Tag: TCPA

Federal Communications Commission Tackles the “Reassigned Number Problem”

Reassigned numbers have been at the center of the surge in litigation under the Telephone Consumer Protection Act (“TCPA”) during the last few years.  By now the story is well known to businesses that actively communicate with their customers: the customer consents to receive telemarketing and/or informational robocalls[1] at a wireless telephone number, but months or years later the customer changes his or her wireless telephone number and—unbeknownst to the business—the telephone number is reassigned to a different person.  When the recipient of the reassigned number starts receiving calls or messages from the business, a lawsuit often ensues under the TCPA because that party has not consented to receive such calls.  The FCC adopted on July 13 a Second Notice of Inquiry (“Second NOI”) that promises to address this problem in a meaningful way.  Specifically, the Second NOI focuses on the feasibility of “using numbering information to create a comprehensive resource that businesses can use to identify telephone numbers that have been reassigned from a consumer who has consented to receiving calls to a consumer who has not.”

Background on the Reassigned Number Problem

Under the current regime, the North American Numbering Plan (NANP) Administrator generally provides telephone numbers to voice service providers—including those who supply interconnected voice—in blocks of 1000.  The voice service providers recycle those numbers in and out of service, such that, after a number has been dropped, the number goes into a pool for a short period and then is brought out of the pool and reassigned to a different consumer.

The “reassigned number problem” occurs when a consumer consents to receive robocalls (telemarketing and/or informational), but then terminates service to the relevant wireless number without informing the businesses the consumer previously gave consent to make the robocalls.  Businesses that find themselves making robocalls to numbers that (unbeknownst to them) had been reassigned to a different consumer increasingly find themselves subject to lawsuits under the TCPA—this even though it has been widely acknowledged that (1) customers often switch telephone numbers without providing notice to businesses and (2) there is no public directory of reassigned wireless numbers that businesses can rely on to identify and scrub reassigned numbers.  When various industry groups and business entities asked the FCC to intervene, the FCC clarified that businesses making robocalls needed the consent of “the actual party who receives a call,” not of the intended recipient of the robocall.  FCC created a so-called “safe harbor” that afforded little protection in practice: a business could make a single call to a reassigned number without triggering liability under the TCPA, but the business would then be imputed with “constructive” knowledge that the number had been reassigned even if the single call did not yield actual confirmation that the number had been reassigned. The FCC did so even as it admitted that the tools available to identify reassigned numbers “will not in every case identify numbers that have been reassigned” and that the steps it was taking “may not solve the problem in its entirety” even “where the caller is taking ongoing steps reasonably designed to discover reassignments and to cease calls.”

The Second NOI

The Second NOI promises to more meaningfully address the reassigned number problem by suggesting the creation of a reliable, complete list of reassigned numbers that service providers would be required to update.  In pertinent part, the Second NOI addresses a number of other topics, including, but not limited to, possible reporting alternatives, compensation schemes, frequency of updates, and fees and eligibility requirements for accessing reassigned number data.  It also asks a number of logistical questions, including, but not limited to:

(1) What are the ways in which voice service providers could report the information in an accurate and timely way?

(2) Would the reporting—into a database or other platform—“substantially improve robocallers’ ability to identify reassigned numbers?”

(3) What information should voice service providers report?

(4) In what ways might the information reported raise concerns regarding the disclosure of private, proprietary, or commercially sensitive information?

(5) Should reassignment of toll-free numbers also be reported?

(6) What is the quantity of numbers reassigned and the benefits of reducing unwanted calls to these numbers?

(7) Should there be a safe harbor from TCPA violations for robocallers who use the new reassigned number resource?  What would be the advantages and disadvantages?

(8) How can the FCC incentivize robocallers to use the reassigned number resource?

In addition, the Second NOI seeks comment on whether the notification requirement should apply to all voice service providers or just providers of wireless services, and how to “balance the reporting burden placed on voice service providers against consumers’ privacy interests and robocallers’ interest in learning of reassignments.”   The item also seeks comment on which entity should be responsible for notification in circumstances when a voice service provider does not receive numbers directly from NANP, but instead obtains numbers “indirectly” from carrier partners.

The Commission claims it has the authority under Sections 227(b) and 251(e) of the Communications Act of 1934, as amended—which give the FCC control over the US portion of NANP and incorporate the TCPA—to require entities that obtain numbers from NANP to also report reassignments.  In fact, the Commission claims that doing so may further the statutory goals underlying the TCPA, which generally prohibits unwanted robocalls.

Although many details remain to be discussed and addressed by the FCC, the creation of the list that the FCC is proposing would address one of the main challenges faced by businesses that want to comply with the TCPA: how to gather reliable and complete information regarding which wireless telephone numbers have been reassigned.  The possibility of such a list working similar to that available to identify telephone numbers in the Do Not Call List is particularly promising, especially if it comes accompanied by safe harbor provisions similar to those attached to the Do Not Call List obligations in the FCC’s rules.

Comments are due August 28, 2017 and Reply Comments September 26, 2017.

[1] For purposes of this post “robocalls” refers to both calls made using an automatic telephone dialing system or using an artificial voice or pre-recorded message.

This post was contributed by Eduardo R. Guzmán  Paul C. Besozzi  and Koyulyn K. Miller of   Squire Patton Boggs (US) LLP
For more legal analysis check out the National Law Review.

FCC Slams Serial Robocaller With $120 Million Proposed Fine for “Spoofing” Numbers

We all get them.  Repeated marketing calls to our mobile and home phones with the incoming phone number altered to make it appear that it’s a local call, when in fact, the call is from a robo-scammer using IP technology to “spoof” the phone number.  As it turns out, there’s a federal law that makes such spoofing illegal, the Truth in Caller ID Act of 2009 (“TICIDA”), and in its first enforcement action under TICIDA, the FCC hit an alleged serial robocaller, Adrian Abramovich and his companies (together, Abramovich) with a whopping $120 million Notice of Apparent Liability for allegedly originating nearly 100 million such calls.

The Commission also issued a Citation and Order to Abramovich for alleged violations of the Telephone Consumer Protection Act (“TCPA”) for making unauthorized prerecorded telemarketing calls to emergency phone lines, wireless phones and residential phones without obtaining the required prior express written consent from the called party.  While TICIDA allows the Commission to directly fine first-time violators through its NAL authority, which it did here, in TCPA FCC enforcement actions involving entities and individuals that do not hold Commission authorizations, the Commission must first issue a citation, and then can only proceed with a fine if the recipient repeats the violation.  That still leaves Abramovich open to potentially monumental TCPA class action exposure.   The Citation and Order also notified Abromovich that he had violated the federal wire fraud statute by transmitting or causing to be transmitted, by means of wire, misleading or false statements with the intent to perpetrate a fraud.

According to the Commission, Abramovich ran a scheme where his spoofed calls appeared to originate from local numbers and offered, via a pre-recorded message, holiday vacations and cruises claiming to be associated with well-known American travel and hospitality companies.  The pre-recorded messages would prompt customers to “press 1” to secure their reservation.  Once a customer pressed “1”, the customer was transferred to a call center where live operators pushed vacation packages typically involving timeshare presentations, that were not affiliated with the well-known brands used in the recorded messages.  The Commission characterized Abramovich’s schemes as “one of the largest – and most dangerous – illegal robocalling campaigns the Commission has ever investigated.”  According to the Commission, in addition to defrauding consumers, the robocalling campaign also caused disruptions to an emergency medical paging service, which provides paging services for emergency room doctors, nurses, emergency medical technicians, and other first responders.

While significant in absolute terms, the $120 million proposed fine, according to the Commission, was significantly below the penalty that could have been proposed in the NAL.  Rather than fine the statutory maximum of $11,052 for each spoofing violation, or three times that amount for each day of a continuing violation, the Commission calculated the base forfeiture amount at $1,000 per unlawful spoofed call, since this was the first time the Commission used its TICIDA forfeiture authority.

Mr. Abromovitz now has an opportunity to respond to both the NAL and Citation.  Stopping illegal robocalling has been a key priority for Chairman Pai, and no doubt the Commission is expecting that the threat of huge monetary forfeiture penalties against the industry will provide a powerful incentive for roboscammers to look for other ways to make a buck.  Given the Commission’s struggle with fashioning tools to go after serial robocallers that do not have the effect of increasing TCPA exposure for established companies engaging in legitimate customer communications, we do not expect the Commission to back down from its proposed penalty, and expect this to be the start of a new enforcement initiative using TICIDA and its direct penalty provisions.

This post was written byRebecca E. Jacobs,  Martin L. Stern and  Douglas G. Bonner of Womble Carlyle Sandridge & Rice, PLLC.

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
©2015 Drinker Biddle & Reath LLP. All Rights Reserved

FCC’s Enforcement Bureau Commends PayPal for Modifying its User Agreement

We previously advised that the FCC’s Enforcement Bureau, in an unusual move, on June 11 published a letter it sent to PayPal warning that PayPal’s proposed changes to its User Agreement that contained robocall contact provisions might violate the TCPA.

FCC_LogoThese proposed revisions conveyed user consent for PayPal to contact its users via “autodialed or prerecorded calls and text messages … at any telephone number provided … or otherwise obtained” to notify consumers about their accounts, to troubleshoot problems, resolve disputes, collect debts, and poll for opinions, among other things. The Bureau’s letter highlighted concerns with the broad consent specified for the receipt of autodialed or prerecorded telemarketing messages and the apparent lack of notice as to a consumer’s right to refuse to provide consent to receive these types of calls.

On June 29, prior to the revisions coming into effect, PayPal posted a notice on its blog stating: “In sending our customers a notice about upcoming changes to our User Agreement we used language that did not clearly communicate how we intend to contact them.” PayPal clarified that it would modify its User Agreement to specify the circumstances under which it would make robocalls to its users, including for important non-marketing reasons relating to misuse of an account, as well as to specify that continued use of PayPal products and services would not require users to consent to receive robocalls.

The FCC’s Enforcement Bureau immediately put out a statement commending PayPal for its decision to modify its proposed contact language, noting that these changes to the User Agreement represented “significant and welcome improvements.” The Bureau’s very public actions on this matter signal to businesses everywhere of the need to review existing “consent to contact” policies. Certainly the FCC’s yet to be released Declaratory Ruling on TCPA matters that was voted on during a contentious FCC Open Meeting on June 18 may also invite that opportunity.

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

©2015 Drinker Biddle & Reath LLP. All Rights Reserved

Court Dismisses Text-Message TCPA Suit Against AOL, Finding Instant Messaging Service Does Not Constitute an ATDS

On June 1, the Northern District of California dismissed a putative TCPA class action against AOL, finding that the plaintiff had failed to allege that AOL utilized an automated telephone dialing system (ATDS), as required to state a cause of action under the TCPA.  In dismissing the plaintiff’s complaint in Derby v. AOL, the court rejected the plaintiff’s arguments that AOL Instant Messenger (AIM), which allows individuals to send instant messages as text messages to cell phones, constitutes an ATDS.  Instead, the court agreed with AOL’s argument that AIM relied on “human intervention” to send the messages at issue, which foreclosed the possibility of potential TCPA liability.  (Covington represented AOL in this case.)  The decision should be beneficial to a variety of services that enable their users to send text messages to cell phones.

The TCPA’s prohibitions include a ban on using an ATDS to call cellular telephones for informational purposes without the prior express consent of the recipient.  The FCC and courts have extended the reach of the statute to include text messages.  However, the FCC has stated that only equipment that has the capacity to operate “without human intervention” may qualify as an ATDS.  The plaintiff in Derby alleged that he received three text messages from an AIM user that were intended for another individual, which the court recognized were “presumably . . . the result of the sender inputting an incorrect phone number.”  After the receiving the third message, the plaintiff alleged that he sent a text message to AIM to block future texts from the AIM user, and that he received back a text confirmation of his request.

In analyzing TCPA liability for the first three text messages, the court noted that the plaintiff’s complaint “affirmatively alleges that AIM relies on human intervention to transmit text messages to recipients’ cell phones.”  The court followed precedent from other Ninth Circuit district courts rejecting ATDS arguments where the equipment at issue relied on humans to press buttons on phones or manually enter telephone numbers into the system.  Since the complaint demonstrated that “extensive human intervention is required to send text messages through defendant’s AIM service,” the court held that the complaint failed to state a claim under the TCPA with respect to the three text messages sent by an AIM user.

The court also analyzed potential TCPA liability for the separate confirmation text message that Derby alleged he had received from AIM.  Again citing relevant authority, the court held that “a single message sent in response to plaintiff’s text . . . is not the kind of intrusive, nuisance call that the TCPA prohibits.”  The court concluded that Derby, having sent the “block” request from his cell phone, had “knowingly released” his number to AIM and consented to receive a confirmation text from AIM at that number.  The court’s opinion advocated for a “common sense” approach to TCPA liability, finding that the statute should not be utilized to “punish the consumer-friendly practice of confirming requests to block future unwanted texts.”  Accordingly, the court also dismissed the TCPA claim based on the confirmation text message for failure to state a claim.

ARTICLE BY Caleb Skeath of Covington & Burling LLP
© 2015 Covington & Burling LLP

FCC Chairman Proposes New TCPA Rules

The FCC is ready to rule on long-standing petitions seeking clarifications of the Telephone Consumer Protection Act and related FCC regulations. On May 27, 2015, FCC Chairman Tom Wheeler circulated a proposed regulatory ruling to fellow commissioners, which would address issues raised in more than 20 pending petitions. The fact sheet summarizing the chairman’s proposal foreshadows bad news for legitimate businesses using automatic telephone dialing technology.

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The fact sheet lumps scammer calls like those from perky “Rachel” of the mysterious and ambiguous “Cardholder Services” with those from legitimate businesses. The fact sheet cites the 214,000 consumer complaints about robocalls. No breakdown is given as to how many of these complaints involved con artists and how many related to businesses calling, for example, to collect debt. The tone of the fact sheet provides no comfort. Its preamble states the plan is to “close loopholes and strengthen consumer protections.”

The FCC will vote on the new proposal during its Open Commission Meeting scheduled for June 18, 2015. In the meantime, companies using automatic telephone dialing technology should plan to take action to comply with whatever comes from the FCC. There will be no notice and comment period and whatever passes at the Open Commission Meeting will become effective immediately upon release.

New Provisions

If Chairman Wheeler’s proposals are adopted without changes, the new rules will provide:

  • Wireless and wired telephone consumers will have the right to revoke their consent to receive calls and text messages sent from autodialers in any reasonable way at any time. Many courts have concluded that consumers have a right to revoke consent. Some have said that revocation must be in writing. Some have said consent, once given, cannot be taken back. If this proposal passes, all courts likely will hold that consent may be revoked in any reasonable way at any time. This rule will have consequences beyond TCPA exposure. For example, it is likely to increase the cost of credit because creditors and debt collectors will have to employ more people to manually dial debtors who have failed to meet their obligations and utter the words, “Stop calling me!”

  • To prevent “inheriting” consent for unwanted calls from a previous subscriber, callers will be required to stop calling reassigned wireless and wired telephone numbers after a single request. It is not clear from the fact sheet what the individual on the other end of the line must say to notify the caller that they are not the person they seek to reach.

  • The TCPA currently prohibits the use of automatic telephone dialing systems to call wireless phones and to leave prerecorded telemarketing messages on landlines without consent. The current definition of an “automatic telephone dialing system” under the TCPA is “equipment which has the capacity to (A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers.” A 2003 FCC ruling focused on the use of the word “capacity” in the definition and broadly extended the definition to cover autodialers used to dial specific numbers. This ruling has resulted in inconsistent court decisions over whether a dialer must have a present capacity to so dial or whether a future capacity is sufficient for to trigger TCPA coverage. The new proposal appears to attempt to resolve the ambiguity by amending the definition of an “automatic telephone dialing system” to mean “any technology with the capacity to dial random or sequential numbers.” That is not much help. The industry needs an answer on the present versus future capacity issue. As it stands now, a court could conclude that a smartphone is an automatic telephone dialing system. The tone of the fact sheet suggests that this problem is not going to be solved in a way that is favorable to industry.

Existing Provisions Under TCPA

Chairman Wheeler’s proposal also provides for some very limited and specific exceptions for “urgent circumstances,” which may include free calls or text messages to wireless devices that alert consumers of potential fraud or that remind them of urgent medication refills. Consumers will still have an opportunity to opt-out of these types of calls and texts.

  • The new proposal will also leave many of the existing provisions of the TCPA intact:

  • The FTC will continue to administer the National Do-Not-Call Registry to prevent unwanted telemarketing calls

  • Wireless and home phone subscribers can continue to prevent telemarketing robocalls made without prior written consent

  • Autodialed and prerecorded telemarketing and information calls and text messages to mobile phones will still require prior consent

  • Political calls will still be subject to restrictions on prerecorded, artificial voice, and autodialed calls to wireless phones, but will continue to not be subject to the National Do-Not-Call Registry because they do not contain telephone solicitations as defined by FCC regulations

  • Consumers will still have a private right of action for violations of the TCPA along with statutory penalties

Implications

If adopted, the new regulations may significantly restrict the use of autodialing technologies by business. However, the devil will be in the details. Organizations should review the owners’ manual that came with their dialer. What can it actually do? In other words, what is its present and future capacity? Have those answers ready so you can act when the FCC rules. Companies should also have proper processes and systems in place to meet the consumer opt-out requirements of any new regulations. Policies should address steps to take when a called party claims that the number called no longer belongs to your intended recipient.

One thing is certain about these new rules, they will not stop scammers who use spoofed caller IDs and originate calls from outside of the United States and, therefore, outside of the jurisdiction of the FCC and/or FTC. They will just make to harder and more expensive for legitimate businesses to reach their customers.

ARTICLE BY Chanley T. Howell, Michael C. Lueder & Steven Millendorf of Foley & Lardner LLP

© 2015 Foley & Lardner LLP

California District Court Holds that Providing Cellphone Number for an Online Purchase Constitutes “Prior Express Consent” Under TCPA – Telephone Consumer Protection Act

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A federal district court in California recently ruled that a consumer who voluntarily provided a cellphone number in order to complete an online purchase gave “prior express consent” to receive a text message from the business’s vendors under the TCPA. See Baird v. Sabre, Inc., No. CV 13-999 SVW, 2014 WL 320205 (C.D. Cal. Jan. 28, 2014).

In Baird, the plaintiff booked flights through the Hawaiian Airlines website. In order to complete her purchase, the plaintiff provided her cellphone number. Several weeks later she received a text message from the airline’s vendor, Sabre, Inc., inviting the plaintiff to receive flight notification services by replying “yes.” The plaintiff did not respond and no further messages were sent. The plaintiff sued the vendor claiming that it violated the TCPA by sending the single text message.

The central issue in Baird was whether, by providing her cellphone number to the airline, the plaintiff gave “prior express consent” to receive autodialed calls from the vendor under the TCPA. In 1992, the FCC promulgated TCPA implementing rules, including a ruling that “persons who knowingly release their phone numbers have in effect given their invitation or permission to be called at the number which they have given, absent instructions to the contrary.” In re Rules & Reg’s Implementing the Tel. Consumer Prot. Act of 1991, 7 F.C.C.R. 8752, 8769 ¶ 31 (1992) (“1992 FCC Order”). In support of this ruling, the FCC cited to a House Report stating that when a person provides their phone number to a business, “the called party has in essence requested the contact by providing the caller with their telephone number for use in normal business communications.” Id. (citing H.R.Rep. No. 102–317, at 13 (1991)).

The court found that, while the 1992 FCC Order “is not a model of clarity,” it shows that the “FCC intended to provide a definition of the term ‘prior express consent.’” Id. at *5. Under that definition, the court held that the plaintiff consented to being contacted on her cellphone by an automated dialing machine when she provided the number to Hawaiian Airlines during the online reservation process. Id. at *6. Under the existing TCPA jurisprudence, a text message is a “call.” Id. at *1. Furthermore, although the plaintiff only provided her cellphone number to the airline (and not to Sabre, Inc., the vendor), the court concluded that “[n]o reasonable consumer could believe that consenting to be contacted by an airline company about a scheduled flight requires that all communications be made by direct employees of the airline, but never by any contractors performing services for the airline.” Id. at *6. The Judge was likewise unmoved by the fact that the plaintiff was required to provide a phone number (though not necessarily a cellphone number) to complete the online ticket purchase. Indeed, the court observed that the affirmative act of providing her cellphone number was an inherently “voluntary” act and that, had the plaintiff objected, she could simply have chosen not to fly Hawaiian Airlines. Id.

Baird does not address the October 2013 TCPA regulatory amendments that require “prior express written consent” for certain types of calls made to cellular phones and residential lines (a topic that previously has been covered on this blog). See 47 CFR § 64.1200(a)(2), (3) (emphasis added). “Prior express written consent” is defined as “an agreement, in writing, bearing the signature of the person called that clearly authorizes the seller to deliver or cause to be delivered to the person called advertisements or telemarketing messages using an automatic telephone dialing system or an artificial prerecorded voice, and the telephone number to which the signatory authorized such advertisements or telemarketing messages to be delivered.” 47 CFR § 64.1200(f)(8). Whether the Baird rationale would help in a “prior express written consent” case likely would depend on the underlying facts such as whether the consumer/plaintiff agreed when making a purchase to be contacted by the merchant at the phone number provided, and whether the consumer/plaintiff provided an electronic signature. See 47 CFR § 64.1200(f)(8)(ii).

Nonetheless, Baird is a significant win for the TCPA defense bar and significantly reduces TCPA risk for the defendants making non-telemarketing calls (or texts) to cellphones using an automated dialer (for which “prior express consent” is the principal affirmative defense). If that cellphone number is given by the consumer voluntarily (and, given the expansive logic of Baird, we wonder when it could be considered “coerced”), the defendant has obtained express consent. Baird leaves open a number of questions worth watching, including how far removed the third-party contractor can be from the company to whom a cellphone number was voluntarily provided. Judge Wilson seemed to think it was obvious to the consumer that a third-party might be utilized by an airline to provide flight status information, but how far does that go? We’ll be watching.

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