Businesses Beware: FCC Adopts Significant TCPA Declaratory Ruling and Order

At its Open Meeting on June 18, 2015, the Federal Communications Commission (“FCC” or “Commission”) adopted a significant Declaratory Ruling and Order to clarify aspects of the Telephone Consumer Protection Act (“TCPA”), namely, the use of automatic dialing systems and/or artificial or prerecorded voice messages to send telemarketing and informational calls and texts to consumers (“robocalls”).  The Order follows a proposal circulated by FCC Chairman Wheeler last month to address nearly two dozen TCPA petitions filed with the FCC, “close loopholes” in the TCPA, and “crack down” on robocalls.  The text of the Order has not yet been released, but it will take effect immediately, and will impact all businesses that use automated technologies, including text messaging, to communicate with consumers. 

Among other things, the TCPA prohibits autodialed and artificial or prerecorded voice message calls and texts, unless made for “emergency purposes” (defined as “a situation affecting the health and safety of consumers”) or with the called party’s consent.  The type of consent required depends on the nature of the call (i.e., telemarketing or non-commercial/informational), and the type number called (i.e., wireless or residential); telemarketing calls to wireless numbers and residential lines require written consent, while informational calls to wireless numbers require consent, which need not be written, and informational calls to residential lines require no consent.  While text messaging and other technologies available today did not exist in 1991 when the TCPA was enacted, the FCC has clarified that the TCPA applies to text messaging.  The proliferation of text messaging and other technologies makes it imperative for all businesses to understand the requirements for communications that advertise a product or service or provide important information relating to a purchase or a customer’s account. 

The intent of the TCPA, and the purported intent of the Order, is to protect consumers from unwanted, harassing calls without impeding legitimate communications from businesses, but aspects of the Order could subject even the most well-intentioned businesses to an increased risk of FCC or state enforcement and/or class action lawsuits.  The penalties for non-compliance can add up quickly, with statutory damages of $500 per call/text ($1,500 if willful).  

We describe below some highlights of the Order based on the FCC’s News Release and discussion at the Open Meeting, and some practical implications for businesses.  We will provide more details once the Order is released.

1. If a phone number has been reassigned to another subscriber, callers must stop robocalls to that number after one call.  The Order confirms that the TCPA requires the consent of the new subscriber of the number that has been reassigned, not the intended recipient.  Several petitioners described circumstances in which companies have made calls to wireless numbers that were reassigned without their knowledge, despite having obtained consent from the previous subscriber, and were targets of TCPA litigation as a result.  They therefore urged the Commission to declare that the “called party” for purposes of the TCPA refers to the intended recipient, not a new subscriber of a number that has been reassigned.  The “one call” standard adopted by the Commission, which apparently does not include any safe harbor, will require companies to check databases of wireless numbers and other sources to confirm whether numbers have been reassigned.  This of course assumes that all reassigned numbers appear in such databases.  Merely calling or texting an individual one time to confirm may not be sufficient, for example, if no one answers the call or responds to the text.  Commissioners Pai, O’Rielly, and Clyburn all acknowledged the challenges posed by the “one call” standard for reassignment.  With such a strict liability standard, many companies may simply decide to stop automated calls and texts altogether. 
2. Consumers have the right to revoke their consent to receive robocalls in any reasonable way at any time.  Processes will need to be in place to ensure that all revocations of consent, however made, are recorded and honored.       
3. The Order provides a few very limited exceptions to the consent requirement, including free financial fraud, data breach, and medical alerts, but consumers must still be able to opt-out.  Other types of financial and healthcare related calls and texts, such as marketing and debt collection, are not exempt.  In his statement, Commissioner O’Rielly provided examples of other types of important notifications, such as those that communicate utility outages, product recalls, school closings, or airline delays.  Commissioner Rosenworcel expressed that even the limited exceptions granted by the Order afford certain businesses a “loophole” and potentially open the door to even more robocalls.
4. With regard to third party applications, the Order clarifies that the mere fact that an individual’s number appears in an app user’s contact list does not constitute consent from such individual to receive robocalls from the app.
5. The Order affirms that an “automatic telephone dialing system” means any technology that has the capacity to dial random or sequential numbers, regardless of whether the technology is actually used in that manner. This encompasses Internet-to-text message apps, so the restrictions on robocalls and consent requirements apply.
6. Carriers will be allowed to offer robocall-blocking technologies to consumers.

These are just some of the highlights and potential implications of the FCC’s TCPA Declaratory Ruling and Order, and we expect that the text of the Order, once released, will provide further clarification.  Given the significant impact of the Order and the number of petitions and comments that were filed with the FCC, this is not the end of the discussion on the TCPA and the FCC’s interpretation of the Act.  Indeed, legal challenges and/or legislative action cannot be ruled out.

For more information, contact Tracy P. Marshall at marshall@khlaw.com or +1 202 434-4234.  Follow privacy, advertising, and data security developments and similar topics on Keller and Heckman’s Consumer Protection Connection blog.