunch utilized a system called Textmunication.  In this system, phone numbers are captured and stored in one of three ways: an operator of the system can manually enter a phone number into the system; a current or potential customer may respond to a marketing campaign with a text; or a customer may provide a phone number by filling out a consent form on a Textmunication client’s website.  A client of Textmunication can then design a marketing campaign and Textmunication will automatically send the desired messages to the stored phone numbers at a time scheduled by the client.  When Crunch wants to send a text through Textmunication, a Crunch employee logs into the system, selects the recipient phone numbers, generates the content of the message, and selects the date and time for the message to be sent.  The messages are then automatically sent at the appointed time.

Prior to the decision in ACA Int’l, the district court held that Textmunication was not an ATDS because it lacked the present or potential capacity “to store or produce telephone numbers to be called, using a random or sequential number generator” and granted summary judgment for Crunch.  Marks appealed the decision, and following his appeal, ACA Int’l was decided.  The Ninth Circuit then reversed, holding that a system could be an ATDS if it has the capacity to store a list of numbers and call those numbers automatically, even if the system does not have the ability to generate random or sequential lists of numbers.  In doing so, the Ninth Circuit first reviewed the statutory definition of ATDS as set forth by Congress in 1991 and determined that the provision is ambiguous, and, accordingly, that it was appropriate to look to the context and structure of the statutory scheme.  The Ninth Circuit found that Congress intended to regulate devices that make automatic calls, including those devices that make automatic calls from lists of recipients, rather than utilizing a random or sequential number generator.  The Ninth Circuit rejected Crunch’s argument that because the system was not fully automatic, it did not qualify as an ATDS, holding that Congress had been clear that it was targeting equipment that could engage in automatic dialing rather than equipment that operated without any human oversight or contact.  The Ninth Circuit remanded the matter back to the district court for further proceedings.

In addition to the Ninth Circuit, several other courts have discussed the effect of ACA Int’l on the definition of ATDS:

  • In Gonzalez v. Ocwen Loan Servicing, LLC, the Court concluded that a predictive dialer that lacks the capacity to generate random or sequential telephone numbers and dial them, but it does include a predictive dialer that has the “present ability” to do so.
  • In Washington v. Six Continents Hotels, Inc., the Court agreed that ACA Int’l set aside not only the FCC’s 2015 ruling but also the FCC’s historic treatment of which devices qualify as an ATDS. 16-3719, 2018 WL 4092024, at *3 (C.D. Cal. Aug. 24, 2018)  The Court then determined that the complaint adequately alleged the use of an ATDS by claiming that the defendant “acquired Plaintiff’s number, stored it in a database connected to its telephonic or computer system . . . [the system] . . . has the capacity to generate random numbers . . . has the capacity to generate sequential numbers . . . [and] has the capacity to store and dial the random or sequential numbers it generates just like it stored and dialed Plaintiff’s number.”  Id.

  • In Heard v. Nationstar Mortg. LLC, the Court held that a system that could and did store customer information for at least 24 hours and did not have the capacity to store or produce telephone numbers to be called using a random or sequential number generator fell within the definition of ATDS. 16-694, 2018 WL 4028116, at *5-6 & n.2 (N.D. Ala. Aug. 23, 2018).
  • In King v. Time Warner Cable Inc., the Second Circuit determined that qualification as an ATDS was limited to those devices that were “capable at the time of use” of performing the functions of an autodialer, absent any modifications to the device’s hardware or software. 849 F.3d 473, 476–77 (2d Cir. 2018).
  • In Dominguez ex rel Himself v. Yahoo, Inc., the Court held that, absent any evidence that the device had the capacity to generate random or sequential telephone numbers and dial those numbers, the plaintiff failed to show that the text messaging system was an ATDS in light of ACA Int’l. 894 F.3d 116, 119 (3d Cir. 2018).

Given the split among courts on how to interpret ATDS, uncertainty will continue to prevail until there is additional clarification, either from the Supreme Court or the FCC.  The FCC has requested further comment from the public regarding the interpretation of the TCPA in light of this decision.

Congress Holds Hearings on Abusive Robocalls and Caller ID Spoofing – Possible Legislative or Regulatory Changes Requires Close Watch

By Pamela Garvie and Amy Carnevale

The Senate Commerce Committee and House Energy and Commerce Committee held back-to-back hearings late last month on abusive robocalls and caller ID spoofing and how to combat them. Committee members and witnesses both highlighted the fact that robocalls and ID spoofing have “exploded in recent years” and several noted that “over 3 billion calls were placed [in March] alone” and “about a quarter of these calls are scam calls.”  Further, because the technology used to place robocalls and to spoof are evolving technically, the number of calls continues to grow.  There was broad agreement on both committees that consumer education, aggressive Federal Communications Commission (“FCC”) and Federal Trade Commission (“FTC”) enforcement actions, and the use of new ID verification and robocall-blocking technologies are important tools in combating these calls.  However, Republicans and Democrats and business and consumer witnesses are generally split on the question of whether legitimate businesses are part of the problem and whether the Telephone Consumer Protection Act (“TCPA”) needs to be reformed or conversely expanded through new legislation and regulations.  This focus on abusive/illegal robocalls and split on the TCPA presents both risks and potential opportunities for businesses and, consequently, requires close watch.

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