United States: FCC Issues Controversial TCPA Order Further Expanding Definition Of Autodialer, Providing Limited Protections To App Developers

On July 10, 2015, the Federal Communications Commission ("FCC") issued a much-anticipated Declaratory Ruling and Order ("Order") resolving 21 petitions concerning the Telephone Consumer Protection Act ("TCPA"). With statutory penalties of up to $1500 per violation without any showing of actual damage, the TCPA has become a favorite of plaintiffs' attorneys seeking catastrophic class payments from companies using text messages to interact with their customers. Because Congress enacted the TCPA in 1991, however, the application of the statute to novel technologies is often unclear, and has resulted in disagreement among district courts. While the FCC's Order may bring clarity to some aspects of the statute's application, the Commission's expansive interpretation of the statute's reach will also likely draw additional challenges to the FCC's authority and is unlikely to quell the tide of TCPA litigation.

The Order addresses a wide array of topics, but two are critically important for companies using SMS to reach their customers and users or to help users of their services to communicate with their friends by SMS. First, the FCC reaffirmed and further expanded its already broad definition of what constitutes an Automatic Telephone Dialing System, or an "ATDS" under the statute. Under this definition—which may or may not be accepted by courts—any computer with the ability to dial numbers, including modern smartphones, could be considered an ATDS. Second, the FCC attempted to provide some clarity on whether a mobile application provider that allows users to send messages to friends through use of the app "makes a call" for purposes of liability under the Act. This aspect of the Commission's ruling should provide some protection to companies whose customers choose to send invitational text messages to their friends or contacts.

Definition of an Automatic Telephone Dialing System

When it enacted the TCPA, Congress defined the term Automatic Telephone Dialing System 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). The FCC's July 10 Order attempts to bring clarity to three disputed aspects of this definition: (1) whether the equipment must have the present capacity to store or produce and dial numbers as provided by the statute; (2) the circumstances under which a predictive dialer is an ATDS; and (3) whether Internet-to-phone dialing technology qualifies as an ATDS.

Present Versus Potential Capacity

First, because the TCPA speaks in terms of a system's "capacity," courts have diverged on the issue of whether a system should be judged in terms of its present capacity—meaning the system's capabilities at the time a call was placed—or the system's potential capacity, meaning what the system could theoretically do if modified or altered. Many courts have concluded that a system must be judged in terms of its present capacity, as that is the only interpretation that would avoid bringing every modern smartphone under the statute. See, e.g., Dominguez v. Yahoo!, Inc., 8 F. Supp. 3d 637, 641 n. 4 (E.D. Pa. 2014)("Recently, courts and commentators have observed that many modern technological devices, including smartphones, could store or produce numbers and dial such numbers without human intervention if outfitted with the requisite software. Thus, they have drawn a distinction between a system's present capacity (as currently designed) and its potential capacity.").

The FCC shared no such concerns in its Order, concluding that a system need not have the "present ability" to dial random or sequential numbers to qualify as an ATDS (or "autodialer"). Rather, the Commission concluded that a system qualifies as an autodialer if it has the "potential ability" to achieve the required capacity, even if doing so would require, for example, the addition of specific software not currently present. Accordingly, the fact that a system does not have the present capacity to generate or dial numbers as described in the statute will not protect defendants under the FCC's ruling if it could be programmed or otherwise modified to dial numbers generated or stored using a random or sequential number generator. As discussed in greater detail below, because that conclusion is contrary to many courts' interpretation of the statutory language, its viability is an open question.

Predictive Dialers

In a 2003 declaratory ruling, the FCC concluded that equipment which has the capacity to "store or produce numbers and dial those numbers at random, in sequential order, from a database of numbers" qualifies as an ATDS under the statute. 18 F.C.C.R. 14014, 14091-93 (2003). In 2012 the FCC further stated that a predictive dialer included "any equipment that has the specified capacity to generate numbers and dial them without human intervention regardless of whether the numbers called are randomly or sequentially generated or come from calling lists." 27 F.C.C.R. at 15392 n.5 (2012). The use of this definition has also divided courts, as almost all modern smartphones are capable of dialing numbers from a contact list. To characterize such phones as qualifying as autodialers, even where they lack the ability to "store or produce telephone numbers to be called using a random or sequential number generator," appears to run directly contrary to the statutory definition.

Nonetheless, in its Order, the Commission "reiterate[d] that predictive dialers, as previously described by the commission, satisfy the TCPA's definition of an 'autodialer.'" In so doing, the Commission rejected petitioners' argument that the widespread use of smartphone technology merited any reconsideration of the expansive definition offered by prior FCC rulings. Again, that ruling brings the FCC into direct conflict with courts that have concluded that the agency lacks the authority to contradict the statutory language of the TCPA.

Internet to Phone Dialers

Citing its authority to apply TCPA protections to technologies not yet created at the time the statute was enacted, the FCC further determined in its Order that equipment used to originate Internet-to-phone text messages to wireless numbers via email or via a wireless carrier's web portal also constitutes an ATDS. The Commission reasoned that such equipment meets the statutory definition of an autodialer because it has the capacity to store or produce numbers to be called using a random or sequential number generator, even if the system does not actually use that capacity. The Commission also found that the system has the capacity to dial such numbers, noting that although the statute itself does not define the term "dial," the Commission would interpret that term to include the act of "addressing and sending an Internet-to-phone text message to a consumer's wireless number." The Order emphasized that from the perspective of consumers, the impact of Internet-to-phone texts is indistinguishable from that of phone-to-phone texts, and thus reasoned that such conduct should be equally subject to TCPA requirements.

Ramifications for Mobile Technology

Combined, these aspects of the FCC's Order endorse a broad definition of autodialer that plaintiffs in TCPA litigation have advocated: any system that could be programmed or combined with other technology to achieve the required capacity to generate random or sequential numbers and dial them, or any system that has the capacity to dial numbers from a list, arguably qualifies as an ATDS under the FCC definition. Equally troublingly, the FCC seems to have endorsed the idea that all modern smart phones do in fact qualify, reasoning that this outcome is not troubling because "there is no evidence in the record that individual consumers have been sued based on typical use of smartphone technology."

While this outcome is troubling to businesses seeking to reach out to customers through novel technology available on smartphones, it remains to be seen whether courts will embrace this expansive definition or reject it as beyond the scope of the FCC's authority. At least one court has ruled that the FCC lacks the authority to define ATDS in a manner that includes predictive dialers. Marks v. Crunch San Diego, LLC, 55 F. Supp. 3d 1288, 1291 (S.D. Cal. 2014) (concluding that FCC interpretation including predictive dialers runs contrary to statute). Other courts have acknowledged the serious constitutional concerns that could arise from such definition, and the United States has in fact intervened to advocate against such a constitutionally-questionable construction. See "United States Mem. In Supp. Of The Constitutionality Of The TCPA," No. 13-80670-CV, Dkt. 54 (S.D. Fla. Jan. 31, 2014) (arguing that "[t]he overbreadth doctrine is not available where Defendant simply argues that section 227(b)(1)(A) could conceivably apply to calls made from smartphones and computers without providing any support for such an interpretation of the statute"). One FCC commissioner dissented from the FCC's Order, likening the FCC's action to the Federal Aviation Authority attempting to regulate cars based on the theory that they could be extensively modified to fly. See Dissenting Statement of Commissioner O'Reilly, available here. In short, the FCC's authority to define the ATDS as it had done, and the constitutionality of the statute if that definition is employed, is far from clear.

Making a Call

A second key piece of the Order concerns what it means to "make a call" within the meaning of the statute. Providers of mobile apps are now common targets of TCPA litigation when they offer users the opportunity to send text messages to friends inviting them to try the app. Plaintiffs pursuing these claims contend that app developers are responsible for the sending of such text messages, while the developers maintain that their users—through the decision to send such messages to their contacts and the affirmative steps required to do so—are responsible for making the call.

In resolving this dispute, the Commission considered the petition of one app provider, TextMe, which set forth evidence that when a user decided to invite friends to download the app, the user had to (1) tap a button that reads "invite your friends:" (2) choose whether to invite all friends or select friends individually; (3) actually send the invitation by hitting another button. Although the Commission expressed concern that the App developer played a role in the message creation, by providing the text of the invitation that the user could alter, it concluded that given this affirmative activity by the user, the user, and not Text Me, was responsible for making a call under the statute.

By contrast, the Commission also considered another app provider for which the app allegedly sent invitational texts to all of a user's contacts automatically when the user signed up for the app without any affirmative steps by the user to send the messages. Under that petitioner's system, the user did not affirmatively select an option for sending invitations to contacts or select recipients to receive the message. In that scenario, the Commission concluded that the app user was not meaningfully involved in the sending of the texts, and the app provider itself was deemed to have made or initiated the call for purposes of TCPA liability.

The takeaway from the FCC's ruling on invitations is that an app developer will have a stronger defense to a TCPA claim where its SMS invitation system (1) requires users to take steps to select recipients who will receive the invitations; (2) requires, or at a minimum provides users the ability, to draft the invitation text, and (3) requires the user to choose to send the invitation.

The FCC's Order provides valuable material to both plaintiffs and defendants in TCPA lawsuits. While mobile app providers have some degree of protection based on the Commission's disposition of the TextMe petition, the FCC appears to have doubled down on a definition of autodialers so expansive that it likely encompasses all smartphones.

The complete FCC Order is available here.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
20 Jan 2019, Conference, California, United States

Since 2009, recognized as a vital cornerstone for all constituents of the healthcare and biotechnology community, PMWC provides an exceptional forum for the exchange of information about the latest advances in technology (e.g. DNA sequencing technology), in clinical implementation (e.g. cancer and beyond), research, and in all aspects related to the regulatory and reimbursement sectors.

20 Jan 2019, Conference, California, United States

Fenwick partner ​Kevin Kabler will be speaking at the IO Intellectual Property session (January 21 at 2pm).

21 Jan 2019, Speaking Engagement, California, United States

Now entering its fifth year, the Pocket Gamer Connects events series has grown to become the biggest and most influential mobile games conference in the west as well as th​e biggest games event overall in the UK and Helsinki.

 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions