Sunday, July 12, 2015

FYI: FCC Issues Significant TCPA Interpretation Changes Affecting Telemarketing and Servicing

As referenced in our prior update below, the Federal Communications Commission (“FCC”) recently issued its Declaratory Ruling and Order FCC 15-72 (“Order”) addressing more than 20 requests for clarification or other action relating to various issues under the TCPA.

 

One of the dissenting Commissioners (Ajit Pai) noted that, “[r]ather than focus on the illegal telemarketing calls that consumers really care about, the Order twists the law’s words even further to target useful communications between legitimate businesses and their customers.  This Order will make abuse of the TCPA much, much easier. And the primary beneficiaries will be trial lawyers, not the American public.”

 

A copy of the Order is available at:

 

https://www.fcc.gov/document/tcpa-omnibus-declaratory-ruling-and-order

 

Among other things, the FCC’s Order provides that:

 

 

1.  “Callers cannot avoid obtaining consumer consent for a robocall simply because they are not ‘currently’ or ‘presently’ dialing random or sequential phone numbers.”

 

The FCC re-states its position that:  (1) “dialing equipment generally has the capacity to store or produce, and dial random or sequential numbers (and thus meets the TCPA’s definition of ‘autodialer’) even if it is not presently used for that purpose, including when the caller is calling a set list of consumers;  (2) “predictive dialers, as previously described by the Commission, satisfy the TCPA’s definition of ‘autodialer’ for the same reason;” and  (3) “callers cannot avoid obtaining consent by dividing ownership of pieces of dialing equipment that work in concert among multiple entities.”

 

The FCC states that “the capacity of an autodialer is not limited to its current configuration but also includes its potential functionalities,” and “even when the equipment presently

lacked the necessary software, it nevertheless had the requisite capacity to be an autodialer.”

 

Even though this “broad interpretation of ‘capacity’ could potentially sweep in smartphones because they may have the capacity to store telephone numbers to be called and to dial such numbers through the use of an app or other software,” the FCC stated “there is no evidence in the record that individual consumers have been sued based on typical use of smartphone technology. Nor have these commenters offered any scenarios under which unwanted calls are likely to result from consumers’ typical use of smartphones. We have no evidence that friends, relatives, and companies with which consumers do business find those calls unwanted and take legal action against the calling consumer. We will continue to monitor our consumer complaints and other feedback, as well as private litigation, regarding atypical uses of smartphones, and provide additional clarification if necessary.”

 

The FCC declined the “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.” 

 

Instead, the FCC reiterated that the “prohibitions of [section] 227(b)(1) clearly do not apply to functions like ‘speed dialing,” 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.’”

 

However, “[h]ow 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.”

 

Nevertheless, according to the FCC, “[t]here must be more than a theoretical potential that the equipment could be modified to satisfy the ‘autodialer’ definition. Thus, for 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.”

 

 

2.  A called party “may revoke consent at any time and through any reasonable means.”

 

The FCC states that “a called party may revoke consent at any time and through any reasonable means. A caller may not limit the manner in which revocation may occur.”

 

The FCC also emphasized that “regardless of the means by which a caller obtains consent, under longstanding [FCC] precedent, if any question arises as to whether prior express consent was provided by a call recipient, the burden is on the caller to prove that it obtained the necessary prior express consent.”

 

 

3.  Consent must be specific to the type of call, and type of telephone service of the number being dialed.

 

The FCC clarified “that porting a telephone number from wireline service to wireless service does not revoke prior express consent.  Stated another way, if a caller obtains prior express consent to make a certain type of call to a residential number and that consent satisfies all of the requirements for prior express consent for the same type of call to a wireless number, the caller can continue to rely on that consent after the number is ported to wireless.”

 

“Until such revocation occurs, the caller may reasonably rely on the valid consent previously given and take the consumer at his word that he wishes for the caller to contact him at the number he provided when the caller obtained the consent.”

 

However, the FCC stressed that its Order “in no way relieves a caller of the obligation to comply with the prior express consent requirements applicable to calls to wireless numbers.”

 

Thus, “if a caller did not obtain prior express consent for a type of call to the number when it was residential because no prior express consent was required, but prior express consent is required for that type of call to a wireless number, the caller would have to obtain the consumer’s prior express consent to make such calls after the number is ported

to wireless.”

 

 

4.  Only “the consumer assigned the telephone number dialed and billed for the call” or “the non-subscriber customary user of a telephone number included in a family or business calling plan” may consent.

 

The FCC states that the “called party” under the TCPA is “the subscriber, i.e., the consumer assigned the telephone number dialed and billed for the call, or the non-subscriber customary user of a telephone number included in a family or business calling plan. Both such individuals can give prior express consent to be called at that number.”

 

However, “providing one’s phone number evidences prior express consent to be called at that number, absent instructions to the contrary.”

 

 

5.  “Callers are liable for robocalls to reassigned wireless numbers when the current subscriber to or customary user of the number has not consented, subject to a limited, one-call exception for cases in which the caller does not have actual or constructive knowledge of the reassignment.”

 

The FCC states that “the TCPA requires the consent not of the intended recipient of a call, but of the current subscriber (or non-subscriber customary user of the phone) and that caller best practices can facilitate detection of reassignments before calls.”

 

In addition, “[c]allers who make calls without knowledge of reassignment and with a reasonable basis to believe that 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.”

 

However, “the caller is liable for any calls thereafter.”

 

The FCC specifically declined to “add an affirmative, bad-faith defense that vitiates liability upon a showing that the called party purposefully and unreasonably waited to notify the calling party of the reassignment in order to accrue statutory penalties.”

 

In addition, “[t]he caller, and not the called party, bears the burden of demonstrating: (1) that he had a reasonable to 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 we recognize as an opportunity for callers to discover reassignment.”

 

 

6.  The FCC rejected one Petitioner’s arguments (subsequently withdrawn) that “the TCPA’s protections are limited to telemarketing calls to wireless numbers and should not require consent for non-telemarketing robocalls made with a predictive dialer.”

 

 

7.  “The TCPA’s consent requirement applies to short message service text messages (“SMS” or “text message”),” as well as “internet to phone text messages,” in addition to voice calls.

 

 

8.  The FCC’s 2012 “prior express written consent” rule is waived “for certain parties for a limited period of time to allow them to obtain updated consent.”

 

Several petitioners sought “relief from or clarification of the prior-express-written-consent rule that became effective October 16, 2013,” which “requires prior express written consent for

telemarketing calls; to get such consent, telemarketers must tell consumers the telemarketing will be done with autodialer equipment and that consent is not a condition of purchase.”

 

The FCC granted these petitions “(including their members as of the release date of this Declaratory Ruling) a retroactive waiver from October 16, 2013, to release of this Declaratory

Ruling, and then a waiver from the release of the Declaratory Ruling through a period of 89 days following release of this Declaratory Ruling to allow Petitioners to rely on the ‘old’ prior express written consents already provided by their consumers before October 16, 2013 (the effective date of new requirement).”

 

The FCC clarified that “the ‘old’ written express consents provided by consumers before October 16, 2013, remain effective for a period of 89 days following release of this Declaratory Ruling. Petitioners must come into full compliance within 90 days after release of this Declaratory Ruling for each subject call, which [the FCC] believes is a reasonable amount of time for Petitioners to obtain the prior express written consent required by the current rule.”

 

 

9.  “’[O]n demand’ text messages sent in response to a consumer request are not subject to TCPA liability.”

 

The FCC states that “a one-time text sent in response to a consumer’s request for information does not violate the TCPA or the Commission’s rules so long as it: (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.”

 

The FCC emphasized that “this ruling applies only when the on-demand text message has been expressly requested by the consumer in the first instance.”

 

 

10.  “[C]ertain free, pro-consumer financial- and healthcare-related messages” are exempt “from the consumer-consent requirement, subject to strict conditions and limitations to protect consumer privacy.”

 

More specifically, the FCC exempted calls and texts concerning “(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 harm caused by data security breaches; and (4) actions needed to arrange for receipt of pending money transfers.”

 

The FCC imposed the following restrictions and requirements regarding these messages:

 

“1) voice calls and text messages must be sent, if at all, only to the wireless telephone number provided by the customer of the financial institution;

2) voice calls and text messages must state the name and contact information of the financial institution (for voice calls, these disclosures must be made at the beginning of the call);

3) voice calls and text messages are strictly limited to the [specified purposes] and must not include any telemarketing, cross-marketing, solicitation, debt collection, or advertising content;

4) voice calls and text messages must be concise, generally one minute or less in length for voice calls (unless more time is needed to obtain customer responses or answer customer questions) and 160 characters or less in length for text messages;

5) a financial institution may initiate no more than three messages (whether by voice call or text message) per event over a three-day period for an affected account;

6) a financial institution must offer recipients within each message an easy means to opt out of future such messages, voice calls that could be answered by a live person must include an automated, interactive voice- and/or key press-activated opt-out mechanism that enables the call recipient to make an opt-out request prior to terminating the call, voice calls that could be answered by an answering machine or voice mail service must include a toll-free number that the consumer can call to opt out of future calls, text messages must inform recipients of the ability to opt out by replying ‘STOP,’ which will be the exclusive means by which consumers may opt out of such messages; and,

7) a financial institution must honor opt-out requests immediately.”

 

In addition, the exemption only applies “only if they are not charged to the recipient, including not being counted against any plan limits that apply to the recipient (e.g., number of voice minutes, number of text messages).”

 

As to healthcare related messages, the FCC stated that “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.”

 

In the situation “where a party is unable to consent because of medical incapacity, prior express consent to make healthcare calls subject to HIPAA may be obtained from a third party—much as a third party may consent to medical treatment on an incapacitated party’s behalf. A caller may make healthcare  calls subject to HIPAA during that period of incapacity, based on the third party’s prior express consent. Likewise, 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.  A caller seeking to make healthcare calls subject to HIPAA to a patient who is no longer incapacitated must obtain the prior express consent of the called party.”

 

The FCC also adopted the following conditions for each exempted message made by or on behalf of a healthcare provider:

1) voice calls and text messages must be sent, if at all, only to the wireless telephone number provided by the patient;

2) voice calls and text messages must state the name and contact information of the healthcare provider (for voice calls, these disclosures would need to be made at the beginning of the call);

3) voice calls and text messages are strictly limited to [certain specific healthcare-related purposes]; must not include any telemarketing, solicitation, or advertising; may not include accounting, billing, debt-collection, or other financial content; and must comply with HIPAA privacy rules ;

4) voice calls and text messages must be concise, generally one minute or less in length for voice calls and 160 characters or less in length for text messages;

5) a healthcare provider may initiate only one message (whether by voice call or text message) per day, up to a maximum of three voice calls or text messages combined per week from a

specific healthcare provider;

6) a healthcare provider must offer recipients within each message an easy means to opt out of future such messages, voice calls that could be answered by a live person must include an automated, interactive voice- and/or key press-activated opt-out mechanism that enables the call recipient to make an opt-out request prior to terminating the call, voice calls that could be answered by an answering machine or voice mail service must include a toll-free number that the consumer can call to opt out of future healthcare calls, text messages must inform recipients of the ability to opt out by replying ‘STOP,’ which will be the exclusive means by which consumers may opt out of such messages; and,

7) a healthcare provider must honor the opt-out requests immediately.”

 

In addition, the exemption only applies “only if they are not charged to the recipient, including not being counted against any plan limits that apply to the recipient (e.g., number of voice minutes, number of text messages).”

 

 

 

 

Ralph T. Wutscher
Maurice Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (312) 284-4751

Mobile:  (312) 493-0874
Email: rwutscher@MauriceWutscher.com

 

Admitted to practice law in Illinois

 

 

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From: Ralph T. Wutscher <rwutscher@mauricewutscher.com>
Date: Sun, May 31, 2015 at 8:33 AM
Subject: FYI: FCC Proposes Significant TCPA Interpretation Changes Affecting Telemarketing and Servicing
To: "Ralph T. Wutscher" <rwutscher@mauricewutscher.com>
Cc: Florida Office, Chicago Office, San Francisco Office, San Diego Office, New York Office, New Jersey Office, Philadelphia Office, Ohio Office, Indiana Office, DC Office

The Federal Communications Commission announced a fact sheet proposal by Chairman Tom Wheeler to respond to some two dozen pending petitions regarding various aspects of the federal Telephone Consumer Protection Act (“TCPA”). 

 

The FCC states that the proposed actions would be “one of the most significant FCC consumer protection actions since it established the Do-Not-Call Registry with the FTC in 2003.”

 

The Commission will vote on the proposal at its Open Meeting on June 18, 2015.

 

A copy of the fact sheet is available at:  http://transition.fcc.gov/Daily_Releases/Daily_Business/2015/db0527/DOC-333676A1.pdf

 

According to the fact sheet, and among other things, the following issues would be addressed in the proposed actions:

 

 

1.  Revocation of Consent:

 

The FCC Chairman states “[c]onsumers would have the right to revoke their consent to receive robocalls and robotexts in any reasonable way at any time.”  This would affect calls to landline home service, and to wireless/cell numbers.

 

2.  “Do Not Disturb” or “Call Blocking” Technology

 

The FCC Chairman states “[c]arriers could offer robocall-blocking technologies to consumers. It would give the go-ahead for carriers to implement market-based solutions that consumers could use to stop unwanted robocalls.”  This would affect calls to landline home service, and to wireless/cell numbers.

 

3.  Calls to Re-Assigned Numbers, the “One Free Pass” Rule.

 

The FCC Chairman proposes to make clear that “[c]onsumers who inherit a phone number would not be subject to a barrage of unwanted robocalls to which a previous subscriber of the number consented. If a phone number has been reassigned, callers must stop calling the number after one call.”  This would affect calls to landline home service, and to wireless/cell numbers.

 

4.  Definition of “Automatic Telephone Dialing System”

 

The FCC Chairman proposes to double-down on the FCC’s position that “[a]n ‘autodialer’ is any technology with the capacity to dial random or sequential numbers. The rulings would ensure robocallers cannot skirt consumer consent requirements through changes in calling technology design or by calling from a list of numbers.”  This would affect calls to wireless/cell numbers.

 

5.  Limited Exceptions for Urgent Circumstances

 

The FCC Chairman proposes to allow “[f]ree calls or texts to, for example, alert consumers to possible fraud on their bank accounts or remind them of important medication refills would be allowed. The proposal is very clear about what such messages can be and what they cannot be (i.e., no marketing or debt collection). In addition, consumers would have the ability to opt out of even these permitted calls and texts.”  This would affect calls to wireless/cell numbers.

 

 

 

Ralph T. Wutscher
Maurice Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (312) 284-4751

Mobile:  (312) 493-0874
Email: rwutscher@MauriceWutscher.com

 

Admitted to practice law in Illinois

 

 

NOTICE: We do not send unsolicited emails. If you received this email in error, or if you wish to be removed from our update distribution list, please simply reply to this email and state your intention. Thank you.


Our updates are available on the internet, in searchable format, at:


Financial Services Legal Developments

 

and

 

The Consumer Financial Services Blog

 

and

 

California Finance Law Developments

 

and

 

Insurance Recovery