Regulatory: New technologies, new risks

An update on recent TCPA developments that could require companies to reassess their outbound communications policies

Before wireless telephones became ubiquitous, the Telephone Consumer Protection Act (TCPA) was a minor compliance issue for most companies. Today, however, the TCPA is a major litigation risk for companies in a variety of industry sectors. With regulators, courts and plaintiffs’ class action attorneys all targeting TCPA violations, businesses should review their practices and stay apprised of the latest legal developments—especially when using predictive dialers, prerecorded messages, text messages and other technologies to interact with consumers on their mobile devices.

Passed in 1991, the TCPA imposes a series of restrictions on outbound communications, including voice calls and fax transmissions. Two provisions of the decades-old statute have become increasingly problematic for companies. First, the TCPA prohibits callers from using an “automatic telephone dialing system” (an autodialer) or a prerecorded or artificial voice message to call, inter alia, wireless telephone numbers, absent an emergency or the “prior express consent” of the called party. The Federal Communications Commission (FCC), which is charged with implementing the act along with courts such as the 9th Circuit, has determined that this restriction applies to both voice calls and text or short message service (SMS) messages.

Second, the TCPA separately prohibits callers from using a prerecorded or artificial voice message to call residential telephone numbers without prior express consent, subject to certain exceptions (e.g., calls that do not include a solicitation).

Violations of these two provisions can result in penalties of up to $1,500 per call or message, and the TCPA provides for consumer lawsuits (including class actions).

A host of legal challenges have arisen as companies use new technology platforms to contact their customers and remain competitive in today’s economic environment. For example, a 9th Circuit panel recently indicated that companies must obtain “prior express consent” at the time of the “original transaction.” Consents obtained through later interactions are invalid. Another 9th Circuit panel found that a company’s prerecorded notification about the looming expiration of points from a loyalty program was a solicitation or telemarketing call because it effectively encouraged future purchases.

Spurred by the avalanche of class action litigation and the rapid increase in wireless-only households, several organizations have filed petitions with the FCC seeking clarification of the term “autodialer,” which the TCPA defines 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.” For example, Communication Innovators (CI) asked the FCC to confirm that certain predictive dialers are not autodialers when they:

  1. Are not used for telemarketing purposes
  2. Do not have the current ability to generate and dial random or sequential numbers

The FCC previously determined that some predictive dialers qualify as autodialers, concerned that telemarketers would otherwise use them to escape the TCPA’s autodialer restrictions. CI notes that the FCC did not explain which types of predictive dialing technologies qualify (or why), creating widespread confusion because many predictive dialers do not have the “capacity” required for an autodialer. GroupMe, Inc. also asked the FCC to confirm that its group texting service does not trigger the act’s autodialer restriction, arguing,like CI, that its systems do not have the requisite capacity.

Other petitions ask the FCC to clarify when third parties may provide consent on behalf of the called party. For example, the Cargo Airline Association (CAA) requested confirmation that delivery companies can rely on representations from package senders that a package recipient consents to receiving autodialed and prerecorded notifications regarding the shipment through the provided wireless telephone numbers.

Comments on the CI and CAA petitions are due to the FCC by Nov. 15, with replies due Nov. 30.

Companies sending text messages have also been in the class action crossfire. SoundBite Communications, Inc., for example, asked the FCC to clarify that the TCPA allows companies to send one-time opt-out confirmation text messages

Moreover, there are other TCPA traps on the horizon: The FCC adopted new “robocall” restrictions earlier this year and is creating a do-not-call registry for certain public safety telephone numbers. Mobile financial services, now commencing widespread U.S. deployment, also pose TCPA concerns. In light of these challenges, companies should assess their existing practices to avoid becoming embroiled in costly class action litigation. Likewise, companies that rely heavily on these technological tools to reach consumers should file comments in the pending FCC proceedings to limit the scope of these dated requirements on burgeoning new communications technologies used for informational purposes.

Contributing Author

author image

Michele Farquhar

Michele Farquhar is a partner at Hogan Lovells, and a practice area leader of the firm's communications group. She focuses her practice on commercial and private...

Additional Contributors: Mark Brennan

Bio and more articles

Join the Conversation

Advertisement. Closing in 15 seconds.