In last Friday’s long-awaited TCPA Omnibus Declaratory Ruling and Order (Order), the Federal Communications Commission (FCC or Commission) may have dramatically altered the landscape for TCPA class action defense[¹]. The Order, issued on July 10, 2015, addresses and purports to resolve a wide variety of open issues under the Telephone Consumer Protection Act of 1991 (TCPA), including the meaning of key terms and the application of antiquated provisions in the context of modern day technology. The Order finally addressed over 21 petitions and dozens of comments that had been pending before the Commission for months or, in many cases, years. Although the FCC described the Order as closing loopholes and strengthening consumer protections “already on the books,” see Fact Sheet, businesses should carefully review the details, which indicate the Commission has taken a more-consumer protective stance than it had previously[²].

Below, we highlight “the good, the bad, and the ugly” of the FCC’s recent Order, followed by a detailed description of each ruling.

The Good:

• One-time responses to consumer-initiated text messages may not in some cases require additional consent.
• Some informational healthcare and financial services-related texts and calls may be subject to less stringent consent requirements.
• A non-subscriber, customary user of a telephone can provide consent to autodialed calls, texts and robocalls that is binding on the subscriber.

The Bad:

• Third-party TCPA liability is subject to a totality of the circumstances analysis, which can lead to varying results. Vendor contracts will need to address and allocate TCPA liability appropriately to address the potential of joint and several liability.
• Similarly, whether a smartphone texting/dialing app provider “makes or initiates” a call or text message depends on the degree of control the app provider has over the content, timing and recipients to the call or text message[³].

The Ugly:

• The FCC interprets the definition of “autodialer” extremely broadly to include any dialing system that has the potential capacity to dial randomly or sequentially. Most, if not all, automated calling and texting systems that dial numbers without human intervention may be construed by the FCC as an “autodialer” giving rise to obligations under the TCPA.
• Other than a one-call safe harbor for some calls to reassigned phone numbers, there is no “good faith” exception to the TCPA for calls to reassigned numbers and wrong numbers. Companies should regularly update their lists to exclude reassigned phone numbers and may consider periodically renewing consent from consumers.

The following summary provides additional details about the rulings contained in the Order.

 

Definition of Automatic Telephone Dialing System (ATDS or Autodialer)

The Commission “reaffirmed” its position that an autodialer[⁴] under the TCPA includes equipment that has the capacity to store or produce and to dial random or sequential numbers, even if the system is not presently used for that purpose, and even when the caller is calling a set list of numbers. In fact, the Commission noted that autodialers do not even need to have the “present ability” to dial randomly or sequentially, noting that “the capacity of an autodialer is not limited to its current configuration but also includes its potential functionalities.” (Order ¶ 16). The FCC further reiterated its view that Congress intended a broad definition of autodialer and that the basic functions of an autodialer “are to dial numbers without human intervention” and “to dial thousands of numbers in a short period of time.” (Order ¶ 17)[⁵]. Nonetheless, the Commission observed that these are “outer limits to the capacity of equipment to be an autodialer” (Order ¶ 18) and noted that the definition of autodialer does not extend to “every piece of malleable equipment that conceivably could be considered to have some capacity, however small, to store and dial telephone numbers.” (Id.)[⁶].

The Commission expressly ruled that both predictive dialing and Internet-to-phone text messaging technology fall within the definition of autodialer. The Commission’s “interpretation” of what constitutes an autodialer features front and center in the Petitions for Review filed in the Courts of Appeal for the D.C. Circuit and the Seventh Circuit. (See n.2, supra).

 

Texting/Calling Apps

The Commission clarified several issues relating to app-based calls and texts. First, with respect to Youmail, the FCC held that the app provider does not “make or initiate” a text when an individual uses its service to set up auto replies to incoming voicemails. With regard to TextMe, the Commission clarified that TextMe does not make or initiate a call when one of its app users sends an invitational message using its app. (Order ¶ 25). However, the Commission ruled that Glide does make or initiate a text message when it invites consumers appearing in its app user’s contact list to use the app because, when it “automatically sends invitational texts of its own choosing to every user in the app user’s contact list with little or no obvious control by the user” because it takes “the steps physically necessary to send each invitational text message or, at a minimum, is so involved in doing so as to be deemed to have made or initiated them.” (Order ¶ 35).

Third-Party Liability

The Commission discussed third-party liability and the definitions of “make” and “initiate” from its DISH Network Declaratory Ruling[⁷]. It reiterated that there must be a “direct connection between a person or entity and the making of a call,” which may include the steps necessary to actually physically place the call. (Order ¶ 30). However, it went on to note that the relevant analysis looks to the totality of circumstances surrounding the placement of the call to determine: (1) who took the steps necessary to physically place the call; and (2) whether another person or entity was so involved in placing the call as to be deemed to have initiated it, considering the goals and purposes of the TCPA. (Order ¶ 30). The Commission further noted that in addition to the factors identified in the DISH Network Declaratory Ruling, other factors can be relevant in determining TCPA liability, including:

• the extent to which a person willfully enables fraudulent spoofing of telephone numbers or assists telemarketers in blocking Caller ID, by offering either functionality to clients; and
• whether a calling platform service knowingly allows its clients to use the platform for unlawful purposes. (Id.)

 

Clarification of Consent

The Commission acknowledged that the term “called party” to which consent is tied under the TCPA is ambiguous. It concluded that the term does not mean “intended recipients” and includes individuals who might not be the subscriber, but who are the number’s customary user and can provide consent for the call. The Commission recognized that “the subscriber will generally have allowed such customary users to control the calling to and from a particular number under the plan, including granting consent to receive robocalls.” The FCC even acknowledged that requiring callers to ignore consent from such customary users “would undermine the full benefits of the calling plans.” (Order ¶ 75). Finally, the Commission also expressly recognized that “the consent of a customary user of a telephone number may bind the subscriber.” (Order ¶ 78). The Commission’s failure to include “intended recipient” as a called party is also one of the issues specifically raised in the Petitions for Review.

The Commission also clarified, consistent with recent case law, that the called party may revoke consent at any time and by “any reasonable means.” (Order ¶ 47). The caller may not designate any specific or exclusive means by which consent can be revoked. Further, it is the caller’s obligation to maintain proper business records to track, and ultimately the caller’s burden to prove, consent and the revocation of consent. (Order ¶ 70).

The clarification of the term “called party” to include both subscribers and non-subscriber customary users is a significant development as the definition of a called party has been the subject of differing constructions by the courts. This clarification acknowledges the reality of family plans and business plans where multiple users may be on the same account and can provide valid consent to callers.

 

Reassigned Wireless Numbers and Called Party

Millions of wireless phone numbers are reassigned every year from a prior to a subsequent subscriber. Individuals may change their phone numbers without notifying callers to whom they have provided consent to be called. While the Commission appears to recognize this issue, its solution is less than satisfactory for good faith callers who intend to be compliant with the TCPA.

The Commission addressed this issue in two ways. First, the Commission created a one-call safe harbor for calls to reassigned numbers where the caller does not have actual or constructive notice of the reassignment and claimed that “caller best practices can facilitate detection of reassignments before calls.” (Order ¶ 72). Second, the FCC clarified the definition of “called party” from whom callers must obtain consent, stating that “the TCPA requires consent not of the intended recipient of a call, but of the current subscriber (or non-subscriber customary user of the phone).” (Id.)

The Commission’s one-call safe harbor for calls to reassigned numbers does not require the recipient to inform the caller of the reassignment, making it difficult for businesses to minimize risk by identifying reassigned numbers[⁸].

In balancing the caller’s interest in having an opportunity to learn of reassignment against the privacy interests of consumers to whom the number is reassigned, we find that, where a caller believes he has consent to make a call and does not discover that a wireless number had been reassigned prior to making or initiating a call to that number for the first time after reassignment, liability should not attach for that first call, but the caller is liable for any calls thereafter. The caller, not the called party, bears the burden of demonstrating: (1) that he had a reasonable basis to believe he had consent to make the call, and (2) that he did not have actual or constructive knowledge of reassignment prior to or at the time of this one-additional-call window [that] we recognize as an opportunity for callers to discover reassignment.

(Order ¶ 85).

The FCC described a number of options for callers to determine whether a wireless number has been reassigned: (1) include an interactive opt-out mechanism in all artificial or prerecorded voice calls so that recipients may easily report a reassigned or wrong number; (2) implement procedures for recording wrong number reports received by customer service representatives placing outbound calls; (3) implement processes for allowing customer service agents to record new phone numbers when receiving calls from customers; (4) periodically send an email or mail request to the consumer to update his or her contact information; (5) utilize an autodialer’s and/or a live caller’s ability to recognize “triple-tones” that identify and record disconnected numbers; (6) establish policies for determining whether a number has been reassigned if there has been no response to a “two-way” call after a period of attempting to contact a consumer; and (7) enable customers to update contact information by responding to any text message they receive, which may increase a customer’s likelihood of reporting phone number changes and reduce the likelihood of a caller dialing a reassigned number. (Order ¶ 86).

Significantly, the Commission expressly noted that the one-call safe harbor does not apply to misdialed calls or incorrect data entry by the caller as in those situations, there was never valid consent. (Order ¶ 72 n. 262). However, as a practical matter, a number of these “options” are generally not feasible, rendering the one-call safe harbor little comfort to callers attempting to comply with the TCPA. Indeed, the one-call safe harbor is another issue specifically raised in the Petitions for Review.

 

On Demand Text Messages

The Commission clarified that a one-time text message sent immediately after a consumer’s request for the text does not violate the TCPA or FCC rules or regulations. For example, this could involve a situation where a consumer sees an advertisement or other form of a “call to action” by a retailer inviting the consumer to text a word like “discount” to the retailer, who responds by sending a coupon. The Commission notes that the response from the retailer (or other business) is not a TCPA violation so long as it:

1. 1. 1. 1. 1. is requested by the consumer;
            2. is a one-time only message sent immediately in response to a specific consumer request; and
            3. contains only the information requested by the consumer with no other marketing or advertising information.

 

Prior Express Written Consent Waiver After 2012 Rule Changes

When the 2012 changes to the implementing rules for the TCPA went into effect on October 16, 2013, there was some ambiguity as to whether previously obtained written consents were still valid or whether new written consents that fully complied with the new rules needed to be obtained prior to October 16. In response to petitions addressing this lack of clarity by the Direct Marketing Association (DMA) and a Coalition of Mobile Engagement Providers (Coalition), the Commission granted a retroactive waiver to 89 days after this Order to the DMA and the Coalition “and their members” allowing these groups and “their members” to rely on the “old” written express consent provided by consumers before October 16, 2013. It appears that this retroactive waiver does not apply to any other entity without a further petition from such entity.

 

Financial Services and Healthcare-Related Messages

In recognition of the exigent nature of certain financial-related and healthcare-related information, the Commission exempted certain of these calls from the consent requirements under certain conditions. For these exceptions to apply, the calls or text messages must be free to the end user. The Commission’s reasoning and order with respect to each type of call is as follows.

Financial-Related Calls

There are certain types of financial-related calls that involve exigent circumstances which require a quick, timely communication to prevent harm or to help promptly mitigate the extent of a harm. If the subject matter of the call or text involves one of four identified areas, the call or text will be exempt from the prior express consent requirement.

The four areas are: (1) transactions and events that suggest a risk of fraud or identity theft; (2) possible breaches of the security of customers’ personal information; (3) steps consumers can take to prevent or remedy the harm caused by data security breaks; and (4) actions needed to arrange for receipt of pending money transfers. (Order ¶ 127). The FCC also adopted a number of conditions that must be complied with in order for the exemption to be effective. (Order ¶ 138).

Healthcare-Related Calls

Acknowledging also that there are certain types of healthcare-related calls that benefit consumers, the Commission clarified that healthcare-related calls subject to HIPAA do not need to have prior express consent if the covered entity or business associate (as defined by HIPAA) is calling within the general scope of consent given by the consumer and absent instructions to the contrary. (Order ¶ 141). Further, the Commission also ruled that where a party is medically incapacitated and unable to provide consent, prior express consent to make healthcare-related calls may be obtained from a third party. (Order ¶ 142).

The types of calls that are the subject of this clarification are calls for healthcare treatment purposes including: appointment and exam confirmations and reminders, wellness checkups, hospital pre-registration instructions, pre-operative instructions, lab results, post discharge follow up intended to prevent re-admission, prescription notifications, and home healthcare instructions. (Order ¶ 146). Further, the HIPAA privacy rules control the content of these communications. (Id.) As with the financial-related calls, the FCC imposed a number of conditions that must be met for the above exemptions to apply. (Order ¶ 147).

 

Call-Blocking Technology

The FCC affirmed, consistent with the viewpoint of the FTC, that nothing in the Communications Act or the FCC’s rules or orders prohibits carriers or VoIP providers from implementing call-blocking technology. (Order ¶ 152). However, the offer of such technologies must also include accurate disclosures that certain calls that consumers want to receive may also be blocked. (Order ¶ 157). Such disclosures must consist of “factual and uncontroversial information.” (Order ¶ 160). Finally, the Commission also strongly encouraged carriers and VoIP providers, as well as independent call-blocking service providers, to develop technologies and protocols to avoid blocking emergency calls. (Order ¶¶ 161, 163).

 

Miscellaneous Issues

The Order addressed additional issues that reaffirmed prior positions. First, the Commission reaffirmed that text messages are calls within the meaning of the TCPA. Second, simply being on an acquaintance’s phone contact list does not amount to consent to receive robocalls from third-party applications downloaded by the acquaintance (consistent with the FCC’s prior ruling in the GroupMe matter)[⁹] Third, the Order addressed circumstances in which collect calling services (including inmate calling services) can call residential numbers or cell phone numbers without consent and not violate the TCPA.

 

Key Takeaways

• Definition of an Autodialer – The FCC Order states that a dialing system need only have the potential capacity to dial random or sequential phone numbers in order to qualify as an autodialer under the statute. Present or actual capacity to dial randomly or sequentially is not required.
• Text/Calling Apps – The Order clarifies that an app provider does not necessarily “make or initiate” a text when an individual uses a service to set up automatic replies to incoming voicemails or when an app user sends an invitational message through the app. However, the analysis depends on the degree of control the user has over the sending of a text and an app provider does make or initiate a text message when it sends an invitation to a consumer appearing in an app user’s contact list with minimal intervention or choice by the app user.
• Third-Party Liability – The FCC clarified what constitutes “making” or “initiating” a call and provided further guidance on the level of involvement that may result in liability under the TCPA.
• Clarification of Consent – The Commission expanded the statute’s consent requirements, ruling that simply being on an acquaintance’s phone contact list does not amount to consent to receive robocalls or text messages from third-party applications downloaded by the acquaintance; that consumers may revoke consent at any time and through reasonable means; and that Internet-to-phone messages require consent. Certain “pro-consumer” financial and healthcare-related messages were excepted from prior express consent requirements.
• Called Party – The “called party” who may consent to receive autodialed calls, texts, and robocalls includes the current subscriber or the “non-subscriber customary user of the phone.” A nonsubscriber, customary user can provide consent that is binding on the subscriber.
• Reassigned Numbers – Callers are liable, according to the Order, for autodialed calls, texts and robocalls to reassigned numbers when the current subscriber or non-subscriber customary user of the number has not provided the requisite consent. There is a one-call safe harbor for such calls where the caller does not have actual or constructive knowledge of the reassignment.
• On Demand Text Messages – “On demand” text messages sent in response to a consumer request are not subject to TCPA liability.
• Prior Express Consent After 2012 Rule Changes – The Commission granted a retroactive waiver from October 16, 2013 to the release of the July 10, 2015 Order and then a waiver from the release of this retroactive ruling through a period of 89 days to the DMA and the Coalition and their members.
• Call-Blocking Technology – Nothing prohibits carriers or VoIP providers from offering products to consumers that implement call-blocking technology.

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Endnotes

[1] This update is not intended to opine on, nor should it be construed to opine on, the legal consequences and effects of the Order.

[2] Petitions challenging the Commission’s Order have already been filed in at least two appellate courts. See ACA Int’l v. Fed. Comm’ns Comm’n, No. 15-1211 (D.C. Cir. filed July 10, 2015) (petition for review), consolidated with Sirius XM Radio, Inc. v. Fed. Comm’ns Comm’n, No. 15-1218 (D.C. Cir. filed July 14, 2015) (petition for review); See Prof’l Ass’n for Customer Engagement, Inc. v. Fed. Comm’ns Comm’n, No. 15-2489 (7th Cir. filed July 14, 2015) (petition for review). These Petitions raise some specific issues but also assert that the “Declaratory Ruling and Order is arbitrary and capricious, an abuse of discretion, in excess of the FCC’s statutory authority, and otherwise contrary to the Constitution and other laws.” Sirius, No. 15-1218, at 3; Prof’l Ass’n for Customer Engagement, No. 15-2489, at 3.

[3] This ruling addressed petitions filed by three app providers, Youmail, TextMe and GlideTalk. Youmail is an app that sends a text message in response to a voicemail; TextMe is an app that provides access to text message and voice call services, and Glide enables real-time communications through video messaging. (Order ¶¶ 31, 34, 36).

[4] The TCPA defines an ATDS as equipment which has the capacity to both (1) “store or produce telephone numbers to be called, using a random or sequential number generator;” and (2) “to dial such numbers.” 47 U.S.C. § 227(a)(1).

[5] The dissents of Commissioners Pai and O’Rielly were especially critical of this analysis.

[6] Also, parties cannot avoid TCPA liability by dividing ownership of dialing equipment. (Order ¶ 23). Thus, even if different pieces of equipment that do not constitute an autodialer individually but do constitute an autodialer when combined are owned separately, the pieces are still considered an autodialer.

[7] 28 FCC Rcd. 6574 (2013).

[8] Interestingly, the Commission also observes that callers choose to use autodialers and that these issues could be effectively avoided if calls are made manually. (Order ¶ 84).

[9] In the Matter of GroupMe, Inc./Skype Communications S.A.R.L. Petition for Expedited Declaratory Ruling, CG Docket No. 02-278, 29 FCC Rcd. 3442 (2014).

© 2015 Perkins Coie LLP

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