United States: FCC Releases Its Long-Awaited TCPA Ruling, But Don't Hang Up – There Will Be More

Last Updated: July 17 2015
Article by Ian D. Volner, Daniel S. Blynn and Mark S. Goodrich

On July 12, 2015, the Federal Communications Commission ("FCC") released its much-anticipated Telephone Consumer Protection Act ("TCPA") declaratory ruling on important questions about the TCPA, resolving 21 requests for clarification received by the Commission. This article touches on several of the highlights of the 139-page Order.

In many respects the Order is going to be furiously controversial. It engendered detailed dissents by two of the five Commissioners, and ACA International immediately filed an appeal of the Order in the U.S. Court of Appeals of the D.C. Circuit following the release of the ruling. Moreover, although the Order purports to be definitive, it does not bind the federal or state courts in which TCPA litigation, including a number of class action lawsuits, is or may in the future be pending. The extent to which the Order will be given deference by the courts is unknowable.

The central issue affecting all companies and organizations that use the phone to communicate with customers, donors, and prospects is the definition of an automatic telephone dialing system ("autodialer"), which the FCC addresses at length. Despite the advances in communications technology that have occurred in the 13 years since the TCPA was passed, the FCC's definition sticks to the literal, and often fuzzy, terms of the statute. The FCC's ruling states that a device meets the definition of autodialer "even if it is not presently used for that purpose, including when the caller is calling a set list of consumers." As far as the FCC is concerned, any device that has the present or future "capacity" to dial numbers on a random or sequential basis is covered by the statute. In its Order, the FCC reaffirmed that predictive dialers fall under the TCPA, again asserting that "Congress intended a broad definition of autodialer."

Despite this literal reading of the statute, there may be some room to use a dialing device or program, at least for live operator calls. The FCC has long held, and the courts have been inclined to agree, that a device which requires human intervention, such as a preview dialer, is not a dialer that is subject to the TCPA. In the Order, the FCC refused to provide clarity on what constitutes "human intervention" that would place a call outside the scope of TCPA liability, stating that "how the human intervention element applies to a particular piece of equipment is specific to each individual piece of equipment, based on how the equipment functions and depends on human intervention, and is therefore a case-by-case determination." The FCC pretty clearly signaled that these case-by-case determinations are to be made in the courts in which TCPA cases are filed. In any event, it is possible that some types of preview dialers, which enable call representatives to first view available information about the consumer and then decide whether to place the call, may fall outside the TCPA's definition of "autodialer," given that some level of human involvement is required to place the call to begin with.

The ruling states that the definition does not extend to "every piece of malleable and modifiable dialing equipment," otherwise a handset with a speed dialer would be an autodialer. Further, the FCC rejected arguments (adopted by some courts) that, under the literal terms of the statute, any device with speed dialing capability such as a cell phone could be an autodialer. Although the FCC stated that "there is no evidence that individual consumers have been sued based on typical use of smartphone technology," that is not the real issue. It is possible that the FCC's Order is intended to clarify that its definition does not cover speed dialing as such and that, therefore, preview dialers that can be configured only in the preview mode are not covered by the TCPA. Of course, as noted at the outset, the courts may or may not agree with the FCC, or may conclude, as a few courts have, that a wholly different test should be applied. Moreover, even if preview dialers are now permitted under some circumstances, these dialers are of little or no use for pre-recorded calls or text messages.

While the autodialer definition is by far the most important of the "clarifications" contained in the Order, it is not, by any means, the only controversial determination. Amplifying its 2012 decision – in which the FCC followed the Federal Trade Commission's lead in requiring that marketers secure prior express written consent to make marketing calls – the FCC has now announced that such consent can be revoked by the consumer by "any reasonable means whether oral or in writing." That consumers have the right to opt out of cell phone calls and text messages has been generally understood, responsible marketers usually specify the method that consumers should use to opt out, and marketers do so in order to minimize the burden on the marketer and the consumer. The real-world effect of the "any reasonable means" test is that the burden of proving that a consumer has not notified the merchant that he or she no longer wishes to accept text messages or cell calls from the merchant has been shifted to the merchant, and invites "he said / she said" contests in the courts.

It bears repeating that the courts are not obliged to defer to the FCC's position, which is not based on the statute itself. In fact, the FCC's position is more rigid than the normal rules applied by regulators to opt-out requirements. In court it can well be claimed that so long as the opt-out method is clearly specified, does not unreasonably burden consumers, and serves a legitimate business purpose, sound public policy supports the conclusion that marketers can specify the exclusive method of opting out. It is unfortunate that by failing to recognize this fact the FCC is likely fomenting still more TCPA litigation.

Another point of controversy that may affect many marketers is the FCC's resolution of the issue of calls or texts to re-assigned cell phone numbers. The FCC states that the term "called party" in the TCPA refers to the current subscriber. Thus, the FCC reasons, a marketer who makes calls or sends texts inadvertently to the wrong number (because the number has been re-assigned) does not have consent to do so. The FCC held that if the merchant has actual or constructive knowledge that the number has been re-assigned, it can be held liable under the TCPA for a violation; what exactly "constructive knowledge" means is not explained. However, the FCC recognized that in some cases the marketer may have no reason to know or think that the number has been re-assigned. In those cases, the merchant is permitted to make one call to the "wrong number" without exposure to TCPA liability; any subsequent calls to the wrong number are not exempt.

As the dissenting Commissioners pointed out, it is impossible for a merchant to determine whether he is calling a re-assigned number on the basis of a single call, so the one-call exemption serves no real-world purpose. The FCC set forth a number of suggested procedures that merchants might follow to avoid the problem of re-assigned numbers, all of which are unrealistic, or expensive and essentially unreliable. Since this problem is not one that marketers create, the FCC could have held that calls to re-assigned numbers are exempt unless and until the party receiving the call notifies the merchant that the number has been re-assigned. The one-call rule can fairly be characterized as a general hostility to the use of phones to communicate with consumers and customers or donors – a view that pervades the decision.

Whether all of this is what Congress intended in a statute that was passed when cell phone service was in its infancy (and text messages did not exist) remains to be seen. Don't hang up yet – this "conversation" about the FCC's declaratory ruling is just beginning.

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