On July 10, 2015, the Federal Communications Commission (FCC) released its long-anticipated Declaratory Ruling and Order¹ addressing twenty-one petitions and requests seeking clarification of, and relief from, various provisions of the Telephone Consumer Protection Act (TCPA) and the FCC’s implementing regulations.² The order provides some much-needed clarity in certain areas, but commentators have generally concluded that the order has broadened the reach of the TCPA and inserted uncertainty in other areas, making calling or texting consumers an increasingly risky business practice.

Congress enacted the TCPA in 1991 to regulate certain communications that consumers deemed an annoyance and an invasion of privacy. Among other things, the TCPA imposes requirements for telemarketing and artificial or prerecorded voice calls to residential landline numbers, and all calls to wireless numbers and certain categories of business numbers made using an “automatic telephone dialing system” or an artificial or prerecorded voice. To encourage private enforcement, the TCPA provides for a private right of action to recover up to $1,500 per call that violates the statute. Putative class actions alleging TCPA violations have increased significantly in recent years, with one source estimating that 2,336 such actions were filed in 2014 alone.³ Therefore, businesses making calls or sending text messages to consumers are encouraged to review the FCC order and to assess its impact on their operations.

The Order

The FCC order addresses the following questions, among others:

• What equipment qualifies as an “automatic telephone dialing system” subject to the TCPA’s prohibitions?
• Who is liable for TCPA violations when text messages are facilitated using apps and platforms?
• May consumers revoke consent previously given to be called/texted, and if so, how?
• Are callers liable for calls to reassigned wireless numbers when they had consent from the prior user of the number and had no knowledge of the reassignment?
• Do mobile marketers who had obtained written consent for mobile marketing campaigns prior to the effective date of the FCC’s “express written consent” regulation need to re-obtain written consent?
• Do on-demand text messages sent in direct response to a consumer’s request violate the TCPA if no additional consent has been provided?
• Is there an exemption from consent requirements for certain free-to-recipient calls?
• May carriers offer Do-Not-Disturb technology to customers?

Definition of “Automatic Telephone Dialing System”

The TCPA defines “automatic telephone dialing system” (which the FCC refers to as an “auto-dialer”) 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.”⁴ This definition has been heavily litigated in class actions, with courts divided over: (1) a strict construction of the statutory definition (i.e., equipment needs a present capacity to generate and dial random or sequential telephone numbers to be an “auto-dialer”); and (2) a more expansive definition based on the FCC’s commentary in prior rulings (i.e., an “auto-dialer” includes any system that can dial stored lists of numbers without human intervention).

In the order, the FCC denied multiple requests to clarify that the plain language of the statutory definition controls and that the FCC has not broadened that definition. Instead, in an ambiguous and confusing discussion, the FCC both relied on Congress’s statutory definition and said that it would continue to apply a “without human intervention” test, using a case-by-case determination.⁵ However, the order also went on to say that the term “capacity” as used in the definition does not mean “present ability,” but rather “potential ability”—i.e., equipment that can generate and dial random or sequential telephone numbers with modification, reconfiguration, or addition of new software.⁶ Responding to criticism from two strongly worded dissents, the majority stated that a theoretical possibility that equipment can be modified to generate and dial random or sequential numbers is not enough to make it an auto-dialer.⁷ It gave examples of dialing equipment that are not auto-dialers: a handset with a speed dial function and rotary phones.⁸ However, the FCC refused to define the precise boundaries of the term “capacity,” leaving significant uncertainty for businesses engaged in calling or texting consumers. Several businesses have already appealed this ruling.

Texting Apps and Platforms

Numerous apps provide functionality for users to invite friends via text, or otherwise to send text messages. Businesses also use third-party texting platforms to send text messages to consumers as part of mobile marketing campaigns, for informational alerts, and for other purposes. As part of the order, the FCC resolved three petitions by app providers seeking rulings that their users initiate the texts sent through the apps, and therefore the providers have no liability under the TCPA. In resolving these petitions, the order clarifies that whether the provider is deemed an initiator of the texts (and therefore subject to TCPA requirements) depends upon the totality of the circumstances and, in particular, the provider’s level of involvement in the sending of the texts.⁹

In two of the three scenarios presented in the petitions, the app users: (1) choose whether to send the messages and when; (2) choose the message recipients; and (3) control the bulk of the message content. The FCC concluded that given these circumstances, the app users initiate the messages.¹⁰ Even where the app provider supplied the content, which promoted the app and could be considered advertising, the FCC concluded that this minimal involvement was not enough to make the app provider responsible for the messages.¹¹ In a third scenario, where the app provider was alleged to have automatically sent invitation text messages to all of its users’ cell phone contacts with little or no involvement of the users, the FCC concluded that the app provider was the initiator.¹² This is a beneficial ruling for app and texting platform providers, as they can design their services to conform to the ruling so that they can facilitate others’ sending text messages without opening themselves up to TCPA liability.

Revoking Consent to Calls

The FCC order makes clear that consumers may revoke consent. It also concludes that a consumer may revoke consent through any reasonable means that clearly expresses a desire not to receive further calls or messages.¹³ Reasonable means may include oral or written opt-out requests.¹⁴ The order rejects the notion that businesses can require revocation only in writing or by other limited means.¹⁵ Multiple appeals have been filed arguing that this ruling, among other things, imposes an undue compliance burden on businesses.

Calling Wireless Numbers No Longer Associated with the Person Who Provided Consent

The order concludes that for consent to be valid under the TCPA, it must be obtained from the current subscriber to the number, or a non-subscriber who is a customary user of the phone (e.g., a family member on a family plan).¹⁶ According to the FCC, consent to call a number obtained from the intended recipient of the call when the number has been reassigned to someone else is insufficient, even though the calling party had no knowledge of the reassignment.¹⁷

Numerous parties had petitioned the FCC to clarify the meaning of the phrase “called party” within the section of the TCPA that excludes from the law’s coverage any calls made “with the prior express consent of the called party.” Those petitions explained that there is no database of reassigned numbers or other means for callers to know in all instances that a number has been reassigned, which has led to significant TCPA class action litigation. Although the FCC recognized this reality, it rejected the plea to fix this problem.

In light of the significant impact of this ruling—which plainly stands to chill a significant amount of protected speech and likely violates the Due Process rights of callers—the FCC adopted a “one free call” exception. Under this exception, a caller may initiate one call to a call recipient after a number reassignment without incurring TCPA liability.¹⁸ However, the exception has limited value since it is limited to one call even if the called party does not answer or respond, and even if the caller does not obtain knowledge of the number reassignment through that call.¹⁹ Therefore, this exception may not be helpful to callers in most cases.

To take advantage of this exception, the caller must be able to show that it made the one-time call without knowledge of the reassignment and with a reasonable basis to believe that it has a valid consent to make the call.²⁰ If the one-time call does not provide actual knowledge of whether reassignment occurred, the caller is deemed to have constructive knowledge that the number was reassigned—a position that these writers believe makes no sense. The FCC suggests several alternative options for determining whether a number has been reassigned, such as by signing up for number reassignment databases (which the FCC acknowledge are incomplete) and regular email communications with consumers to verify contact information.²¹ This ruling also is the subject of several appeals.

Updating Prior Express Written Consent Obtained Under Old Rules

Effective October 16, 2013, the FCC made material changes to its TCPA regulations affecting the consumer consent requirements applicable to certain calls and messages.²² Under the TCPA, “prior express consent” is required for calls and texts to wireless numbers and certain other types of calls. In the amended regulations, the FCC made a distinction between calls/texts that are purely informational and calls/texts that introduce an advertisement or that amount to telemarketing. For marketing/advertising calls or messages to wireless numbers using an “automatic telephone dialing system” or artificial or prerecorded voice message (as well as artificial or prerecorded voice marketing/advertising calls to residential lines and certain categories of calls to business lines), prior express written consent, obtained in the manner specified in the FCC’s regulations, is required by the FCC.²³ Prior to the effective date of the amended regulation, consent could be provided orally or in writing for these types of calls.

Multiple mobile marketing organizations petitioned the FCC to clarify that when their members had obtained written consent (such as through a double opt-in) for ongoing campaigns prior to October 16, 2013, they were not required to re-opt in those users to comply with the new written consent requirements. The FCC order rejected those requests and stated that re-opt in is required to ensure that the disclosures required by the updated consent regulation were provided.²⁴ However, the FCC granted a limited waiver of the updated consent regulation until October 7, 2015, so that members of the petitioning organizations can come into compliance.

On-Demand Text Messages

The order concludes that one-time text messages sent immediately after a consumer’s request for the message does not violate the TCPA because the sender is merely fulfilling the consumer’s request even if the text otherwise would be deemed telemarketing.²⁵ The one-time text message must: (1) have been requested by the consumer; (2) be sent immediately in response to the request; and (3) contain only the information requested by the consumer and no other marketing or advertising language.²⁶ A one-time text message may be commercial in nature, such as sending coupon codes in response to a consumer inquiry. This is a very helpful ruling for companies that engage in mobile marketing.

Exemptions for Certain Free Calls

The order permits certain free-to-end-user urgent financial or healthcare-related calls and text messages without prior express consent from consumers.²⁷ First, when certain conditions are met, the FCC exempted from the TCPA’s prior-express-consent requirement any messages from financial institutions intended to: (1) prevent fraudulent transactions or identity theft; (2) alert consumers to data breaches at retailers and other businesses that pose a security threat to the customers’ financial account information; (3) instruct customers on measures to take to prevent identity theft following a data breach; and (4) communicate information regarding money transfers.²⁸ Second, the FCC exempted from the TCPA’s prior-express-consent requirement any messages from entities regulated by HIPAA that meet certain conditions and “for which there is exigency and that have a healthcare treatment purposes, specifically: appointment and exam confirmations and reminders, wellness checkups, hospital pre-registration instructions, pre-operative instructions, lab results, post-discharge follow-up intended to prevent readmission, prescription notifications, and home healthcare instructions.”²⁹

Call-Blocking/Do-Not-Disturb Technology

In the order, the FCC affirmed that carriers and VoIP providers may offer and implement call-blocking technology to help consumers block calls or categories of calls that come from consumer-selected sources.³⁰ However, the FCC cautioned carriers and VoIP providers to avoid blocking autodialed or prerecorded calls from public safety, emergency, city or school, or law enforcement entities.³¹ The FCC was concerned that blocking such calls may negatively affect local and state emergency alerting and communications efforts.³² The FCC stated that certain disclosures may be offered to consumers, such as notice that the blocking technology may inadvertently block wanted calls.³³ The FCC also suggested that carriers and VoIP providers permit customers to review a list of blocked calls to report and correct blocking errors.³⁴

The FCC order covers a wide variety of TCPA-related requirements and shows how complicated and nuanced compliance may be. The compliance burden is even greater when taking into account the many state mini-TCPA and telemarketing statutes. Businesses calling consumers may wish to review and update their policies and procedures to account for FCC orders, as well as other applicable federal and state laws.

¹ In re Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, FCC 15-72 (June 18, 2015) (hereinafter “FCC order”).

² 47 U.S.C. § 227. The FCC’s TCPA rules are available at 47 C.F.R. § 64.1200 et seq.

³ “Debt Collection Litigation & CFPB Complaint Statistics, December 2014 & Year in Review,” WebRecon LLC, January 22, 2015, http://dev.webrecon.com/debt-collection-litigation-cfpb-complaint-statistics-december-2014-and-year-in-review/.

⁴ 47 U.S.C. § 227 (a)(1).

⁵ FCC Order, supra note 1, at para. 17.

⁶ Id. at para. 19.

⁷ Id. at para. 18.

⁸ Id.

⁹ Id. at para. 30.

¹⁰ Id. at para. 32, 37.

¹¹ Id. at para. 37.

¹² Id. at para. 34.

¹³ Id. at para. 63.

¹⁴Id. at para. 64.

¹⁵ Id. at para. 47.

¹⁶ Id. at para. 73.

¹⁷ Id. at para. 83.

¹⁸ Id. at para. 72.

¹⁹ Id.

²⁰ Id.

²¹ Id. at para. 86.

²² See In re Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, CG Docket No. 02-278 Report and Order, FCC 12-21, ¶ 4 (February 15, 2012).

²³ 47 C.F.R. §§ 64.1200 (a)(2), (a)(3).

²⁴ Id. at para. 100.

²⁵ Id. at para. 103, 104.

²⁶ Id. at para. 106.

²⁷ Id. at para. 125.

²⁸ Id. at para. 129-131.

²⁹ Id. at para. 146.

³⁰ Id. at para. 152.

³¹ Id.

³² Id.

³³ Id. at para. 160.

³⁴ Id. at para. 161.