United States: FCC Issues Omnibus Ruling On Host Of Issues Affecting TCPA Litigation And Compliance

Last Updated: July 14 2015
Article by Judith L. Harris, Henry Pietrkowski, David S. Reidy and Ashley L. Shively

Most Read Contributor in United States, October 2017

On July 10, 2015, the Federal Communications Commission (FCC) finally released its long awaited TCPA Omnibus Declaratory Ruling and Order, which resolved 21 petitions involving a wide variety of issues regarding the enforcement and interpretation of the Telephone Consumer Protection Act (TCPA). The FCC had voted in favor of the Ruling June 18 at an Open Meeting of the Agency's five Commissioners, but the details of the Ruling were only summarized at the time. See June 19, 2015 Reed Smith Client Alert: FCC Finally Acts to Clarify Ambiguities in the TCPA. Now, we have the full 166 page document – which includes more than 550 footnotes – so we can report more definitively about the scope of the FCC's Ruling.

As expected, the Ruling unfairly lumps legitimate businesses in with the telemarketing abusers that the Act was intended to deter. The FCC shows little concern for most industries' interests in its attempt to stem the recent wave of TCPA class action litigation. Following are some of the Ruling's highlights:

  • Definition of "Automatic Telephone Dialing System" or "Autodialer." The TCPA's express definition of an autodialer requires it to have the "capacity" to store or produce telephone numbers "using a random or sequential number generator," and to dial such numbers. In response to numerous petitions seeking clarification of the term "capacity," the FCC espouses an extremely broad view in its Ruling, essentially reading the "random or sequential number generator" requirement out of the statute. The FCC holds that "the capacity of an autodialer is not limited to its current configuration but also includes its potential functionalities." In other words, the FCC rejects the view of the industry (and many courts) that it is the "present capacity" of the equipment that matters, not some future possibility of converting that equipment into an autodialer. For instance, if software could be downloaded to the equipment at any point in the future to generate random or sequential numbers (which virtually all computers and smartphones can do), that is sufficient to render it an autodialer under the FCC's Ruling. The FCC acknowledges, though, that it is not addressing the "exact contours" of the autodialer definition and that "there are outer limits to the capacity of equipment to be an autodialer," giving as an example that modifying "a rotary-dial phone to such an extreme that it would satisfy the definition of 'autodialer'" would be "too attenuated." The FCC also reiterates that the absence of "human intervention" remains a key component in determining whether any particular piece of equipment functions as an autodialer, but that the ultimate determination must be made on a "case-by-case" basis. As for the slippery slope argument that every smartphone would be an "autodialer" under the FCC's extremely broad definition, the FCC could only respond that "there is no evidence in the record that individual consumers have been sued based on typical use of smartphone technology" and it would monitor consumer complaints "regarding atypical use of smartphones, and provide additional clarification if necessary." The FCC did clarify that equipment used to send Internet-to-phone text messages may be considered an autodialer under the TCPA.
  • Liability for Calling Reassigned/Wrong Wireless Numbers and the Definition of a "Called Party." A number of petitions had asked for a "safe harbor" from TCPA liability for calls made with the prior express consent of a consumer whose wireless telephone number is subsequently reassigned to another person without the caller's knowledge. Despite acknowledging that "marketplace solutions for identifying reassigned numbers are not perfect," the FCC refuses to interpret the term "called party" in the TPCA as referring to the "intended recipient" of the call. The FCC finds instead that "called party" means the current phone subscriber or "customary user" of the phone. As a result, businesses will be held strictly liable for calls to reassigned phone numbers regardless of whether the original subscriber had previously provided his or her consent. The FCC did impose an "exception" for the first call to a wireless number following reassignment. However, it specifically "reject[ed] the argument that this one call must connect to a person, answering machine, or voicemail, or must otherwise provide the caller with actual knowledge of reassignment," finding that the one call provided "constructive knowledge" to the caller. In other words, the "exception" has no value to a company that unknowingly calls a reassigned number if the recipient does not actually pick up the phone or does not inform the caller of the change (which often will be the case).
  • Revocation of Consent. The FCC also clarifies that consumers can revoke their consent to receive telemarketing and/or informational robocalls "through any reasonable means." Examples of revocation methods given by the Commission include: "by way of a consumer-initiated call, directly in response to a call initiated or made by a caller, or at an in-store bill payment location." The FCC further holds that companies "may not infringe on that ability by designating an exclusive means to revoke." In response to a petitioner's argument that allowing oral revocation would put defendant callers at a disadvantage in "he said-she said" situations, the FCC simply replied that companies must "maintain proper business records tracking consent."
  • 89-Day Opportunity to Obtain Prior Express Written Consent for Telemarketing Calls. In October 2013, the FCC implemented its prior express written consent requirement for telemarketing calls. The FCC Ruling clarifies that prior express consent for telemarketing calls obtained before the October 2013 effective date is not sufficient if that consent does not comply with the new prior express written consent requirements. However, the FCC acknowledges that some confusion may have existed on this point and, therefore, imposes a new 89-day period from the release of its Ruling July 10, 2015, for companies to implement compliance with the new written consent requirements. In other words, by October 7, 2015, all businesses will have to obtain new consent from consumers if the consent those consumers gave prior to October 2013 does not conform to the more stringent requirements now in effect.
  • Text Messages. The FCC took the opportunity provided by the Ruling to reiterate its prior holding that a text message counts as a "call" under the TCPA. The Ruling also sets forth rules for when a text message application provider may be held liable under the TCPA, which depends mostly on who initiates the text and who creates the message content. A contact's presence in an address book does not alone establish consent to receive a message from the application platform.
  • "On Demand" Text Messages. The FCC clarifies that sending a single text message in direct response to a consumer-initiated text message does not require any further prior express written consent because it is not considered a "telemarketing" message. However, that text message must not contain marketing information about any products other than those specifically asked about by the consumer.
  • Prior Express Consent for Non-Telemarketing Healthcare Calls. The FCC Ruling clarifies that the "provision of a phone number to a healthcare provider constitutes prior express consent for healthcare calls subject to HIPAA by a HIPAA-covered entity and business associates acting on its behalf [as those terms are defined in HIPAA]," if those calls are made within the scope of the consent given. In addition, if a person is medically incapacitated, a third party may give prior express consent to receive healthcare calls for that incapacitated person. However, this only applies during the period of incapacity; afterwards, the patient must give his or her own prior express consent.
  • Exemptions for Free Informational Calls by Certain Banking and Healthcare Institutions. In one bright spot, the FCC did agree to exempt from the TCPA's autodialer provisions certain calls made by financial and healthcare institutions. The FCC generally permits three calls (of one minute or less) or texts, over a three day period, per event, subject to strict opt-out requirements and provided that no marketing information is included and that the healthcare messages comply with HIPAA. The basic exempt categories are:
    • Fraud/identity theft/data security breach alerts
    • Calls regarding pending money transfers
    • Appointment and exam confirmations and reminders
    • Wellness checkups
    • Hospital pre-registration and pre-operative instructions
    • Lab results
    • Post-discharge follow-up intended to prevent readmission
    • Prescription notifications, and
    • Home healthcare instructions.

ACA International, the association of credit and collection professionals, filed suit in the United States Court of Appeals for the D.C. Circuit last Friday, just as soon as the FCC's Ruling was released. ACA International seeks judicial review of the Ruling, arguing that the FCC has exceeded the scope of its authority and tried to sidestep Congress. Stay tuned for further news on this and other appeals certain to be filed.

This article is presented for informational purposes only and is not intended to constitute legal advice.

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