The Positives and Negatives of the FCC’s Recent Omnibus Order on the TCPA
On Friday, July 10, 2015, the Federal Communications Commission (FCC) issued an omnibus, Declaratory Ruling and Order (FCC Ruling) seeking to clarify certain ambiguities in the Telephone Consumer Protection Act (TCPA). The TCPA was enacted in 1991 with the purpose of protecting consumers’ privacy rights against unwanted robocalls.
Briefly, an individual is liable under the TCPA if they use an autodialer or prerecorded message to make a non-emergency call to a wireless phone without the prior express consent of the consumer. If the message is telemarketing, the prior express consent for the call must be in writing. Damages for these violations are mandatory and fixed at $500 per violation (i.e., per call) or $1,500 where the violation was willful. Because of the potential for draconian damages awards, the TCPA has been boon to plaintiff’s attorneys and class litigation under this statute has exploded in recent years.
Key Rulings & Ramifications
The FCC has the authority to implement rules and issue orders under the TCPA. Recently, the FCC issued a long-awaited omnibus ruling offering guidance and clarification on a number of issues currently being litigated in the courts. While many commentators have heralded the FCC’s Order as another blow to businesses, the order actually contains several positives as well. This post addresses the key takeaways and their positive, as well as negative, ramifications for businesses:
#1: Text messages are “calls” for purposes of the TCPA. However, the FCC Ruling exempts “on demand” text messages and certain pro-consumer free financial and healthcare related messages from liability, subject to certain conditions and limitations. For example, text messages alerting a consumer to a fraudulent charge on their bank account or availability of a prescription refill would be exempt, assuming certain additional requirements (such as having an appropriate opt-out mechanism) are met.
This is the first time the FCC explicitly addressed whether text messages were calls, although that conclusion had been reached by the majority of courts. While expansion of liability under the TCPA is obviously bad for business, the limitations announced by the FCC are a positive and a welcome departure from contrary court precedent.
#2: Technology meets the definition of “autodialer” (and thus capable of being in violation of the TCPA) if the dialing equipment generally has the capacity to store or produce, and dial random or sequential numbers, even if it does not have the present ability to do so. The capacity of the autodialer is not limited to its current configuration or use at the time of the call, but also includes its potential functionalities.
Given this broad definition, avoiding liability on the basis that the equipment used to make the call does not fall within the scope of the TCPA will be difficult. Accordingly, all businesses placing autodialed or prerecorded calls are encouraged to work with counsel to develop policies for TCPA compliance.
#3: Application providers, namely those which sell “apps” to consumers which facilitate or provide extra features for calling or texting once downloaded on a smartphone but which are only minimally involved in sending messages are not liable for making unwanted calls. Third-party retailers that provide software or a platform that facilitates or hosts calling are not per se liable for a violation of the TCPA. Instead, a totality of the circumstances surrounding the call with be used to determine whether the entity was so involved in making the call as to be deemed to have initiated it.
On balance, this ruling positively changes the dynamic for application providers as it will likely dissuade plaintiffs’ attorneys from filing lawsuits against them because class certification will be more difficult under the totality of the circumstances standard.
#4: Consent for non-telemarketing, non-advertising calls can be demonstrated by the called party giving prior oral or written consent, or by the caller giving their wireless number to the person initiating the autodialed call. Further, transferring a telephone number from landline to a wireless service does not revoke prior express consent. A caller can rely on the previous express consent to a residential number, if the consent satisfies the requirements for the same call to a wireless number, after the number is ported to a wireless phone.
This ruling is another positive for businesses, as it reaffirms (at least in the non-telemarketing context) previous FCC Orders which recognize that by providing a business with a wireless number, the consumer has given prior express consent to receive a call. It also removes the potential for liability when a consumer or carrier unilaterally ports a number to wireless service.
#5: Consumers can revoke consent at any time and through “any reasonable means.” A caller may not limit the manner in which the revocation may occur and the burden is on the caller to prove that it obtained the necessary prior express consent. By way of example, even if prior consent was obtained in writing, the consumer may revoke consent orally directly in response to a call or at an in-store bill pay location.
The expansion of consumers’ ability to revocate creates additional risk for businesses given that employees may not accurately understand, convey or implement the alleged revocation. As a best practice, affected businesses should train their employees to adequately recognize and record revocations of consent and work with counsel to develop procedures for quickly implementing that revocation.
#6: If a called party reassigns their number, a caller is given one free call as an opportunity to gain actual or constructive knowledge of the reassignment, without the risk of violating the TCPA. The TCPA requires the consent of the party who receives the call, not the intended recipient of the call. After the one free call, the caller is deemed to have constructive knowledge of the assignment and must cease future calls to the new subscriber.
This one-call exception will make it more difficult for potential plaintiffs to obtain class certification and has the potential to be a powerful defense for to class certification.
We will continue to keep you posted on the application of these new rules by courts, and of the recent lawsuit filed by the Association of Credit Collection Professional, which is challenging various aspects of the order.