United States: FCC Open Meeting May Open TCPA Class Action Litigation Floodgates . . . Further

Last Updated: June 22 2015
Article by Daniel S. Blynn and Mark S. Goodrich

For over a year, telemarketers have anxiously awaited clarity on a number of issues relating to the Telephone Consumer Protection Act ("TCPA"), including the treatment of reassigned numbers and the definition of "autodialer."  At the June 18, 2015, Open Meeting held by the Federal Communications Commission ("FCC" or "Commission") to vote on updates to the TCPA, the FCC previewed its positions on a number of these issues.  Staying true to the language in the fact sheet circulated by Chairman Tom Wheeler several weeks earlier on May 27, the FCC majority adopted a broad interpretation of "capacity," emphasizing that the definition of autodialer includes the future or "potential" capacity to dial random or sequential numbers.  This decision could lead to even more devices being classified as autodialers and more litigation.  The FCC also addressed concerns regarding telemarketers' potential liability for calling reassigned numbers, the limited exceptions for urgent circumstances, and the technological ability to block "robocalls."

As we have noted in the past, there have been ongoing debates within the FCC and among the courts regarding how broadly "autodialer" (or "automatic telephone dialing system" as is used in the Act) should be defined under the TCPA.  Autodialer consistently has been defined 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," but until today, there was no clear guidance as to whether "capacity" meant present capacity or future, potential capacity with courts going different ways in their interpretations.  The FCC's new guidance considers any technology with the capacity, present or future, to dial random or sequential numbers an "autodialer."  This is troubling to telemarketers because almost any device, with the right engineering, can be programmed to record and redial telephone numbers.  In his dissent, Commissioner O'Rielly highlighted this issue, noting that under the new, expansive definition, the FCC had to use a rotary phone as an example of a device that is not an autodialer.  Despite the deep frustration expressed by the two dissenters, the majority has provided an expansive definition of "autodialer" that will maintain telemarketers' status as prime targets for class action litigation. 

In addition to expanding the definition of autodialer, the FCC discussed the implications of reassigned numbers for telemarketers and other businesses.  The majority acknowledged that thousands of phone numbers are reassigned each year, but noted that consumers who inherit phone numbers should not be subject to unwanted calls directed towards the previous subscriber.  After weighing these considerations, the majority decided that each telemarketer is afforded one liability-free call, meaning a telemarketer is not liable for the first call made to a reassigned number, but is liable for every subsequent call.  It is unclear, however, whether it is incumbent upon the unintended recipient to advise the telemarketer that it has called a reassigned telephone number, or whether the telemarketer must somehow determine on its own that it called a reassigned number.  Importantly, the majority said the trigger for violating the TCPA is not the intended recipient of the call, but the party that is actually contacted.  While the one mistake policy serves as a buffer, it is not sufficient to protect legitimate businesses and telemarketers from all lawsuits.  In particular, Commissioner O'Rielly expressed concern that companies making good faith efforts not to call reassigned numbers are not provided any additional safe harbor.  Under the one mistake policy, telemarketers must be extremely diligent in tracking and making note of reassigned numbers.

The FCC also established limited exemptions for "urgent circumstances."  The Commissioners decided to allow calls without the consumer's prior consent in a set of narrow circumstances, including bank fraud alerts and medication refill reminders.  Marketing and debt collection calls are explicitly not exempted under the new rules.  Importantly, the FCC noted that consumers must have the option to opt out of these health and bank alert messages.

A less controversial issue discussed by the Commission was the ability of carriers to provide consumers with the technology to block unwanted "robocalls."  Chairman Wheeler emphasized that the FCC, in fact, encourages this practice and none of the Commissioners articulated a dissent in their comments as to this section of the proposal.  The FCC also granted consumers the unequivocal right to revoke their consent "in any reasonable way at any time."

Finally, the Commission also provided some important clarifications for our increasingly Internet-driven society.  First, it emphasized the limitations of third-party consent, ruling that a consumer whose name is on the contacts' list of an acquaintance's phone does not consent to receive robocalls from third-party applications downloaded by the acquaintance.  Second, the FCC confirmed that consumers, in fact, do have the right to revoke their previously provided consent to receive autodialed and pre-recorded message calls.  Finally, it clarified that the equipment used to send Internet-to-phone text messages may be an autodialer and, thus, requires consumer consent before calling.

A formal order and report expounding on the aforementioned issues is expected to be released in the upcoming weeks.  We will keep you apprised of new developments as information becomes available (the FCC approved editorial privileges), but, at this time, it appears that the FCC has refused to grant any significant respite to telemarketers.  Indeed, the expanded definition of autodialer could spur on even more class actions to a statute that Commissioner Pai called "the poster child for lawsuit abuse."

*Allison L. Laubach is a Venable summer associate and not admitted to practice law.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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