Tag: Telephone Consumer Protection Act

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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