Aftershocks Being Felt: The TCPA After ACA International v. FCC

The aftershocks from the D.C. Circuit’s opinion in ACA International v. FCC are beginning to be felt.  In ACA International, the D.C. Circuit set aside several elements of the FCC’s 2015 Declaratory Ruling.  A recent opinion by the Third Circuit demonstrates some of the repercussions of that decision.

In Dominguez v. Yahoo, Inc., 2018 U.S. App. LEXIS 17436 (3^rd Cir. June 26, 2018), the Third Circuit affirmed a judgment in favor of Yahoo despite the fact that the consumer received 27,800 unwanted text messages.  In Dominguez, the consumer purchased a cell phone with a reassigned number.  The prior owner of the number had a subscription with Yahoo’s Email SMS Service which sent a text every time the prior owner received an email.  Because the prior owner of the number never cancelled the subscription, Mr. Dominguez became the recipient of 27,800 unwanted text messages.  Mr.  Dominguez filed a putative class action against Yahoo asserting violations of the TCPA.  The problem?  The district court concluded that the Email SMS Service did not qualify as an automated telephone dialing system (“ATDS”) because it did not have the capacity to store or produce telephone numbers using a random or sequential number generator.  On remand from a prior appeal, the consumer amended his complaint to take advantage of the FCC’s 2015 Declaratory Ruling and alleged that the Email SMS Service had the “latent or potential capacity” to store or produce telephone numbers using a random or sequential number generator.  The trial court again concluded that the Email SMS Service did not qualify as an ATDS.

On appeal, the Third Circuit relied upon the D.C. Circuit’s holding in ACA International to support its conclusion that the statutory definition of an ATDS requires the present capacity to function as an autodialer. In doing so, the court relied upon two key findings: first, that the Email SMS Service only sent messages to numbers that had been individually and manually inputted into its system by a user; and secondly, that the messages were sent because the previous owner of the message affirmatively opted to receive them and not because of a random number generation.  Dominguez, *9. 

The opinion is a positive for the ARM industry because it demonstrates the potential impact of the D.C. Circuit’s decision and will likely to be followed by others that will more narrowly define the meaning of an ATDS.

D.C. Circuit’s Ruling May Provide Some Potential Relief for the Consumer Financial Services Industry

The D.C. Circuit has issued its long-awaited decision on the FCC’s 2015 TCPA Declaratory Ruling.  ACA International v. Federal Communications Commission, No. 15-1211 (Mar. 16, 2018).  The ruling invalidates the FCC’s definition of an automated telephone dialing system (“ATDS”) and sets aside the FCC’s ruling on reassigned numbers.  The ruling, however, upholds the FCC’s determination that consent can be revoked through any reasonable means.

The 2015 Declaratory Ruling.

In July of 2015, the FCC issued its highly controversial ruling on 21 petitions seeking review of various aspects of the Telephone Consumer Protection Act (the “TCPA”).  In the Matter of Rules & Regulations Implementing the Telephone Consumer Protection Act of 1991, Declaratory Ruling & Order, 30 FCC Rcd, 7961 (2015) (“Order”).  Two commissioners issued impassioned dissents, 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.”  Dissenting Statement of Commissioner Ajit Pai.  Immediately following the ruling, ACA International, a major trade group for the collection industry, filed suit against the FCC in the United States Court of Appeals for the D.C.  Circuit seeking a judicial review of the Order. 

While the D.C. Circuit’s review focused on four aspects of the FCC Ruling, this post will limit itself to an examination of the three aspects most relevant to the consumer financial services industry.  Before discussing the D.C. Circuit’s holding, here is a reminder of the FCC’s Ruling on the relevant issues:

• The Definition of an ATDS.  The FCC Ruling rejected any “present use” or current capacity test.  The FCC held that capacity of an autodialer is not limited to its current configuration and includes its potential functionalities even if it currently lacks the requisite software. Thus, the FCC affirmed 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.” Order at ¶ 10 (emphasis supplied).  The Order further confirmed the majority’s focus 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 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.  As noted by the dissent, 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.  Commissioner (and now chair of the FCC) 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.
   

• Reassigned Numbers. The FCC Ruling addressed the question of where and when, a caller violates the TCPA by placing a call to a wireless number which has been reassigned from a consenting party to a third party without the caller’s consent.  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 established a one-call safe harbor stating 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.
   

• Revocation of Consent. The FCC Ruling also clarified the ways in which a consenting party may revoke his consent to receive auto dialed calls.  Pursuant to the Ruling 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.

The D.C. Circuit’s Ruling.

The Definition of an ATDS.

Under the TCPA, an ATDS is defined 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.”  47 U.S.C. §227(a)(1).   Breaking down the definition, the Court looked at two questions.  First, when does a device have the “capacity” to perform the two enumerated functions (to store and dial numbers) and second, what precisely are those functions.  ACA International, Slip Op. at 12. The Court held that the FCC’s efforts to clarify what equipment qualifies as an ATDS provided an “eyepopping sweep” and the Court set it aside. ACA International, Slip Op. at 16. 

Regarding when a device has capacity to store and dial numbers, the court was highly critical of the FCC’s expansive interpretation of “capacity”, noting that it was incompatible with the statute’s original concern – telemarketing calls.  The Court was particularly troubled by the Order’s inescapable conclusion that “all smartphones, under the Commission’s approach, meet the statutory definition of an autodialer.” The Court concluded that the TCPA cannot be reasonably read to render every smartphone an ATDS subject to the TCPA’s restrictions. Id. At 15-17.    Applying a Chevron analysis, the court held that the FCC’s definition was arbitrary and capricious and lay beyond the FCC’s zone of delegated authority.  The Court concluded that “[n]othing in the TCPA countenances concluding that Congress could have contemplated the applicability of the statute’s restrictions to the most commonplace phone device used every day by the overwhelming majority of Americans.”  Id. at 19.

The Court next reviewed the FCC’s treatment of what functions must be present to constitute an ATDS.  Looking to the TCPA, the Court noted that to constitute an ATDS, a device must have capacity to perform two functions: (a) to store or produce numbers to be called using a random or sequential number generator; and (b) to dial such numbers.  The Court determined that the FCC’s efforts fell short of reasoned decision making, offering no meaningful guidance to affected parties.  As examples of why the FCC Ruling failed to satisfy the requirement of reasoned decision making, the Court noted the two conflicting positions taken by the FCC as to what functionalities are necessary for a device to qualify as an ATDS noting that at certain places in the Order, the FCC takes the position that a device qualifies as an ATDS only if it can generate random or sequential numbers to be dialed while in others, the FCC stated that a device qualifies as an ATDS even if it lacks that capacity.  The Court also noted that the FCC Order was unclear as to whether other certain referenced capabilities (for instance, dialing without human intervention) are necessary for a dialer to qualify as an ATDS.   

What Next? The Court’s refusal to sustain Order’s definition of an ATDS invalidates one of the most disturbing aspects of the 2015 Order but what does it mean for collection agencies and others who use ATDS to make non-telemarketing calls? Absent further rulemaking from the FCC, it will leave the issue open for judicial interpretation and we are likely to see additional litigation seeking to examine equipment on a device by device basis.  The Court’s decision contains some language which may prove helpful to the industry on the issue of what constitutes an ATDS - particularly its parsing of the issue as to functionality and the distinction drawn between the ability to generate random or sequential numbers and the ability to call from a database of numbers generated elsewhere.  It is likely that we will see this definition delved into in litigation to a further degree than previously seen.

Reassigned Numbers.

Regarding reassigned numbers, the court determined the FCC’s one call safe harbor was arbitrary and set it aside. The Court’s ruling was premised in large part upon the FCC’s own interpretation of the TCPA as allowing a caller’s reasonable reliance on prior express consent.  Recognizing that a caller’s reasonable reliance might not cease after one call or text message (for instance, when the recipient does not answer or provide any indication of reassignment), the Court held that there was no reasonable basis for the FCC to conclude that reasonable reliance would cease after the first call.  “Having embraced an interpretation of the statutory phrase ‘prior express consent’ grounded in conceptions of reasonable reliance, the Commission needed to give some reasoned (and reasonable) explanation of why the safe harbor stopped at the seemingly arbitrary point of a single call or message.” Id. at 38.  Importantly, the Court further held that the FCC’s failure regarding the one call safe harbor requires that the Court set aside its treatment of reassigned numbers generally.  As a result, the Court also set aside the FCC’s interpretation of a “called party” as referring to a new subscriber because to leave it in place would in turn “mean that a caller is strictly liable for all calls made to the reassigned number, even if she has no knowledge of the reassignment.”  Id. at 39.

What Next? While setting aside the FCC Ruling, the Court also signaled its agreement with other circuits (notably the Seventh and Eleventh) that the “called party” for purpose of the TCPA is intended to be the current subscriber.  The Court also seemingly embraced the reasonable reliance on prior express consent position espoused by the FCC.  As a result, it is likely we can anticipate a ramp up in reassigned number litigation centering around who is the “called party” and what constitutes reasonable reliance on prior express consent provided by the previous subscriber.  At the same time, the FCC (under new leadership) is already seeking to address the issue of reassigned numbers by looking at mechanisms to address the issue, including a repository of reassigned numbers.  In re Advanced Methods to Target and Eliminate Unlawful Robocalls, Second Notice of Inquiry, 32 FCC Rcd. 6007. 6010 (2017). 

 Revocation of Consent. 

As noted above, the Court sustained the FCC’s ruling that consent can be revoked through any reasonable means that clearly expresses a desire not to receive further messages.  Of note, the Court made clear that the FCC Ruling did not address revocation rules mutually adopted by contracting parties.  “Nothing in the Commission’s order thus should be understood to speak to parties’ ability to agree upon revocation procedures.” Id. at 43.

What Next?  Based upon the court’s clarification as to mutually adopted revocation rules, affected parties may wish to consider incorporating revocation procedures in their contracts with specific mechanisms for consumers to indicate their consent.  Based upon the Court’s ruling, affected parties should also continue to implement policies and procedures for recording revocations of consent.

In the Eyes of the FCC Not All Mortgage Servicers are Created Equal

The FCC recently denied a petition by the Mortgage Bankers Association which requested a limited exemption from the prior express consent provision of the TCPA for mortgage servicing calls.  In doing so, the FCC shown a bright spotlight on the difficulties faced by the financial service industry in complying with a series of consumer protection statutes which are either outdated or present a natural  conflict with each other.  Moreover, the FCC reiterated a message it sent out earlier this year:  not all financial service providers are created equal. 

The Petition

In its petition, the Mortgage Bankers Association (“MBA”) requested a limited exemption from the “prior express consumer” requirements of the TCPA for certain non-telemarketing residential mortgage servicing calls to cellular telephone numbers.  In support of its petition, the MBA noted that creating the exemption would insure that the TCPA does not restrict telephone communications requested by other federal and state laws and regulations.  The MBA also aptly noted that the a statutory exemption from the consent requirements for calls made to cellular numbers has been made for those collecting debts owed or guaranteed by the United States – an exemption which would include the many residential mortgages owed or guaranteed by the United States.  In support of its petition, the MBA highlighted the early intervention contacts required by the Mortgage Servicing Rules, as well as other federal and state entities. The MBA requested that a limited exemption be provided for free-to-the-end-user mortgage servicing calls which include “all communications, related to the receipt and application of payments pursuant to the terms of any loan or security agreement, execution of other rights and obligations owed under the loan or security agreement, the modification of any terms of the loan or security agreement, and any other loss mitigation options.”  The MBA further suggested a number of required guidelines for such calls including that they be limited in duration and not including any telemarketing, cross-marketing or solicitation.

The FCC Order Denying the Petition

The FCC denied the petition outright, finding that the MBA has not shown the exempted calls would be free of charge to called parties and that the “public interest in, and the need for the timely delivery of, the calls described by MBA do not justify setting aside the privacy interests of called parties.”  The FCC distinguished the MBA’s requested exemption from those previously provided to certain healthcare and financial calls because the MBA has not established a need for immediate communication. The FCC also found that mortgage servicers have other means to contact customers other than “robocalls.”

District Court Suggests Present Capacity Required for TCPA Claims

A District Court in California has suggested that present capacity is required to establish a claim under the Telephone Consumer Protection Act (the "TCPA").  See Chyba v. Bayview Loan Servicing, LLC, C.A. No. 14-cv-1415, 2016 U.S. Dist. LEXIS 59494 (S.D. Cal. May 3, 2016).  In a dispute with a mortgage servicer, the consumer raised an assortment of claims including the FDCPA and the TCPA.  The only claim left unresolved by the parties' cross motions for summary judgment was the TCPA claim.  Ironically, that's where the court's decision gets interesting. 

With respect to the TCPA, the consumer contended her mortgage servicer made eleven automated calls to her cell phone.  In support of her motion for summary judgment, the consumer filed an affidavit indicating that at the beginning of each call, there was an "artificial time delay."  She also submitted a handwritten call log and pictures of her cell phone's screen showing the mortgage servicer's number.  In response, the mortgage servicer contended that the calls were made from a landline that "cannot be used" for autodialed calls.  The court denied both parties' motions for summary judgment after determining an issue of fact existed as to whether the calls were made by an automated telephone dialing system and ordered the parties to undertake additional discovery on the issue.  Specifically, the court ordered that the discovery should concern "whether the 1300 phone line is able to and did use an automated system to call Plaintiff's cell phone."

As many may recall, one of the hallmarks of the FCC 2015 Declaratory Ruling is the FCC's rejection of a present use or current capacity test to determine whether a dialing system is subject to the TCPA.  The FCC instead held that  capacity of an autodialer is not limited to its current configuration, but also includes its potential functionalities even if it currently lacks the requisite software. The FCC's holding on that issue is one of the key issues on appeal in the D.C. Circuit.  See ACA International v. Federal Communications Commission, Case No. 15-1211 (D.C. Cir. June 10, 2015).   It would appear from Chyba, that at least one judge in the Southern District of California agrees with the appellants in the FCC appeal and believes that the FCC's definition is out of whack with the statutory language of 47 U.S. §227 and the correct analysis is the present capacity.

Senate Committee to Conduct Hearing on the TCPA

At the request of several financial services organizations, the Senate Committee on Commerce, Science and Transportation will convene a full committee hearing on the TCPA and its impact on consumers and business on May 18th.  According to the Committee's website, the hearing will examine the TCPA, the FCC 2015 Ruling (which is currently being appealed in the DC Circuit) and the application of the TCPA to new technologies which have arisen since the Act's adopting in 1991. 

New Cases Illustrate the Boundaries of the TCPA

Two recently decided cases serve as a reminder of the reach of the TCPA on the one hand and its limitations on the other.


VICARIOUS LIABILITY IS ALIVE AND WELL UNDER THE TCPA
The first of these cases, Harrington v. Roundpoint Mortgage Servicing Corp., serves as a reminder that the notion of vicarious liability for calls made by third parties is alive and well under the TCPA. See Harrington v. Roundpoint Mortgage Servicing Corp. 2:15-cv-322-FtM-38MRM (M.D. Fl. Feb. 18, 2016). In Harrington, the plaintiff alleged that calls made by the mortgage servicer to collect past due mortgage payments violated the TCPA because they were made without his prior express consent to his cellular phone. The plaintiff contended that because the mortgage servicer made those calls on behalf of the creditor, the creditor was also liable for those calls. The creditor moved to dismiss. Relying in part on dicta from the Eleventh Circuit’s decision in Mais v. Gulf Coast Collection Bureau, 768 F. 3d 110, 119 (11th Cir. 2014) (stating that the 2008 FCC Ruling has the force of law), the court deferred to the 2008 FCC Ruling which provides that “a creditor on whose behalf an autodialed or prerecorded message call is made to a wireless number bears the responsibility for any violation of the Commission’s rules. Calls placed by a third party collector on behalf of that creditor are treated as if the creditor itself placed the call.” In the Matter of Rules & Regulations Implementing the Tel. Consumer Prot. Act of 1991, 23 FCC Rcd 559, 565 (2008). The court therefore concluded based upon the FCC Ruling and existing case law that the creditor may be held vicariously liable for the calls made by its mortgage servicer. Going further, the court also ruled that the creditor may also be directly liable for the same calls, again relying upon the FCC 2008 Ruling which states that “all calls placed by a third party collector on behalf of that creditor are treated as if the creditor itself placed the call.” Id. The court therefore denied the motion to dismiss.

TECHNOLOGY PROVIDERS ARE NOT LIABLE UNDER THE TCPA FOR THE USE OF THEIR TECHNOLOGY

 Meanwhile, a Michigan another court also recently addressed the boundaries of the TCPA. This time, the consumer sought to hold LiveVox, a provider of automated dialer software, liable for calls made using its software. In Selou v. Integrity Solution Services, the court granted LiveVox’s motion to dismiss a TCPA action brought against it. Selou v. Integrity Solution Services, Case No. 15-1097 (E.D. Mich. Feb. 16, 2016). In its complaint, the consumer alleged that the debt collector used LiveVox’s software to make calls and that LiveVox provided technology to enable others to engage in their dialing campaigns, it was liable under the TCPA for those calls to the extent they violated the TCPA. LiveVox filed a motion to dismiss asserting it functions as a common carrier with no liability because it only provides technological services through which its customers can make calls.

As identified by the court, the issue was whether the utilization of LiveVox’s technology can render it liable under the TCPA. In granting LiveVox’s motion to dismiss, the court first noted that the legislative history of the TCPA indicates that Congress only intended for the statute to apply “to the persons initiating the telephone call or sending the message and … not the common carrier or other entity that transmits the call or message and the is not the originator or controller of the content of the call or message.” S. Rep. No. 102-178 (1991). The court then concluded that based upon the case law and the July 2015 FCC Ruling, LiveVox is not considered the maker or initiator of the calls. See In the matter of Rules & Regulations Implementing the Tel. Consumer Prot. Act of 1991, 30 FCC Rcd. 7961, 7978-7984 (July 10, 2015) (stating that entities that merley make technology vailable are not the makers of calls and do not have liability under the TCPA). Moreover, the court was also dismissive of any theory of vicarious liability noting that the complaint did not allege facts that suggested that LiveVox manifested asset for the debt collectors to act on LiveVox’s behalf or subject to its control.

 

 

FCC Announces Weekly Release of Consumer Complaints

The FCC announced this week that it will begin releasing weekly robocall and telemarketing complaint data weekly.  The FCC's declared intention is to assist developers in building and improving "do-not-disturb" technologies but in reality, the compilation of data will provide plaintiff's attorneys with a new tool for targeting TCPA defendants. 


The FCC allows consumers to file complaints with the FCC online, by telephone and by mail. The released information is unverified by the FCC and includes the date and time of the call, the category of complaint and the caller id number.  The spreadsheet does not provide any indication as to the number called and whether it is a cell phone or landline. Financial service companies, including banks and third party collection entities, should review the list regularly to look for developing trends with numbers associated with their entity.

FCC Orders $2.96 Million Fine for TCPA Violations

In case a reminder is needed, TCPA violations may be brought by as enforcement actions by the FCC, as well as by private litigants.  The FCC issued a $2.96 million fine against a Florida travel club this week for making unsolicited, prerecorded advertising calls to consumers.  While the size of the fine alone is enough to grab your attention, consider this:  the identified violation was for 185 automated calls -- that's $16,000 per call.  The investigation was precipitated by complaints received by the FCC from Florida consumers complaining about automated calls they received advertising vacations.  In October of 2011, the FCC issued a Notice of Apparent Liability for Forfeiture to Travel Club Marketing, Inc., its related companies and its owner.  None of the parties challenged the finding that they made or initiated the calls at issue and none filed a timely response to the Notice.  As a result, an Order of Forfeiture was entered.  The parties have thirty days to make payment.

The FCC TCPA Ruling: What Financial Institutions Need to Know

The Federal Communications Commission (the “FCC”) recently released its Declaratory Ruling and Order regarding the requirements of the Telephone Consumer Protection Act of 1991 (the “TCPA”).  The FCC Order provides some good news for financial institutions, exempting certain automated calls to cell phones and text messages from the prior express consent requirement.  Here’s what you need to know:

Prior Express Consent Exemption:

Under the TCPA, the general rule is that calls made with an automated telephone dialing system to cell phones, automated messages to cell phones and text messages all require the recipient’s prior express consent.  The FCC Order exempts from the consumer consent requirements certain pro-consumer calls which are made about time sensitive financial matters so long as they are made free to the end user and do not count against the recipient’s plan minutes or texts. Specifically, the exemption applies to:

• Calls or texts for the purpose of notifying the customer of transactions and events that suggest a risk of fraud or identity theft.

Recognizing that such situations require immediate attention and it may be damaging to the customer if the financial institution is prohibited from contacting the customer for lack of prior express consent, the FCC concluded that financial institutions may call or text a customer’s cellular phone number to notify him of possible fraudulent activity on his account. 

• Call or texts for the purpose of notifying the customer of a possible breach of the security of the customer’s personal information.

Recognizing the need for expediency in the event of a data breach, the FCC held that it is in the best interest of consumers to receive immediate notification of such an occurrence regardless of whether the consumer provided prior express consent.

• Calls or texts for the purpose of conveying measures consumers may take to prevent identity theft following a data breach. 

When a customer’s personal and financial account information is at risk following a data breach, financial institutions seek to inform the customer of measures he can take to prevent identity theft.  Thus, the FCC exempted such calls from the express consent requirement.  The FCC, however, cautioned financial institutions that informing a customer of an instance of identity theft or measures to prevent identity theft does not include marketing products a customer may use to prevent or remedy identity theft.

• Calls or texts regarding actions needed to arrange for a receipt of pending money transfers. 

Financial institutions want to have the ability to notify the recipient of a money transfer of steps to be taken in order to receive the transferred funds; however, money transfers must often be delivered to individuals who do not have a relationship with the transferring institution and therefore have not even had the opportunity to consent to calls or text messages from the financial institution.  Based on the fact that both the transferring and receiving party have an interest in the details and status of the money transfer, combined with the time-sensitive nature of money transfers, the FCC granted the exemption to notifications regarding actions needed to arrange for receipt of a money transfer.

Requirements for Exempted Calls

The FCC’s exemption is not unfettered and financial institutions seeking to take advantage of the exemption must comply with the limitations imposed by the FCC Order:

            General Requirements:

• All calls and texts must be free to the end user and not count against the recipient’s plan minutes or texts.
• Calls and texts may only be sent to the wireless telephone number provided by the customer of the financial institution;
• Calls and texts are strictly limited to purposes specified above and must not include any telemarketing, cross-marketing, solicitation, or advertising content; and
• Calls for debt collection purposes still require prior express consent.
   

Frequency of Calls:

The FCC ruling provides that a single financial institution may call or message a customer, who has not given their prior express consent, no more than three (3) times over a three-day (3) period.  These limits apply per event warranting the exempted calls, regardless of which exemption is triggered.  Any contact beyond the limited number of three (3) calls or messages per event, over a three-day period, is not exempt and requires the express consent of the consumer. 

Opt-out Requirements

Financial institutions must include in their message a method for recipients to easily opt out of future calls and messages.  Voice calls that could be answered by a live person must include an automated, interactive voice and/or key press-activated opt-out mechanism that enables the call recipient to make an opt-out request prior to terminating the call, voice calls that could be answered by an answering machine or voice mail service must include a toll-free number that the consumer can call to opt out of future financial calls, text messages must inform recipients of the ability to opt out by replying “STOP,” which will be the exclusive means by which consumers may opt out of such messages

If the customer chooses to opt out of future calls, the opt-out request should not opt the customer out of receiving all financial calls for that account.  As such, the financial institution should customize the opt-out provision so that a customer is aware that a decision to opt out of future calls from the financial institution is specific only to the category of exemption referenced in that message or call. Financial institutions are required to honor opt out requests immediately.

            Call Content Requirements:

• Voice calls and text messages must state the name and contact information of the financial institution (for voice calls, these disclosures must occur at the beginning of the call); and
• Voice calls and text messages must be concise, generally one minute or less in length for voice calls (unless more time is needed to obtain customer responses or answer customer questions) and 160 characters or less in length for text messages.

The FCC ruling provides much needed exemptions related to urgent financial matters, but caution should be used by financial institutions seeking to take advantage of the exemptions.  First and foremost, financial institutions needs to keep in mind that this is not a blanket exemption.  All calls and texts must be free to the end user and not count against the recipient's plan minutes or texts.  The ability to use the exemption, therefore, will require financial institutions to work closely with wireless carriers and third party servicers to insure the messages and notices do not result in a charge to the recipient. Secondly, content and frequency of calls must likewise be closely monitored as the exemption will be tightly enforced.  Failure to strictly comply, therefore could result in costly litigation.

The FCC TCPA Ruling: What Healthcare Providers Need to Know

The Federal Communications Commission (the “FCC”) recently released its Declaratory Ruling and Order regarding the requirements of the Telephone Consumer Protection Act of 1991 (the “TCPA”).  The FCC Order provides some good news for the healthcare industry, clarifying the TCPA’s application regarding calls to patients by healthcare providers, and granting an exemption from the TCPA’s prior express consent requirement for certain healthcare calls that are not charged to the end recipient.  Here’s what you need to know:

Prior Express Consent:

• The General Rule. The Ruling clarifies that when a patient provides his telephone number to a healthcare provider, such provision constitutes prior express consent for healthcare calls subject to HIPAA.  The express consent only extends to HIPAA covered entities and business associates acting on their behalf as defined in the HIPAA privacy rules and only to calls made within the scope of the consent given, and absent contrary instructions.
   
• Incapacitated Third Parties.  The FCC Order additionally addressed the issue of whether a third party may provide a telephone number and prior express consent for incapacitated patients. In doing so, the FCC recognized that in certain situations, it may be impossible for a caller to provide prior express consent due to incapacity.  The Order therefore allows for a third party to provide prior express consent to make healthcare calls subject to HIPAA where a party is unable to consent because of medical incapacity.  In those situations, prior express consent to make healthcare calls subject to HIPAA may be obtained from a third party.  As such, healthcare providers may make healthcare calls subject to HIPAA, to an incapacitated patient based on the prior express consent of a third party.  At the time the patient is considered capable to grant consent on his own behalf, the third party consent is no longer valid.  At that point, the healthcare provider must obtain prior express consent from the patient himself. 

Free to End User Calls:

The Order also provides a limited exemption from the TCPA’s prior express consent requirement for certain non-telemarketing, healthcare calls that are not charged to the receiving party. 

• What Calls are Exempt?
  • Calls have a healthcare treatment purpose
  • Appointment and exam confirmations and reminders,
  • Wellness checkups,
  • Hospital pre-registration instructions,
  • Preoperative instructions,
  • Lab results,
  • Post-discharge follow-up intended to prevent readmission,
  • Prescription notifications
  • Home healthcare instructions. 
     
• What Calls are Not Exempt?
  Calls regarding accounting, debt collections, payment notifications, Social Security disability eligibility or other financial content.
   
• Requirements for Exempted Calls:
  • Voice calls and text messages must be free to the end user and not counted against any plan limits to the recipient;
  • Voice calls and text messages may be sent only to the wireless telephone number provided by the patient;
  • Voice calls and text messages must state the name and contact information of the healthcare provider (for voice calls, these disclosures must be provided at the beginning of the call);
  • Voice calls and text messages are strictly limited to the purpose permitted in the FCC’s ruling;
  • Voice calls and text messages must not include any telemarketing, solicitation, or advertising;
  • All communications must comply with HIPAA privacy rules;
  • Voice calls and text messages must be concise
    • one minute or less in length for voice calls (unless more time is needed to obtain customer responses or answer customer questions)
    • 160 characters or less in length for text messages;
  • A healthcare provider may initiate only one (1) message per day, up to a maximum of three (3) voice calls or text messages combined per week from a specific healthcare provider;
  • A healthcare provider must offer recipients within each message an easy means to opt out of future such messages;
    • voice calls that could be answered by a live person must include an automated, interactive voice and/or key press-activated opt-out mechanism that enables the call recipient to make an opt-out request prior to terminating the call,
    • voice calls that could be answered by an answering machine or voice mail service must include a toll-free number that the consumer can call to opt out of future healthcare calls,
    • text messages must inform recipients of the ability to opt out by replying “STOP,” which will be the exclusive means by which consumers may opt out of such messages; and,
    • A healthcare provider must honor the opt-out requests immediately.

ACA International Petitions for Review of the FCC's TCPA Declaratory Ruling and Order

ACA International, a major trade group of collection agencies, has filed a petition for review with the Court of Appeals for the DC Circuit.  See ACA International v. Federal Communications Commission, Case No. 15-1211 (D.C. Cir. June 10, 2015).  The petition seeks to set aside certain rulings contained within the FCC's Declaratory Ruling and Order which were filed late Friday.  Specifically, the ACA contends:

• the FCC's treatment of "capacity" within the definition of an "automatic telephone dialing system" ("ATDS") disregards the TCPA; and
• the FCC's treatment of predictive dialers exceeds the FCC's statutory authority and impermissibly expands the definition of an ATDS.

The ACA also takes issue with the FCC's treatment of "prior express consent" and asks the court to compel the FCC to "establish a viable safe harbpr fpr autodialed "wrong number" non-telemarketing calls to reassigned wireless numbers" or "define "called party" as a call's intended recipient."

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.”