Monday, July 13, 2015

FCC Issues TCPA Declaratory Ruling and Order

Late Friday afternoon, the FCC issued its highly controversial and long awaited Declaratory Ruling and Order regarding nineteen petitions which have been filed requesting clarification of the TCPA’s application.  I spent most of my Sunday afternoon and evening digesting the 138 page Order, looking for something positive for the business world and found very little to get excited about.  If there is any consolation to be found, and there are few, it is that the decision was not unanimous.  Two commissioners issued impassioned dissents, rightfully noting that the Order “expands the TCPA’s reach” and “twists the law’s words…to target useful communications between legitimate businesses and their customers.  This Order will make abuse of the TCPA much, much easier.  And the primary beneficiaries will be trial lawyers, not the American public.”  Dissenting Statement of Commissioner Ajit Pai.  The second consolation was the news that ACA International, a major trade group for the collection industry, immediately filed suit against the FCC in the United States Court of Appeals for the D.C.  Circuit seeking a judicial review of the Order. Over the course of this week, I will break down the potential impacts of the Ruling for key industries, but today I provide an overview of the Order’s highlights.

What is an Autodialer?

  • The Order rejects any “present use” or current capacity test and holds that capacity of an autodialer is not limited to its current configuration but includes its potential functionalities even if it currently lacks the requisite software. Thus, the FCC affirms that “dialing equipment that has the capacity to store or produce, and dial random or sequential numbers…[is an autodialer] even if it is not presently used for that purpose.” Id. at ¶ 10.  While the FCC refused to “address the exact contours of the “autodialer” definition”, it did clarify that its focus is on whether the equipment can dial without human intervention and whether it can “dial thousands of numbers in a short period of time”.  Id. at ¶ 17. 
  • The FCC also concluded that callers cannot avoid liability by dividing the ownership of pieces of dialing equipment that work in concert among multiple entities.  The Order holds that “equipment can be deemed an autodialer if  the net result of such voluntary combination enables the equipment to have the capacity to store or produce telephone numbers to be called, using a random or sequential number generator, and to dial such numbers.  The fact that two separate entities have voluntarily entered into an agreement to provide such functionality does not alter this analysis.”  Id. at ¶24.
  • The dissent was highly critical of the majority’s holding, particularly as it related to capacity, its statutory interpretation of capacity and the TCPA’s potential application to smart phones which was not ruled out by the majority.  As noted by Commissioner Pai, if a system cannot store or produce telephone numbers to be called using a random or sequential number generator and it if cannot dial such numbers, it should not be included.  Pai described the majority’s test as being “whether there is “more than a theoretical potential that the equipment could be modified to satisfy the ‘autodialer’ definition.  Pai Dissent.

Text Messaging/Calling Apps are Covered. 

  • The Order confirms text messaging is covered, but with regard to text messaging apps, it depends on who makes the calls.  The Order requires some direct connection between the person or entity and the making of the call.  Order, ¶ 30.  The test is a totality of the circumstances and looks to: (a) who took the steps to physically place the call; and (b) whether another person or entity was so involved in placing the call as to be deemed to have initiated it.  Id.
  • The FCC also determined that equipment used to send Internet to phone text messages may also be an autodialer because it is the functional equivalent to phone-to-phone texting.  In doing so, the FCC held that Congress intended the word “dial” to mean “initiating a communication with consumers through use of their telephone number.”  Order, ¶ 113.

What is Prior Express Consent?

  • For purposes of app platforms, a contact list or address book does not establish prior express consent.
  • Porting of numbers from land lines to wireless numbers does not necessarily revoke prior express consent.  Prior express consent may, under certain circumstances, carry over from a land line to a wireless line if prior express consent was given for the type of call in question.  So, for instance, if the consumer provided consent to receive calls from an automated dialing system or to receive prerecorded messages at 123-456-7890 when it was a land line and the number is then ported over to a wireless line, the Order suggests the consent remains effective unless and until it is revoked.
  • Consent generally may be revoked through any reasonable means and the caller may not dictate how revocation may be made.  The FCC therefore held that “the consumer may revoke his or her consent in any reasonable manner that clearly expresses his or her desire not to receive further calls, and that the consumer is not limited to using only a revocation method that the caller has established as one that it will accept.”  Id. at ¶ 70.
  • Consent must be given by either the current subscriber or the non-subscriber customary user of the phone.

What about Wrong Number Calls?

  • FCC Order’s resolution of the wrong number call issues penalizes businesses and institutions acting in good faith to reach their customers using modern technologies.” Dissenting Statement of Commissioner Michael O’Rielly Dissent.   Several petitions requested clarification as to whether prior express consent must be provided by the intended recipient of the call or the actual recipient of the call, noting that in many instances, prior express consent is provided by the intended recipient for a particular number which is then reassigned to a third party.  The FCC Order ignores the significance of the issue and will, as noted by the dissent, open the floodgates to more litigation against good faith actors.  Pai Dissent.
  • The FCC majority believes that “there are solutions in the marketplace to better inform callers of reassigned numbers, that businesses should institute new or better safeguards to avoid calling reassigned wireless numbers…and that the TCPA requires consent of the actual party who receives a call.” Id. at ¶ 72.  The FCC refused to put any burden on the wrong number consumer to inform the caller that it is the wrong party or opt out of the calls.  Instead, the FCC found that “where a caller believes he has consent to make a call and does not discover that a wireless number has been reassigned prior to making or initiating a call to that number for the first time after reassignment, liability should not attach for that first call, but the caller is liable for any calls thereafter.”  Id. at ¶85.
  • As noted by the dissent, the “marketplace solutions” alluded to by the majority do not exist.  There is “no authoritative database-certainly not one maintained or overseen by the FCC, which has plenary authority over phone numbers- exists to track all disconnected or reassigned telephone numbers or link all consumer names with their telephone numbers.  Pai Dissent.

Certain Financial/Medical Exceptions for Free-to-End User Calls

  • The Order does contain some limited good news for the financial service and medical industries.  Under certain limited circumstances, pro-consumer messages about time sensitive financial and healthcare issues may be provided. 

Call BlockingTechnology

  • The Order affirms that carriers and VoIP providers may implement call-blocking technology “that can help consumers who choose to use such technology to stop unwanted robocalls.”



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