Consumer Protection & Privacy

FCC Passes New Declaratory Rule Clarifying and Interpreting TCPA Generally Unfavorably to Defendants

 by David N. AnthonyAlan D. WingfieldChad Fuller and Tim J. St. George 

On June 18, 2015, the Federal Communications Commission (“FCC”) voted 3-2 to approve an order that promises to have major and negative impacts on companies who use modern telephone technology to text and call consumers.

The stark increase in the number of lawsuits that were filed under the Telephone Consumer Protection Act (“TCPA”) has been well documented. This litigation trend also caused companies and industry groups to file 21 petitions with the FCC seeking clarification on a number of different facets of the TCPA. Those petitions concerns macroscopic issues such as what constitutes an “autodialer” and whether text messages are covered by the TCPA, as well as granular issues involving the application of the TCPA to certain market segments (e.g., healthcare).

On June 18, 2015, the FCC held a hearing on a proposed Declaratory Ruling and Order, which FCC Chairman Tom Wheeler claimed will “reaffirm the Telephone Consumer Protection Act’s protections against unwanted robocalls, encouraging pro-consumer uses of robocall technology, and responding to a number of requests for clarity from businesses and other callers.”

The Declaratory Ruling was confirmed by the FCC by a 3-2 vote along political party lines. The three Democrat Commissioners (including Chairman Wheeler) voted in favor of the Ruling while the two Republican Commissioners opposed it.

The Declaratory Rule has not yet been made public. However, the commentary on the ruling at the hearing detailed a number of principles and findings that will be contained within the forthcoming Declaratory Rule. Some of the highlights of the forthcoming Rule are as follows:

  • • The FCC held that consumers have the right to revoke their consent to receive robocalls and robotexts “in any reasonable way” at any time; a phrase that remains up for interpretation, but which clearly was meant to exclude any attempt to categorically limit the manner(s) in which consumers can revoke consent or to require consumers to revoke consent in writing.
  • • The FCC reaffirmed that the term “autodialer” encompasses as any technology with the “capacity” to dial random or sequential numbers, even if the autodialer is not being used in that manner at the time of the call in question and even if the system was not capable of making autodialed calls at the time of the call in question, so long as the potential to make such calls upon modification was present. Put another way, the potential for a device to be used as an autodialer after modification confers autodialer status.
  • • Text messages continue to constitute “calls” for purposes of potential TCPA liability.
  • • If a phone number has been reassigned, callers can make one call without being subject to TCPA liability, after which they presumably must discover (even if the consumer does not pick up or respond to a text) that the reassigned number no longer belonged to the intended recipient and cease calling to avoid what will otherwise be strict liability. Chairman Wheeler referred to this provision as the “One Strike Rule.”  However, given that the “one-strike” is exhausted even if the consumer does not respond or pick up, this exemption may have little practical effect.
  • • The FCC stated that wireless carriers, as well as VoIP providers, are free to provide consumers with services and technologies to block unwanted robocalls.
  • • In addressing a question “about who makes a call and is therefore responsible for that call under the TCPA,” the Rule “clarifies [that] an application that plays a minimal role in making a call, such as just providing the application itself, but not the message content, is not the maker of the call for purposes of the TCPA.”
  • • In favorable ruling for companies using telephone methods of contact, the FCC stated that consent continues to survive after the number is “ported” from a wireline (i.e., landline) to a wireless number.
  • • Finally, the Rule grants limited exemptions from the TCPA’s consent requirement for “time-sensitive financial alerts and healthcare related calls that are free to the consumers.”  Those exemptions, however, are “subject to strict conditions” on privacy and they must also provide the consumer the ability to opt out of future like messages. The FCC also emphasized that the exemptions also do not apply to “telemarketing and debt collection content.” “There is a simple concept in the statute that we embrace today,” Chairman Wheeler concluded: “You cannot be called unless you consent to be called. The consumer should be in control.”

The vote passed despite strong dissent from two Republican FCC Commissioners. “In practice, the TCPA has strayed beyond its original purpose, and the FCC can fix that. Instead, the order takes the opposite tact,” said Commissioner Ajit Pai in a prepared statement to the Commission. FCC Commissioner Michael O’Rielly, who also voiced dissent, stated “[t]oday’s order has been hailed as protecting American consumers, but it is a farce.”  “The order penalizes businesses and institutions acting in good faith to reach their consumers using technology.”

As a general matter, the FCC’s interpretation of the TCPA is binding on courts applying the TCPA in private lawsuits, including class actions. Many courts have stayed litigation awaiting the FCC’s rulings on the pending petitions. The Declaratory Rule, when released, will need to be carefully studied by affected businesses for compliance.

 Read more at Consumer Financial Services Law Monitor by Troutman Sanders LLP. 

Troutman Sanders LLP is an international law firm with more than 600 lawyers in 16 offices located throughout North America and Asia. Founded in 1897, the firm’s lawyers provide counsel and advice in practically every aspect of civil and commercial law related to the firm’s core practice areas: Corporate, Energy and Industry Regulation, Finance, Litigation and Real Estate. Firm clients range from multinational corporations to individual entrepreneurs, federal and state agencies to foreign governments, and non-profit organizations to businesses representing virtually every sector and industry. See troutmansanders.com for more information.

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