Tag: ATDS

EVERYTHING’S FINE: Big TCPA Win For Medical Debt Collector Suggests FCC Rulings Still Binding After Loper Bright–Let’s Hope it Stays That Way

Fascinating little case for you all today.

Consumer visits hospital for treatment. Provides phone number at admission. Receives treatment and is discharged.

Consumer fails to pay resulting invoices. Hospital and provider network turn account over to collections. Debt collector allegedly uses an ATDS to call consumer on the number she provided.

What result?

Prior to the Supreme Court’s Loper Bright decision the determination would be easy. The FCC held back in 2009 that providing a number in connection with a transaction permits autodialed calls to a consumer in connection with that transaction. And the Sixth Circuit Court of Appeals has directly held that providing a phone number on hospital intake documents permits later debt collection activity at that number–including via autodialer.

But the Loper Bright decision recently destroyed Chevron deference–meaning courts no longer have to yield to agency determinations of this sort. And while the Hobbs Act affords extra protections to certain FCC rulings, those protections only apply where certain procedural requirements were met by the Commission in adopting the rule.

So does the FCC’s rule from 2009 permitting informational calls to numbers provided in connection with a transaction still bind courts? According to the decision in Woodman v. Medicredit, 2024 WL 4132732 (D. Nv Sept. 9, 2024) the answer is yes!

In Woodman the defendant debt collector moved for summary judgment arguing the Plaintiff consented when she provided her number to the hospital. The Court had little problem applying the FCC’s 2009 order and precedent that came before Loper Bright to grant summary judgment to he defense. So just like that case is gone.

Great ruling for the defense, of course, and it makes me feel a bit better about the whole “no one knows what the law is anymore” thing, but the Woodman court didn’t really address the core issue– was the 2009 ruling enacted with sufficient APA pop and circumstance to merit Hobbs Act deference under PDR Resources. 

Really interesting question and one folks should keep in mind.

© 2024 Troutman Amin, LLP
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TCPA Turnstile: 2022 Year in Review (TCPA Case Update Vol. 17)

As 2022 comes to a close, we wanted to look back at the most significant Telephone Consumer Protection Act, 47 U.S.C. § 227 (“TCPA”) decisions of the year.  While we didn’t see the types of landscape-altering decisions that we saw in 2021, there’s still plenty to take note of.  We summarize here the biggest developments since our last update, listed by issue category in alphabetical order.

Arbitration: In Kelly v. McClatchy Co., LLC, 2022 WL 1693339 (E.D. Cal.  May 26, 2022), the District Court denied the defendant’s motion to compel arbitration because the contractual relationship between the parties had terminated before the unwanted calls were made. Plaintiffs had originally signed defendant’s Terms of Service which bound them to an arbitration provision for all legal disputes. Plaintiffs then cancelled their subscriptions which subsequently ended the enforceability of the Terms of Service against them. However, plaintiffs then received unwanted calls from Defendant seeking service renewals which the court deemed were not covered by the arbitration clause, even under a theory of post-expiration enforcement.

ATDS: Following Facebook v. Duguid, 141 S. Ct. 1163 (2021), courts are still struggling to define an “automatic telephone dialing system,” and the Third Circuit weighed in through Panzarella v. Navient Sols., Inc., 2022 WL 2127220 (3d Cir. June 14, 2022).  The district court granted defendant’s motion for summary judgment on the grounds that plaintiffs failed to show that an ATDS was used to call their phones. The Third Circuit upheld the summary judgment ruling but did not decide whether the dialing equipment used constituted an “ATDS” under the TCPA. Rather, its ruling hinged on the fact that defendant’s dialer pulled phone numbers from its internal database, not computer-generated tables. As such, the Third Circuit found that even though the system may very well be an unlawful ATDS system under the TCPA, if it is not used in that way, defendants could not be held liable.

In an interesting move, the court in Jiminez v. Credit One Bank, N.A., Nco Fin. Sys., 2022 WL 4611924 (S.D.N.Y. Sept. 30, 2022), narrowed the definition of an “ATDS,” choosing to reject the Second Circuit approach in favor of the Third Circuit’s approach in Panzarella. Here, plaintiff alleged that defendant used a dialing system to send numerous calls without consent. The Second Circuit follows the majority view that, if a system used to dial numbers has the ability to store or generate random numbers, the call made violates the TCPA, even if the random dialing function is not actually utilized. But the court in Jiminez found the Third Circuit’s reasoning persuasive and applied it to the case, finding that plaintiff failed to show the dialing system was actually used in a way that violated the TCPA. It granted summary judgment to defendants on the TCPA claims because the evidence showed the numbers used were all taken from a pre-approved customer list, not generated from random dialing.

Similarly, in Borden v. Efinancial, LLC, 2022 WL 16955661 (9th Cir. Nov. 16, 2022), the Ninth Circuit also adopted a narrower definition of an ATDS, finding that to qualify as an ATDS, a dialing system must use its automation function generate and dial random or sequential telephone numbers. This means that a mere ability to generate random or sequential numbers is irrelevant, the generated numbers must actually be telephone numbers. Given the circuit split on this issue, it seems likely that the Supreme Court will eventually have to weigh in.

Notably, in May 2022, the FCC issued a new order which will target unlawful robocalls originating outside the country. The order creates a new classification of service providers called “Gateway Providers” which have traditionally served a transmitters of international robocalls. These providers are domestic intermediaries which are now required to register with the FCC’s Robocall Mitigation database, file a mitigation plan with the agency, and certify compliance with the practices therein.

Class Certification: In Drazen v. Pinto, 41 F. 4th 1354 (11th Cir. July 27, 2022), the Eleventh Circuit considered the issue of standing in a TCPA class action. Plaintiffs’ proposed settlement class included unnamed plaintiffs who had only received one unsolicited text message. Because the court held in an earlier case (Salcedo v. Hanna, 936 F.3d 1162 (11th Cir. 2019)) that just one unwanted message is not sufficient to satisfy Article III standing, it found that some of the class members did not have adequate standing. The district court approved the class with these members in it, finding that those members could remain because they had standing in their respective Circuit and only named plaintiffs needed to have standing. The Eleventh Circuit held otherwise and vacated the class certification and settlement in the case. It remanded, allowing for redefinition of the class giving all members standing.

Consent: Chennette v. Porch, 2022 WL 6884084 (9th Cir. Oct. 12, 2022), involved a defendant who used cell phone numbers posted on publicly available websites, like Yelp and Facebook, to solicit client leads to contractors through unwanted text messages. The court rejected defendant’s argument that plaintiffs consented to the calls because their businesses were advertised through these public posts with the intent of obtaining new business. Beyond that, the court also found that even though these cell phones were used for both personal and business purposes, the numbers still fell within the protection of the TCPA, allowing plaintiffs to satisfy both statutory and Article III standing.

Damages: In Wakefield v. ViSalus, 2022 WL 11530386 (9th Cir. Oct. 20, 2022), the Ninth Circuit adopted a new test to determine the constitutionality of an exceptionally large damages award. Defendant was a marketing company that made unwanted calls to former customers, soliciting them to renew their subscriptions to weigh-loss products. After a multi-day trial, a jury returned a verdict for the plaintiff with a statutory damages award of almost $1 billion. The Ninth Circuit reversed and remanded to the district court to consider the constitutionality of the award. While the district court’s test asked whether the award was “so severe and oppressive” as to violate defendant’s due process rights, the Ninth Circuit instructed it to reassess using a test outlined in a different case, Six Mexican Workers. The Six Mexican Workers test assesses the following factors in determining the constitutionality of the damages award: “1) the amount of award to each plaintiff, 2) the total award, 3) the nature and persistence of the violations, 4) the extent of the defendant’s culpability, 5) damage awards in similar cases, 6) the substantive or technical nature of the violations, and 7) the circumstances of each .” We are still awaiting that determination on remand.

Standing: In Hall v. Smosh Dot Com, Inc., 2022 WL 2704571 (E.D. Cal July 12, 2022), the court addressed whether plaintiff had standing under the TCPA as a cell phone plan subscriber where the text messages were only received by someone else on the plan; in this case, plaintiff was the subscriber and her minor son was the recipient of the unwanted text messages. The court granted defendant’s motion to dismiss for lack of standing because she could not show that status of a subscriber alone could convey adequate standing under Article III.

In Rombough v. State Farm, No. 22-CV-15-CJW-MAR, (N.D. Iowa June 9, 2022), the court evaluated standing under the TCPA based on a plaintiff’s number being listed on the Do Not Call list. It determined that being on the DNC was not an easy ticket into court, plaintiff needed to allege more than just having its number on the list. Rather, the plaintiff need have actually registered their own numbers on the list.

© 2022 Vedder Price
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Using Prior FCC Rulings and Focusing on Human Intervention, Court Finds Texting Platform Is Not An ATDS

In today’s world of ever-conflicting TCPA rulings, it is important to remember that, where courts are asked to determine the TCPA’s ATDS definition, their inquiry will revolve around the question of whether that definition includes only devices that actually generate random or sequential numbers or also devices with a broader range of functionalities.  However, it is also important to remember that, when courts are trying to determine whether a calling/text messaging system meets the ATDS definition, focusing on the level of human intervention used in making a call or sending a text message is a separate decisive inquiry that also must be made.

As we’ve previously mentioned, this latter inquiry is important in all types of TCPA cases, but recently the issue has been given special attention in cases regarding text messages and text messaging platforms.  Indeed, this happened again yesterday when the court in Duran v. La Boom Disco determined a nightclub’s use of text messaging did not violate the TCPA because of the level of human involvement exhibited by the nightclub in operating the software and scheduling the sending of messages.

Background

In Duran v. La Boom Disco, the United States District Court for the Eastern District of New York was tasked with analyzing the ExpressText and EZ Texting platforms, which are text messaging software platforms offered to businesses and franchises, whereby the business can write, program, and schedule text messages to be sent to a curated list of consumer mobile phone numbers.

At first glance, the facts in Duran appear to signal a slam dunk case for the plaintiff.  The defendant nightclub had used the ExpressText and EZ Texting platforms to send marketing text messages to the plaintiff after he replied to a call-to-action advertisement by texting the keyword “TROPICAL” to obtain free admission to the nightclub for a Saturday night event.  Importantly, though, after the plaintiff texted this keyword, he never received a second text messaging asking whether he consented to receive recurring automated text messages (commonly referred to as a “double opt-in” message).  He did, however, receive approximately 100 text messages advertising other events at the nightclub and encouraging him to buy tickets, which ultimately led him to bring a TCPA action against the club.

Accordingly, the initial issue that the Duran court was tasked with deciding was whether the defendant nightclub had texted the plaintiff without his prior express written consent.  The court quickly dispensed with it, determining that the nightclub had not properly obtained written consent from the plaintiff, as it had failed to use a double opt-in process to ensure the plaintiff explicitly agreed to receive recurring automated marketing text message and could not otherwise prove that the plaintiff explicitly consented to receiving recurring messages or a marketing nature (which, under the TCPA, the nightclub had the burden to prove).

At this stage, then, things were looking bad for the nightclub.  However, this was not the end of the court’s analysis, as the nightclub could only be liable for sending these non-consented-to messages if they had been sent using an ATDS.  Thus, the court turned to its second – and much more important – line of inquiry: whether the ExpressText and EZ Texting software, as used by the nightclub to text the plaintiff, qualified as an ATDS.

Defining the ATDS Term in the Aftermath of ACA International

In order to determine whether the ExpressText and EZ Texting platforms met the TCPA’s ATDS definition, the court performed an analysis that has become all too common since the FCC’s 2015 Declaratory Order was struck down in ACA International: determining what the appropriate definition of ATDS actually is.  With respect to this issue, the litigants took the same positions that we typically see advanced.  The plaintiff argued that the ExpressText and EZ Texting platforms were the equivalent of “predictive dialers” that could “dial numbers from a stored list,” which were included within the TCPA’s ATDS definition.  The Nightclub countered that predictive dialers and devices that dialed from a database fell outside of the ATDS definition, meaning the nightclub’s use of the ExpressText and EZ Texting platforms should not result in TCPA liability.

The court began the inquiry with what is now the all-too-familiar analysis of the extent to which the D.C. Circuit’s opinion in ACA International invalidated the FCC’s prior 2003 and 2008 predictive dialer rulings.  After examining the opinion, the court found that those prior rulings still remained intact because “the logic behind invalidating the 2015 Order does not apply to the prior FCC orders.”  The court then concluded that, because the 2003 and 2008 ATDS rulings remained valid, it could use the FCC’s 2003 and 2008 orders to define the ATDS term, and that, based on these rulings, the TCPA also prohibited defendants from sending automated text messages using predictive dialers and/or any dialing system that “dial numbers from a stored list.”

However, the fact that the ExpressText and EZ Texting platforms dialed numbers from a stored list did not end the inquiry since, under the 2003 and 2008 orders, “equipment can only meet the definition of an autodialer if it pulls from a list of numbers, [and] also has the capacity to dial those numbers without human intervention.”  And it was here where the plaintiff’s case fell apart, for while the ExpressText and EX Texting platforms dialed from stored lists and saved databases, these platforms could not dial the stored numbers without a human’s assistance.  As the court explained:

When the FCC expanded the definition of an autodialer to include predictive dialers, the FCC emphasized that ‘[t]he principal feature of predictive dialing software is a timing function.’  Thus, the human-intervention test turns not on whether the user must send each individual message, but rather on whether the user (not the software) determines the time at which the numbers are dialed….  There is no dispute that for the [ExpressText and EZ Texting] programs to function, ‘a human agent must determine the time to send the message, the content of the messages, and upload the numbers to be texted into the system.’

…

In sum, because a user determines the time at which the ExpressText and EZ Texting programs send messages to recipients, they operate with too much human involvement to meet the definition of an autodialer.

Human Intervention Saves the Day (Again)

In Duran, the district court made multiple findings that would ordinarily signal doom for a defendant: it broadly defined the ATDS term to include predictive dialers and devices that dialed numbers from a stored list/database and it found the nightclub’s text messages to have been sent without appropriately obtaining the plaintiff’s express written consent.  However, despite these holdings, the nightclub was still able to come out victorious because of the district court’s inquiry into the human intervention issue and because the ExpressText and EZ Texting platforms the nightclub used required just enough human involvement to move the systems into a zone of protection.  In many ways, this holding – and the analysis employed – is unique; however, with respect to the focus on the human intervention requirement, the district court’s decision can be seen as another step down a path that has been favorable to web-based text messaging platforms.

Indeed, over the course of the last two years, several courts have made it a point to note that the human intervention analysis is a separate, but equally important, determination that the court must analyze before concluding that a device is or is not an ATDS.  With respect to the text-messaging line of cases, this has especially been the case, with numerous courts noting that, no matter whether the ATDS definition is or is not limited to devices that randomly or sequentially generate numbers, the numbers must also be dialed without human intervention.  What is interesting, though, is that the courts that have interpreted this line of cases have focused on different actions as being the key source of human intervention.

As we already discussed, the court in Duran noted that the key inflection point for determining whether human intervention exists is based off of the timing of the message and whether a human or the device itself gets to determine when the text message is sent out.  And in Jenkins v. mGage, LLC, the District Court for the Northern District of Georgia reached a similar conclusion, finding that the defendant’s use of a text messaging platform involved enough human intervention to bring the device outside of the ATDS definition because “direct human intervention [was] required to send each text message immediately or to select the time and date when, in the future, the text message will be sent.”  The District Court for the Middle District of Florida also employed this line of thinking in Gaza v. Auto Glass America, LLC, awarding summary judgment to the defendant because the text messaging system the company employed could not send messages randomly, but rather required a human agent to input the numbers to be contacted and designate the time at which the messages were to be sent.

In the case of Ramos v. Hopele of Fort Lauderdale, however, the District Court for the Southern District of Florida found a separate human action to be critical, focusing instead on the fact that “the program can only be used to send messages to specific identified numbers that have been inputted into the system by the customer.”  And another court in the Northern District of Illinois echoed this finding in Blow v. Bijora, Inc., determining that, because “every single phone number entered into the [text] messaging system was keyed via human involvement … [and because] the user must manually draft the message that the platform will sent” the text messaging platform did not meet the TCPA’s ATDS requirements.

Indeed, with the entire industry still awaiting a new ATDS definition from the FCC, there is still much confusion as to how the ATDS term will be interpreted and applied to both users of calling platforms and users of texting platforms.  Fortunately, though, there appears to be a trend developing for text message platforms, with multiple courts finding that human intervention is a crucial issue that can protect companies from TCPA liability.  Granted, these courts have not yet been able to agree on what human action actually removes the platform from the ATDS definition, and, as we’ve noted previously, even if human intervention remains the guiding standard, determining precisely what qualifies as sufficient intervention and when in the process of transmitting a message the relevant intervention must occur remains much more an art than a science.  However, the cases mentioned above are still useful in pointing marketers everywhere in the right direction and present guidelines for ensuring they send text messages in compliance with the TCPA.

 

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What You Need to Know About the FCC’s July 10th Declaratory Ruling on the Telephone Consumer Protection Act (TCPA)

A sharply divided FCC late Friday issued its anticipated TCPA Declaratory Ruling and Order (the “Declaratory Ruling”). This document sets forth a range of new statutory and policy pronouncements that have broad implications for businesses of all types that call or text consumers for informational or telemarketing purposes.  While some of its statements raise interesting and in some cases imponderable questions and practical challenges, this summary analysis captures the FCC’s actions in key areas where many petitioners sought clarification or relief.  Certainly there will be more to say about these key areas and other matters as analysis of the Declaratory Ruling and consideration of options begins in earnest.  There will undoubtedly be appeals and petitions for reconsideration filed in the coming weeks.  Notably, except for some limited relief to some callers to come into compliance on the form or content of prior written consents, the FCC’s Order states that the new interpretations of the TCPA are effective upon the release date of the Declaratory Ruling.  Requests may be lodged, however, to stay its enforcement pending review.

Scope and Definition of an Autodialer

An important threshold question that various petitioners had asked the FCC to clarify was what equipment falls within the definition of an “automatic telephone dialing system” or “ATDS.”  The TCPA defines an 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. 47 U.S.C. § 227(a)(1) (emphasis added).

Two recurring points of disagreement have been: (1) whether “capacity” refers to present or potential capacity, i.e., whether it refers to what equipment can do today, or what some modified version of that equipment could conceivably do tomorrow; and (2) whether “using a random or sequential number generator” should be read to limit the definition in any meaningful way.

Stating that a broad definition would be consistent with Congressional intent and would help “ensure that the restriction on autodialed calls not be circumvented,” the FCC concluded that “the TCPA’s use of ‘capacity’ does not exempt equipment that lacks the ‘present ability’ to dial randomly or sequentially.”  Rather, “the capacity of an autodialer is not limited to its current configuration but also includes its potential functionalities.”

The Declaratory Ruling stated that “little or no modern dialing equipment would fit the statutory definition of an autodialer” if it adopted a less expansive reading of the word “capacity.”  But as for whether any “modern dialing equipment” does not have the requisite “capacity,” the agency declined to say:

[W]e do not at this time address the exact contours of the “autodialer” definition or seek to determine comprehensively each type of equipment that falls within that definition that would be administrable industry-wide….  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.

Indeed, although the Declaratory Ruling insisted that this interpretation has “outer limits” and does not “extend to every piece of malleable and modifiable dialing equipment,” the only example that that Declaratory Ruling offered was anything but “modern”:

[F]or example, it might be theoretically possible to modify a rotary-dial phone to such an extreme that it would satisfy the definition of “autodialer,” but such a possibility is too attenuated for us to find that a rotary-dial phone has the requisite “capacity” and therefore is an autodialer.

Finally, the FCC majority brushed off petitioners’ concerns that such a broad definition would apply to smartphones—not because it would be impossible to read that way, but because “there is no evidence in the record that individual consumers have been sued….”

Commissioner Pai’s dissent expressed concern that the FCC’s interpretation of the ATDS definition “transforms the TCPA from a statutory rifle-shot targeting specific companies that market their services through automated random or sequential dialing into an unpredictable shotgun blast covering virtually all communications devices.”  He also noted that even if smartphone owners have yet to be sued, such suits “are sure to follow….  Having opened the door wide, the agency cannot then stipulate restraint among those who would have a financial incentive to walk through it.”

Commissioner O’Rielly took issue with the FCC’s “refusal to acknowledge” the other half of the statutory definition, specifically that equipment “store or produce telephone numbers to be called, using a random or sequential number generator.”  47 U.S.C. § 227(a)(1).  “Calling off a list or from a database of customers … does not fit the definition,” he explained.  And as for the reading of the word “capacity,” the Commissioner stated that the FCC majority’s “real concern seems to be that … companies would game the system” by “claim[ing] that they aren’t using the equipment as an autodialer” but “secretly flipping a switch to convert it into one for purposes of making the calls.”  He explained that even if there had been examples of this in the regulatory record, “this could be handled as an evidentiary matter.  If a company can provide evidence that the equipment was not functioning as an autodialer at the time a call was made, then that should end the matter.”

Given the breadth of the FCC’s purported interpretation of ATDS, which clashes with the views of a number of courts in recent litigation and is replete with ambiguity, this portion of the Declaratory Ruling will most certainly be challenged.

Consent and Revocation of Consent

The Declaratory Ruling addressed the question of whether a person who has previously given consent to be called may revoke that consent and indicated that consumers have the ability to revoke consent in any “reasonable manner.”  As dissenting Commissioner Pai noted, this can lead to absurd results if consumers are entirely free to individually and idiosyncratically select their mode and manner of revocation, particularly for any such oral, in-store communication.  The Commissioner’s dissent asked ruefully whether the new regime would cause businesses to “have to record and review every single conversation between customers and employees….Would a harried cashier at McDonald’s have to be trained in the nuances of customer consent for TCPA purposes?……the prospects make one grimace.”

FCC Petitioner Santander had sought clarification of the ability of a consumer to revoke consent and alternatively, to allow the calling party to designate the methods to be used by a consumer to revoke previously provided consent.  In considering the TCPA’s overall purpose as a consumer protection statute, the FCC determined that the silence in the statute on the issue of revocation is most reasonably interpreted in favor of allowing consumers to revoke their consent to receive covered calls or texts.  The Declaratory Ruling found comfort both in other FCC decisions and in the common law right to revoke consent, which is not overridden by the TCPA.  The Declaratory Ruling stated that this interpretation imposes no new restriction on speech and established no new law.

The FCC noted that its prior precedent on the question of revocation was in favor of allowing consumer revocation “in any manner that clearly expresses a desire not to receive further messages, and that callers may not infringe on that ability by designating an exclusive means to revoke.”  Stating that consumers can revoke consent by “using any reasonable method,” the FCC determined that a caller seeking to provide exclusive means to register revocation requests would “place a significant burden on the called party.”  The Declaratory Ruling contains no serious discussion of the burdens placed on businesses by one-off individual revocations.   The FCC majority also rejected the argument that oral revocation would unnecessarily create many avoidable factual disputes, instead stating that “the well-established evidentiary value of business records means that callers have reasonable ways to carry their burden of proving consent.”

Reassigned Number “Safe Harbor”

There is perhaps no issue that garners more frustration among parties engaged in calling activities than potential TCPA liability for calls to reassigned numbers.  No matter how vigilant a caller is with respect to compliance, under the FCC’s preexisting and now expanded statements, it is impossible to eliminate the risk of exposure short of not calling anyone.  As explained in Commissioner O’Rielly’s Separate Statement: “numerous companies, acting in good faith to contact consumers that have consented to receive calls or texts, are exposed to liability when it turns out that numbers have been reassigned without their knowledge.”  This portion of the Declaratory Ruling will also most certainly be subject to challenges.

While relying on a number of flawed assumptions, the FCC: (1) rejected the sensible “intended recipient” interpretation of “called party”; (2) disregarded the fact that comprehensive solutions to addressing reassigned numbers do not exist; (3) adopted an unworkable and ambiguous “one-call exemption” for determining if a wireless number has been reassigned (a rule that constitutes “fake relief instead of a solution,” as explained by Commissioner O’Rielly); and (4) encouraged companies to include certain language in their agreements with consumers so that they can take legal action against consumers if they do not notify the companies when they relinquish their wireless phone numbers.

First, the FCC purported to clarify that the TCPA requires the consent of the “current subscriber” or “the non-subscriber customary user of the phone.”  It found that consent provided by the customary user of a cell phone may bind the subscriber.  The FCC declined to interpret “called party” as the “intended recipient,” as urged by a number of petitioners and commenters and held by some courts.

Second, the FCC quickly acknowledged and then set aside the significant fact that there exists no comprehensive public directory of reassigned number data provided by the carriers.  Instead, it seemed flummoxed by the purported scope of information accessible to companies to address the reassigned number issue.  The FCC suggested  that companies could improvise ways to screen for reassigned numbers (e.g., by manually dialing numbers and listening to voicemail messages to confirm identities or by emailing consumers first to confirm their current wireless phone numbers) and explained that “caller best practices can facilitate detection of reassignment before calls.”  Ignoring the reality of TCPA liability, the FCC explained that “[c]allers have a number of options available to them that, over time, may permit them to learn of reassigned numbers.” (emphasis added).

Third, the FCC purported to create an untenable “one-call exemption.”  The Declaratory Ruling explained “that callers who make calls without knowledge of reassignment and with a reasonable basis to believe they have valid consent to make the call should be able to initiate one call after reassignment as an additional opportunity to gain actual or constructive knowledge of the reassignment and cease future calls to the new subscriber.  If this one additional call does not yield actual knowledge of reassignment, we deem the caller to have constructive knowledge of such.”

One potentially helpful clarification made was the determination that porting a number from wireline to a wireless service is not to be treated as an action that revokes prior express consent, and thus the FCC stated that that prior consent may continue to be relied upon so long it is the same type of call for which consent was initially given.  The FCC agreed with commenters who had observed that if a consumer no longer wishes to get calls, then it is her right and responsibility to revoke that consent.  Unless and until that happens, however, the FCC stated that a caller may rely on previously provided consent to continue to make that same type of call.  Valid consent to be called as to a specified type of call continues, “absent indication from the consumer that he wishes to revoke consent.”   As wireline callers need not provide express consent to be autodialed, any party calling consumers would have to still be aware of the nature of the called number to determine whether appropriate consent to be called was present.

Finally, the FCC – which claims to be driven by consumer interests throughout its Declaratory Ruling – makes the suggestion that companies should require customers, through agreement, to notify them when they relinquish their wireless phone numbers and then initiate legal action against the prior holders of reassigned numbers if they fail to do so.  “Nothing in the TCPA or our rules prevents parties from creating, through a contract or other private agreement, an obligation for the person giving consent to notify the caller when the number has been relinquished.  The failure of the original consenting party to satisfy a contractual obligation to notify a caller about such a change [of a cell phone number] does not preserve the previously existing consent to call that number, but instead creates a situation in which the caller may wish to seek legal remedies for violation of that agreement.”

Treatment of Text Messaging and Internet-to-Phone Messaging

The Declaratory Ruling also addressed a number of issues that specifically affect text messaging under the TCPA.   First, the FCC addressed the status of SMS text messages in response to a petition that asked the FCC to make a distinction between text messages and voice calls.  The FCC reiterated that SMS text messages are subject to the same consumer protections under the TCPA as voice calls and rejected the argument that they are more akin to instant messages or emails.

Second, the FCC addressed the treatment of Internet-to-phone text messages under the TCPA.  These messages differ from phone-to-phone SMS messages in that they originate as e-mails and are sent to an e-mail address composed of the recipient’s wireless number and the carrier’s domain name.  The FCC explained that Internet-to-phone text messaging is the functional equivalent of phone-to-phone SMS text messaging and is therefore covered by the TCPA.  The FCC also found that the equipment used to send Internet-to-phone text messages is an automatic telephone dialing system for purposes of the TCPA.  In so doing, the FCC expressly rejected the notion that only the CAN-SPAM Act applies to these messages to the exclusion of the TCPA.

Finally, the FCC did provide some clarity as to one issue that had created significant confusion since the adoption of the current TCPA rules in 2012: whether a one-time text message sent in response to a consumer’s specific request for information constitutes a telemarketing message under the TCPA.  The specific scenario that was presented to the FCC is one confronted by many businesses: they display or publish a call-to-action, they receive a specific request from a consumer in response to that call-to-action, and they wish to send a text message to the consumer with the information requested without violating the TCPA and the FCC’s rules.

The FCC brought clarity to this question by finding that a one-time text message does not violate the TCPA or the FCC’s rules as long as it is sent immediately to a consumer in response to a specific request and contains only the information requested by the consumer without any other marketing or advertising information.  The FCC explained that such messages were not telemarketing, but “instead fulfillment of the consumer’s request to receive the text.”  Businesses may voluntarily provide the TCPA disclosures in their calls-to-action, as the FCC noted in the Declaratory Ruling, but a single text message to consumers who responded to the call-to-action or otherwise requested that specific information be sent to them would not be considered a telemarketing message and, as such, would not require the advance procurement of express written consent.

Limited Exemptions for Bank Fraud and Exigent Healthcare Calls and Texts

The TCPA empowers the agency to “exempt . . . calls to a telephone number assigned to a cellular telephone service that are not charged to the called party, subject to such conditions as the Commission may prescribe as necessary in the interest of the privacy rights [the TCPA] is intended to protect.”  47 U.S.C. § 227(b)(2)(C).  In March 2014, the FCC invoked this authority to grant an exemption from the TCPA’s prior express consent requirement for certain package-delivery related communications to cellular phones, requiring that for such communications to be exempt, they must (among other things) be free to the end user.

The Declaratory Ruling invoked that same provision and followed that same framework in granting exemptions for “messages about time-sensitive financial and healthcare issues” so long as the messages (whether voice calls or texts) are, among other things discussed below, free to the end user.  Oddly, the Declaratory Ruling referred to these two types of messages as “pro-consumer messages,” showcasing an apparent view that automated/autodialed calls are “anti-consumer” by default.

The FCC first addressed a petition from the American Bankers Association (ABA), seeking an exemption for four types of financial-related calls: messages about (1) potential fraud or identity theft, (2) data security breaches, (3) steps to take to prevent identity theft following a data breach, and (4) money transfers.  After analyzing the record before it regarding the exigency and consumer interest in receiving these types of communications, and finding that “the requirement to obtain prior express consent could make it impossible for effective communications of this sort to take place,” the FCC imposed the following very specific requirements in addition to the requirement that the messages be free to the end user: (1) the messages must be sent only to the number provided by the consumer to the financial institution; (2) the messages must state the name and contact information for the financial institution (for calls, at the outset); (3) the messages must be strictly limited in purpose to the four exempted types of messages and not contain any “telemarketing, cross-marketing, solicitation, debt collection, or advertising content;” (4) the messages must be concise (for calls generally one minute or less, “unless more time is needed to obtain customer responses or answer customer questions,” and for texts, 160 characters or less); (5) the messages must be limited to three per event over a three-day period for an affected account; (6) the messages must include “an easy means to opt out” (an interactive voice and/or key-press activated option for answered calls, a toll-free number for voicemail, and instructions to use “STOP” for texts); and (7) the opt-out requests must be honored “immediately.”

The FCC then addressed a petition from the American Association of Healthcare Administrative Management (AAHAM) seeking similar relief for healthcare messages.  Relying on its prior rulings regarding the scope of consent and the ability to provide consent via an intermediary, the FCC stated that (1) 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 defined by HIPAA, if the covered entities and business associates are making calls within the scope of the consent given, and absent instructions to the contrary”; and, (2) such consent may be obtained through a third-party when the patient is medically incapacitated, but that “ just as a third party’s ability to consent to medical treatment on behalf of another ends at the time the patient is capable of consenting on his own behalf, the prior express consent provided by the third party is no longer valid once the period of incapacity ends.”

The FCC also granted a free-to-end-user exemption for certain calls “for which there is exigency and that have a healthcare treatment purpose”: (1) appointment and exam confirmations and reminders; (2) wellness checkups; (3) hospital pre-registration instructions; (4) pre-operative instructions; (5) lab results;(6) post-discharge follow-up intended to prevent readmission; (7) prescription notifications; and (8) home healthcare instructions.  The FCC specifically excluded from the exemption messages regarding “account communications and payment notifications, or Social Security disability eligibility.”

The Declaratory Ruling imposed mostly the same additional restrictions on free-to-end-user health-care related calls as it did with free-to-end-user financial calls: (1) the messages must be sent only to the number provided by the patient; (2) the messages must state the name and contact information for the healthcare provider (for calls, at the outset); (3) the messages must be strictly limited in purpose to the eight exempted types of messages, be HIPAA-compliant, and may not include “telemarketing, solicitation, or advertising content, or . . .  billing, debt-collection, or other financial content”; (4) the messages must be concise (for calls generally one minute or less, and for texts, 160 characters or less); (5) the messages must be limited to one per day and three per week from a specific healthcare provider; (6) the messages must include “an easy means to opt out” (an interactive voice and/or key-press activated option for answered calls, a toll-free number for voicemail, and instructions to use “STOP” for texts); and (7) the opt-out requests must be honored “immediately.”

Service Provider Offering of Call Blocking Technology

A number of state Attorneys General had sought clarification on the legal or regulatory prohibitions on carriers and VoIP providers to implement call blocking technologies.   While declining to specifically analyze in detail the capabilities and functions of particular call blocking technologies, the FCC nevertheless granted the request for clarification and stated that there is no legal barrier to service providers offering consumers the ability to block calls – using an “informed opt-in process” at the individual consumer’s direction.   Blocking categories of calls or individual calls was seen as providing consumers with enhanced tools to stop unwanted robocalls.

Service provider groups, which expressed concern that any blocking technology could be either over or under-inclusive from an individual consumer’s perspective, were provided the assurance that while both the FCC and the FTC recognize that no technology is “perfect,” accurate disclosures to consumers at the time they opt-in for these services should suffice to allay these concerns.  The Declaratory Ruling also noted that consumers are free to drop these services if they wish, and encouraged providers to offer technologies that have features that allow solicited  mass calling, such as a municipal or school alerts, to not be blocked, as well as to develop protocols to ensure public safety calls or other emergency calls are not blocked.

ARTICLE BY Laura H. Phillips & Eduardo R. Guzman of Drinker Biddle & Reath LLP
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