FCC Issues TCPA Declaratory Order New Requirements - 2012 Robocall Rules Are Retroactive

The Federal Communications Commission (FCC) released its much anticipated omnibus Declaratory Ruling and Order (Order) concerning more than twenty petitions and requests for clarification of the FCC’s rules implementing the Telephone Consumer Protection Act (TCPA). The rules became effective on July 10, 2015. While the Order does clarify and resolve some issues, it imposes new requirements on businesses and raises several new concerns given its consumer protection focus. The Order could also increase the risk for class action litigation as was noted in the blistering dissents issued by Commissioners Pai and O’Rielly. Significant provisions of the Order are summarized below.

2012 Robocall Rules

The FCC finally confirmed that its 2012 Robocall Rules are retroactive. The Robocall Rules were effective on October 16, 2013, meaning that entities subject to TCPA must obtain written prior express consent (WPEC) for any prerecorded call or text message that contained telemarketing or advertising content made on or after the effective date. The FCC reasoned that the Robocall Rules “apply to each call [not each campaign] and that telemarketers should not rely on a consumer’s written consent obtained before the current rule took effect if that consent does not follow the current rule.” A sender must now secure the consumer’s express agreement in writing that he/she agrees to receive prerecorded calls or text messages to the wireless number provided and provide clear and conspicuous notice that: (1) the call/text is sent using an automatic telephone dialing system (ATDS); and 2) consent is not, directly or indirectly, conditioned on a purchase of goods or services.

Definition of ATDS

A major issue for clarification before the FCC was the definition of ATDS. The definition of ATDS is critically important because any non-emergency calls (including text messages) sent to a wireless phone without prior express consent regardless of content are generally prohibited under TCPA if made using an ATDS. This issue has been the subject of class action litigation in numerous federal and state courts. TCPA defines ATDS 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.” In the Order, the FCC reaffirmed a previous ruling that predictive dialing equipment is deemed to be an ATDS given its capacity to autodial numbers. The FCC expounded on previous decisions that ATDS also includes equipment that has the present or future capacity with some modification to dial random or sequential numbers, as well as technology that does not currently or presently dial random or sequential phone numbers but is instead calling a “fixed set of numbers” without human intervention. This broad definition of ATDS could be interpreted to include any equipment with the present or future capacity to dial a number, whether or not it uses random or sequential technology.

Although the FCC acknowledged that there are outer limits to the future capacity of equipment to be an autodialer (mentioning that adding a speed dial button to a handset or modifications to a rotary phone would not meet the definition of ATDS) it declined to identify the various types of equipment that could be considered an ATDS and failed to explain how the human intervention element applies to a particular piece of equipment or how the equipment functions. Instead, the FCC stated that it would address such issues on a case-by-case basis. As the dissenters pointed out, the FCC’s broader definition of ATDS could dramatically expand the reach of TCPA to include almost any prerecorded call or text message sent by a smart phone or other advanced wireless device. Auto-reply or bounce-back text messages also are subject to an ATDS classification, increasing the potential for class action litigation. Certain of the petitioners have already challenged the FCC’s broad definition of ATDS.

The FCC stated further that senders cannot evade TCPA liability by dividing ownership or responsibility of individual pieces of dialing equipment that work in concert among multiple service providers. The FCC highlighted a real-world scenario where a business contracted with a third party to transmit advertising text messages to its current and former customers, and that service provider, in turn, contracted with another third party mobile messaging aggregator to transmit the messages to the customers. The first service provider stored the wireless numbers of customers received from the business and the second provided the calling functions. The FCC concluded that the combined equipment of the two separately-owned service providers is deemed to be an ATDS. The fact that the individual pieces of equipment are independently-owned, and that the two service providers voluntarily entered into an agreement to provide the separate functions, did not change the FCC’s analysis. In short, various pieces of software and/or hardware from different independent entities can be combined to form an ATDS.

For the first time, the FCC has stated that Internet-to-phone messages (more commonly called “wireless emails”) are covered by the TCPA and that equipment used to send these messages is an ATDS. A wireless email uses the corresponding email domain name of the carrier in combination with a wireless telephone number and sends the email message directly to a wireless device by converting the email address to the telephone number. Based on this expansion of TCPA to cover email addresses we recommend that businesses that collect and use email addresses for marketing purposes either scrub their databases to eliminate wireless email addresses, or implement the requisite WPEC under TCPA for all traditional email marketing programs.

Reassigned Numbers

The FCC adopted a new strict liability standard for subsequent calls made to a reassigned wireless number after the first call is sent. Various petitioners had requested that the FCC adopt a “good faith” safe harbor for senders that had no actual knowledge that a wireless telephone number had been reassigned. The FCC rejected these seemingly reasonable requests. Notwithstanding that a sender may have secured WPEC to send pre-recorded calls or telemarketing/advertising text messages to the former subscriber of a wireless number, the FCC adopted a requirement that senders must stop calling the reassigned wireless telephone number after one call. Numerous commenters observed that this standard will be extremely difficult to comply with. The Commission reiterated that the definition of a “called party” under the TCPA rule is the receiving party – not the intended recipient. Significantly, there is no requirement for the receiving party of the call to expressly inform the sender that the number has been reassigned. Moreover, when sending a text message or a prerecorded call, there is no opportunity for the new subscriber to inform the sender that the number was reassigned. The sender is not obligated to send a “STOP” message in response to a text message or a pre-recorded call, use the required automated opt-out mechanism or request to be placed on the sender’s company-specific Do-Not-Call list. This new standard creates potential for consumers to operate in bad faith and set-up a sender for future litigation by not promptly informing the sender that the wireless number was reassigned or by not terminating the alleged existing business relationship. One of the petitioners has already appealed this aspect of the FCC’s ruling.

On-Demand (User-Initiated) Text Messages

The FCC clarified that a one-time auto-reply (also known as a bounce-back message) sent immediately after a user-initiated text in response to a specific call-to-action is not a telemarketing or advertising message and does not violate the TCPA if the auto-reply message fulfills the user’s request. This includes unambiguous invitations or solicitations to receive a coupon, discount or marketing/advertising information from an advertiser or sponsor. For such messages, a WPEC is not required and the call-to-action does not have to contain the two WPEC-related disclosures mentioned above. However, there are limitations to this exception. First, the exception only applies to a one-time response; it does not apply to a subscription text club where multiple marketing/advertising messages and auto-replies will be sent. Second, any marketing/advertising material in the auto-reply must be directly related to the consumer’s request. No upsells, or other solicitations or invitations are allowed. Unfortunately, the FCC did not clarify or provide specific guidance regarding whether auto-reply confirmation messages for text-to-win contests or other user-initiated text promotions are subject to this narrow exception.

Consent Standards

The FCC confirmed that the presence of a wireless telephone number in a consumer’s contact list, standing alone, does not demonstrate that the person whose number is listed in an acquaintance/friend’s contact list has granted prior express consent to be called. Consent cannot be “presumed” or “implied.” Express consent, however, can be demonstrated when a person gives his/her wireless telephone number to a business for the purpose of future communications.

The FCC also stated that when a consumer assigns or transfers his wireline service to a wireless service, the consumer has not revoked his/her prior express consent. The sender can rely on the prior express consent until such consent is revoked.

Revocation of Consent

The FCC imposed a new rule that a consumer may revoke his or her consent to receive any call through any “reasonable” means. The Commission does not define “reasonable” and provides little guidance, which, as Commissioner Pai observed in his dissent, could lead to absurd results. It did confirm that revocation of WPEC does not have to be in writing, and that a consumer “is not limited to using only a revocation method that the caller has established as one that it will accept.” This new rule could create operational and compliance issues for senders if a consumer revokes his/her consent in person to a representative or employee of a company who is not in a position to verify the consumer’s information, or is not authorized to process a revocation request.

Service Provider Liability

The FCC also addressed when a service provider is liable for violations of the TCPA and concluded that liability is placed on the person or entity who “makes” or “initiates” a call. If a service provider merely provides the equipment, software, or platform that permits another entity to make calls or host a calling service, and does not control who receives the call, or the timing or content of the call, the service provider will not be deemed to have made or initiated a call and, therefore, is not subject to liability. Service providers, who are involved in determining who receives a call, when the call is made, or a call’s content, will be subject to liability for any such calls sent by their customers. The FCC also ruled on petitions filed by service providers TextMe, You Mail, and Glide, finding that the two former service providers were not deemed to be makers or initiators, but ruling that the latter was subject to TCPA liability because Glide’s mobile app “automatically sends invitational texts of its own choosing to every contact in the app user’s contact list with little or no obvious control by the user.”

The FCC also supported and encouraged the development of call blocking technology and independent market-based solutions by service providers that can be used to stop unwanted Robocalls and text messages.

We suggest that clients immediately review their overall advertising and marketing efforts to wireless numbers, including review of all service provider contracts, to determine potential TCPA liability.

If you have any questions or would like further information regarding the Order or TCPA compliance generally, please contact S. Jenell Trigg (strigg@lermansenter.com) at 202.416.1090, Deborah Salons (dsalons@lermansenter.com) at 202.416.6768, or any other attorney in our office.