Having announced in April 2018 that it would be holding a symposia series, the CFPB has now set a date for the first symposium of the series.  The first symposium, to be held on June 25, 2019, will focus on the Dodd-Frank Act’s prohibition of abusive acts or practices, specifically the meaning of abusiveness.  It will be webcast on the Bureau’s website.

The Dodd-Frank Act does not authorize state attorneys general to bring claims against national banks or federal savings associations to directly enforce Dodd-Frank’s UDAAP provisions.  However, under Section 1042(a)(2) of Dodd-Frank, a state attorney general can bring claims against national banks or federal savings associations “to enforce a regulation prescribed by the Bureau under a provision of [Title 10].”  Thus, this enforcement authority would presumably be triggered if the Bureau were to adopt a rule regarding what is an “abusive act or practice” under Section 1031 of Dodd-Frank.

 

The Federal Trade Commission (“FTC”) recently rescinded several Model Forms and Disclosures associated with the Fair Credit Reporting Act (“FCRA”), determining they are no longer necessary, given that the CFPB has issued its own model forms and disclosures.  The FTC forms that have been rescinded and the corresponding CFPB forms that now apply are as follows:

  • Rescinded FTC Form: Appendix A – Model Prescreen Opt-Out Notices | Corresponding CFPB Form: Appendix D to Part 1022 – Model Forms for Firm Offers of Credit or Insurance.
  • Rescinded FTC Form: Appendix D – Standardized Form for Requesting Annual File Disclosures | Corresponding CFPB Form: Appendix L to Part 1022 – Standardized Form for Requesting Annual File Disclosures.
  • Rescinded FTC Form: Appendix E – Summary of Identity Theft Rights | Corresponding CFPB Form: Appendix I to Part 1022 – Standardized Form for Requesting Annual File Disclosures.
  • Rescinded FTC Form: Appendix F – General Summary of Consumer Rights | Corresponding CFPB Form: Appendix K to Part 1022 – Standardized Form for Requesting Annual File Disclosures.
  • Rescinded FTC Form: Appendix G – Notice of Furnisher Responsibilities | Corresponding CFPB Form: Appendix M to Part 1022 – Standardized Form for Requesting Annual File Disclosures.
  • Rescinded FTC Form: Appendix H – Notice of User Responsibilities | Corresponding CFPB Form: Appendix N to Part 1022 – Standardized Form for Requesting Annual File Disclosures.

Furthermore, the FTC has re-designated Appendix B – Model Forms for Risk-Based Pricing and Credit Score Disclosure Exception Notices as appendix A, and Appendix C – Model Forms for Affiliate Marketing Opt-Out Notices as appendix B.

Covered entities, including motor vehicle dealers otherwise subject to the authority of the FTC, should now look to the corresponding forms issued by the CFPB to obtain the appropriate model forms and disclosures.

The FTC is also amending several FTC rules so that they refer to the applicable CFPB Model Forms and Disclosures.  These amendments address references to the forms and disclosures in the Risk-Based Pricing Rule (16 CFR part 640), and the Affiliate Marketing Rule (16 CFR part 680).

Utah Governor Gary Herbert signed H.B. 378, Regulatory Sandbox, into law on March 25, 2019.  This bill created the nation’s third regulatory sandbox program for fintechs, after Arizona, which enacted sandbox legislation in March 2018, and Wyoming, which enacted sandbox legislation in February of this year.

Regulatory sandboxes are laboratories for the development of innovative technologies in an environment that is free from onerous government restrictions.  The sponsor of Utah’s legislation, Rep. Marc Roberts, highlighted “the opportunity Utah’s Regulatory Sandbox will give fintech companies and entrepeneurs to test innovative business models and ideas in the marketplace, on a limited basis, without having to jump through the traditional regulatory hoops and licensing requirements which can often times be burdensome, costly and create barriers to entry.”

Utah’s regulatory sandbox, which is effective as of May 13, is similar in many respects to Arizona’s sandbox, which began accepting applications in August 2018 and now has six participants.  Utah’s sandbox allows participants to “temporarily test innovative financial products or services on a limited basis without otherwise being licensed or authorized to act under the laws of the state.”  The program will be administered by the Utah Department of Commerce (the Department).  Arizona’s program, in contrast, is administered by the Arizona Attorney General.

Similar to the Arizona sandbox law, eligible financial products and services under the Utah sandbox law include those that are “innovative” and either:

  • Require state licensure or registration; or
  • Involve a business model, delivery mechanism, or element that may require the applicant to be licensed or authorized to act as a financial institution or other entity regulated by the Utah Financial Institutions Act.

Both the Utah and Arizona laws similarly define “Innovative products” as products that use or incorporate new or emerging technology, or use existing technology in a new way to address a problem, provide a benefit, or provide a service not known to be in widespread use in the state.  Notably, Utah’s definition expressly includes blockchain technology.  While Arizona’s law does not specifically mention blockchain technology, the State’s AG has said “certain blockchain or cryptocurrencies products or services might also be eligible.”

Under the Utah law, applicants must have a physical location in Utah, and  must develop and perform all testing of the innovative product or service from that location.  Applicants must also agree to retain all records and data concerning the product or service at this location.  The requirement of a physical Utah presence varies materially from the Arizona program, which permits participants to operate out of a “physical or virtual location that is adequately accessible to the Attorney General, from which testing will be developed and performed and where all required records, documents and data will be maintained.”

Aside from the physical location requirement, the application process and requirements of Utah’s sandbox are virtually identical to those of Arizona.  Applicants must, among other things:

  • Demonstrate they have the necessary personnel, financial, and technical expertise, have access to capital, and  have developed a plan to test, monitor, and assess the innovative product or service;
  • Describe the innovative product or service and its licensing requirements under existing regulations;
  • Describe how consumers will benefit and how the product is different from already available products;
  • Describe risks to consumers who purchase or use the product or service;
  • Explain how participating in the sandbox would enable a successful test of the product or service;
  • Detail a proposed testing plan, with timelines;
  • Describe how the applicant will perform ongoing duties after the test, including obtaining necessary licenses; and
  • Describe procedures for ending the test if the test is not successful.

Under Utah’s program, the Department has 90 days to approve or deny a completed application, but this time period may be extended by mutual agreement of the parties.  The Department may deny an application for “any reason, at the [D]epartment’s discretion,” but must provide a written explanation of the basis for a  denial.  The Arizona AG may deny applications at its discretion as well, but a decision of the Arizona AG is not an appealable agency action.  Utah’s legislation appears more favorable to applicants because it does not expressly forbid administrative appeals.  Further, by requiring the Department to provide a written explanation of the reasons for a denial, unsuccessful Utah applicants should be able to challenge Department decisions that appear arbitrary or capricious.

The testing period under both the Utah and Arizona programs is two years.  Utah provides for an extension of up to six months, and Arizona provides for an extension of up to one year.  In Utah, the Department may specify, on a case-by-case basis, the number of consumers who test the product, as well as the maximum amount of any individual consumer loan or aggregate loans that may be issued to an individual consumer.  The size of transactions involving money transmission are similarly regulated on a case-by-case basis.

By contrast, in Arizona, a sandbox participant may not transact business with more than 10,000 consumers, but may only be increased to 17,500 consumers upon a showing of adequate financial capitalization, risk management, and oversight.  Consumer loans under the Arizona law may not exceed $15,000 per loan, with an aggregate limit of $50,000 per consumer.  Arizona also restricts money transmission transactions to $2,500 with an aggregate limit of transactions per consumer capped at $25,000 (potentially increasable to $2,500 and $50,000 upon a showing of adequate financial capitalization, risk management, and oversight).  Utah’s law does not have a limit on the value of the proposed transactions.

Like Arizona’s sandbox, an applicant’s admission into the Utah sandbox does not assure the applicant complete freedom from state regulation.  In Arizona, the AG may subject participants to specified state regulations at its discretion.   In contrast, in Utah, the Department must conduct a cost-benefit analysis.  In other words, the Department may require a participant to comply with a specified regulation if it determines that an applicant’s plan does not adequately protect consumers from the harm addressed by the regulation, and the benefits to consumers of applying the law outweigh the potential benefits to consumers from increased competition, innovation, and access.  The Department must notify a participant of any specific regulatory provisions with which the participant must comply.

With respect to usury, Utah’s sandbox legislation is silent because Utah does not impose an interest rate ceiling on consumer loans.  Unconscionability is the only available challenge to the interest rate governed by Utah law, UCA § 70C-7-106, but participants are exempt from an unconscionability challenge unless the Department determines otherwise applying the cost-benefit analysis described above.  By contrast, Arizona imposes various interest rate ceilings on consumer loans, ARS § 6-632, and despite the Arizona AG’s ability to waive compliance with licensing and other requirements, the AG may not exempt participants in Arizona’s sandbox from those ceilings.

Further, neither Utah nor Arizona may exempt participants from compliance with federal laws and regulations.  However, both states’ laws provide that by participating in a sandbox, a participant is “deemed to possess an appropriate license under the laws of the state for the purposes of any provision of federal law requiring state licensure or authorization.”  Further, both Utah and Arizona permit agreements with federal and state regulators that provide for reciprocity between sandboxes.  In other words, Utah and Arizona could agree that participants in their sandboxes may operate in both states.

With respect to consumer disclosures, Utah’s law only differs from Arizona’s in that it requires disclosures just in English, not English and Spanish.  Consumers must be notified, in general, that the innovative product or service in question is authorized by the sandbox and, if applicable, that the participant is not licensed or authorized under state law to provide the product or service.  Consumers must also be notified, as applicable:

  • That the product or service is undergoing testing and may not function as intended or involve financial risk;
  • That the participant is not immune from civil liability or damages caused by the product or service;
  • That the product or service is not endorsed by the state; and
  • The expected end date of the testing period.

A participant’s disclosures must be clear and conspicuous, and if the product or service is internet- or application-based, the consumer must acknowledge receipt of the disclosures before a transaction may be completed.

Utah and Arizona each require a participant to maintain records, documents, and data produced in the ordinary course of business regarding the tested product or service.  If the test fails, both states require that regulators be advised of steps taken by the participant to prevent harm to consumers as a consequence of the failure.

The states do differ in the level of confidentiality afforded business records shared with the government.  Arizona’s law provides that records submitted by a participant or obtained by the AG pursuant to the statute “are not public records or open for inspection by the public.”  The purpose of this restriction is to protect a participant’s trade secrets from disclosure pursuant to state freedom of information laws.

Utah’s sandbox statute does not contain a similar provision, so a player in the Utah sandbox will need to take extra precautions to protect its trade secrets.  Under Utah’s freedom of information law, called the Government Records Access and Management Act, UCA § 63G-2-1 et seq. (GRAMA), the public ordinarily has access to documents provided by businesses to the government.  An exception exists for trade secrets, UCA § 63G-2-305(1), but it must be affirmatively invoked, § 63G-2-309.   A business that discloses trade secrets to a government entity must “provide with the record a written claim of business confidentiality and a concise statement of the reasons supporting the claim of business confidentiality.”  The government may grant or deny a request to protect records, and its decision is subject to appeal.

There is every reason to believe that the Department will honor such requests – the sharing of trade secrets is implicit in the nature of a regulatory sandbox established to test innovative products and services.  Utah is also home to a thriving technology sector with extensive government support.  Nevertheless, an applicant must take care to comply with GRAMA requirements every time it discloses a trade secret to the Department unless the legislation is amended to make the process automatic.

Utah’s statute encourages the Department to establish a program that follows the “best practices” of similar state and federal sandbox programs, including that of the CFPB, and we will monitor these developments closely.

Our podcast featuring a discussion with Evan Daniels, Fintech Counsel in the Arizona AG’s Office, about how Arizona’s sandbox is driving innovation may be found here.   Please also watch for our upcoming podcast that will feature a discussion with Rep. Marc Roberts and Department officials discussing Utah’s sandbox legislation and its implementation.

 

 

Last month, Ballard Spahr submitted two letters to the CFPB, critiquing the payment provisions of the CFPB’s final payday/auto title/high-rate installment loan rule (the “Payment Provisions”).  Last Friday, the Bureau delayed the implementation date of the rule’s mandatory underwriting provisions by 15 months, to November 19, 2020.  However, the Payment Provisions are scheduled to go into effect on August 19, 2019 or the date the current judicial stay of the rule is lifted, whichever comes later.

One Ballard Spahr letter focused on the unwarranted treatment of card payments under the Payment Provisions.  Our other letter argues that the Payment Provisions are deeply flawed.  It asserts that, in large part, the Payment Provisions are not justified by the UDAAP concerns identified by the Bureau as their source.  The Payment Provisions impose substantial unwarranted burdens on the industry and straightjacket covered lenders from taking actions beneficial to their customers.  And, despite their complexity and detail, the Payment Provisions fail to provide clear guidance on fundamental issues.

For these and other reasons, clarification of the Payment Provisions and further rule-making are warranted.

 

 

 

The Federal Trade Commission recently provided its annual letter to the CFPB concerning its enforcement activities relating to compliance with Regulation Z (Truth in Lending Act), Regulation M (Consumer Leasing Act), and Regulation E (Electronic Fund Transfer Act).  Under Dodd-Frank, the FTC retained its authority to enforce these regulations with respect to entities subject to its jurisdiction.  The FTC and CFPB coordinate their enforcement and related activities pursuant to a MOU entered into in 2012, reauthorized in 2015, and extended in 2018.  The new letter, which covers the FTC’s activities in 2018, responds to the CFPB’s request for information and focuses on three areas: enforcement actions; research and policy work; and consumer and business education.

On June 12, 2019, from 12:00 PM to 1:00 PM ET, Ballard Spahr will hold a webinar, “Is the FTC the New CFPB?”  For more information and to register, click here.

Regulation Z/TILA; Regulation M/Consumer Leasing Act.  The FTC’s TILA and CLA enforcement activities included:

  • With respect to auto credit and leasing: (1) initiating an action in federal district court involving the alleged failure of four auto dealers to disclose required credit and leasing terms in social media advertisements, and (2) mailing checks as redress to consumers following the settlement of a federal court action against nine dealerships and owners who had allegedly used advertisements that made misleading claims about the availability of vehicles at the advertised prices and financing terms.  The dealerships and owners were alleged to have violated TILA and Regulation Z by not clearly disclosing required credit information in advertisements.
  • With respect to payday lending: (1) the affirmance by the Ninth Circuit of a “record-setting” $1.3 billion dollar district court judgment and order against an individual and several corporate defendants for alleged TILA and FTC Act violations in connection with payday loans, and (2) mailing checks to consumers following the settlement of charges against two individuals and their companies who had allegedly made unauthorized loans to consumers and provided incorrect disclosures in connection with such loans.
  • With respect to consumer electronics financing, the FTC continued litigation against a consumer electronics retailer for violating a consent order that settled allegations that the retailer had violated TILA by failing to provide written disclosures and account statements to consumers.

The FTC reported that its TILA and CLA research and policy efforts included (1) conducting a study of consumers’ experiences related to buying and financing automobiles at dealerships, (2) working on military consumer protection issues through its Military Task Force, (3) hosting a symposium on the economics of consumer protection, and (4) issuing blog posts providing information to consumers and businesses.

Regulation E/EFTA. The FTC’s Regulation E enforcement actions included seven new or ongoing cases.  Six cases involved negative options and the payment terms that automatically applied absent cancellation for which the companies involved allegedly had not obtained proper written authorization under Regulation E or provided copies of written authorizations to consumers.  One case involved allegations that a consumer electronics retailer had conditioned the extension of credit on mandatory preauthorized transfers in violation of the EFTA and Regulation E.

With respect to EFTA research and policy work, the FTC worked with a Department of Defense interagency group and the ABA on electronic fund transfer issues, including issues relating to preauthorized electronic fund transfers in the military lending rule.

 

 

Several civil rights groups have sent a letter to Director Kraninger questioning whether the CFPB is engaging in the oversight of the student loan market that they believe is necessary to “root out potentially discriminatory practices.”  In particular, the groups suggest that access to income-driven repayment programs is being provided “in an unequal way, with a disproportionate impact by race or sex.”

The groups point to statements made by Director Kraninger at her March 2018 appearance before the House Financial Services Committee and in her May 2019 letter to Senator Elizabeth Warren regarding the CFPB’s supervision of student loan servicers as the source of their concern that the CFPB is ignoring its “independent oversight responsibilities and the immediate need for investigative action given the well-documented racial disparities in student loan outcomes.”

In her House testimony, in response to a question about the Bureau’s role in policing discrimination in the student loan market, Director Kraninger stated that she wanted to address the issue with the Department of Education but was waiting for a new Private Education Loan Ombudsman to be in place to have that discussion and “facilitate a more productive relationship going forward.”  Director Kraninger’s letter to Senator Warren was sent in response to a question from the Senator regarding the guidance issued by the ED in December 2017 to student loan servicers about the application of the Privacy Act of 1974 to certain federal student loan records.  In her letter, Director Kraninger stated that since December 2017, based on such guidance, student loan servicers have declined to produce information requested by the Bureau’s examiners in connection with examinations related to Direct Loans and Federal Family Loan Program loans held by the ED.  (As we previously observed, under the ED’s guidance, servicers would have been required to obtain the ED’s permission to produce the information requested by the Bureau’s examiners.)

The civil rights groups conclude their letter by commenting that the CFPB is not required to “receive a permission slip from Secretary Betsy DeVos to ensure that the nation’s civil rights law are being followed” and that the Bureau has “a mandate from Congress to oversee student loan servicers for compliance with the nation’s consumer financial laws, including the Equal Credit Opportunity Act. “

 

 

Appellant Seila Law has filed a motion for a stay of the Ninth Circuit’s mandate in its decision ruling that the CFPB’s single-director-removable-only-for-cause structure is constitutional pending the filing by Seila Law of a petition for a writ of certiorari with the U.S. Supreme Court.  Seila Law has not sought a rehearing en banc by the Ninth Circuit.

Appellant Seila Law had asked the Ninth Circuit to overturn the district court’s refusal to set aside a Bureau civil investigative demand, arguing that the CID was invalid because the CFPB’s structure is unconstitutional.  In rejecting the constitutional challenge, the Ninth Circuit relied on U.S. Supreme Court precedent, which in the Ninth Circuit’s view, “indicate that the for-cause removal restriction protecting the CFPB’s Director does not ‘impede the President’s ability to perform his constitutional duty’ to ensure that the laws are faithfully executed.”  The Ninth Circuit commented that “the Supreme Court is of course free to revisit those precedents, but we are not.”

In support of its motion, Seila Law argues that there is a reasonable chance the Supreme Court will grant the petition because “the question of whether the CFPB’s structure violates the constitution’s separation of powers is ‘substantial’ under any sense of the term” and because the question “has engendered serious debate among federal judges.”  It also argues that there is good cause for the stay because, in the absence of a stay, Seila Law would have to decide whether to comply with the CFPB’s CID, thereby potentially mooting the case.

There is currently no circuit split regarding the CFPB’s constitutionality, with both the Ninth Circuit and the en banc D.C. Circuit having ruled that the CFPB’s structure is constitutional.  Two other cases involving a challenge to the CFPB’s constitutionality are currently pending in the circuit courts, either of which could create a circuit split.  On March 12, the Fifth Circuit heard oral argument in All American Check Cashing’s interlocutory appeal from the district court’s ruling upholding the CFPB’s constitutionality.  The other case is RD Legal Funding, which is pending in the Second Circuit but in which briefing has not yet been completed.  The district court in RD Legal Funding held that the CFPB’s structure is unconstitutional and struck the CFPA (Title X of Dodd-Frank) in its entirety.

While the CFPB has defended its constitutionality to date, it may be unable to oppose Seila Law’s petition for certiorari.  Dodd-Frank Section 1054(e) provides:

The Bureau may represent itself in its own name before the Supreme Court of the United States, provided that the Bureau makes a written request to the Attorney General within the 10-day period which begins on the date of entry of the judgment which would permit any party to file a petition for writ of certiorari, and the Attorney General concurs with such request or fails to take action within 60 days of the request of the Bureau.

The Ninth Circuit’s judgment was entered on May 6 and we are not aware of a request by the CFPB to the Attorney General to represent itself before the Supreme Court.  Thus, assuming the CFPB has not made such a request, only the Department of Justice could respond on behalf of the CFPB to Seila Law’s petition for a writ of certiorari.  The DOJ, however, has previously taken the position that the CFPB’s structure is unconstitutional and that the proper remedy is to sever the Dodd-Frank Act’s for-cause removal provision.

More specifically, the DOJ took that position in opposing the petition for a writ of certiorari filed in September 2018 by State National Bank of Big Spring and two D.C. area non-profit organizations that sought Supreme Court review of a D.C. Circuit decision upholding the CFPB’s constitutionality.  Despite agreeing on the merits with SNB and the other petitioners that the CFPB’s structure is unconstitutional, the DOJ filed a brief in which it argued that the Supreme Court should nevertheless deny the petition because the SNB case was a poor vehicle for consideration of the constitutionality question.  The DOJ pointed to other cases then pending in the courts of appeal that raised a similar constitutional challenge but would be a better vehicle.  In addition to All American Check Cashing and RD Legal Funding, the DOJ pointed to Seila Law which was then still pending in the Ninth Circuit.  SNB’s petition was denied by the Supreme Court.

Thus, the DOJ might not oppose Seila Law’s petition for a writ of certiorari and instead agree with Seila Law that the CFPB’s structure is unconstitutional.  It is also possible that given the importance of the issue, the Supreme Court would grant Seila Law’s petition even in the absence of a circuit split.  Should it do so, it could be necessary for the Supreme Court to appoint an amicus curiae to defend the Ninth Circuit’s judgment, an action that is part of the Supreme Court’s usual practice when no party is defending the circuit court’s judgment.

 

As previously reported, in May 2019 the CFPB issued both a proposed rule to modify the existing Home Mortgage Disclosure Act (HMDA) rule and an advance notice of proposed rulemaking seeking comment on additional potential changes to the rule. The drafts of the items indicate a 30 day comment period for the proposed rule and 60 day comment period for the advance notice of proposed rulemaking. However, the Federal Register version of the proposed rule, which was published on May 13, 2019, indicates that comments are due by July 12, 2019, which is a 60 day comment period. The advance notice of proposed rulemaking appears in the May 8, 2019 Federal Register and comments are due by July 8, 2019.

The CFPB has issued a final rule delaying the compliance date for the ability-to-repay (ATR) provisions in its final payday/auto title/high-rate installment loan rule (Payday Rule) for 15 months, until November 19, 2020.

The Supplementary Information accompanying the final rule expressly states that the Bureau is not delaying the August 19, 2019 compliance date for the Payday Rule’s troublesome payment provisions.  Both the payment provisions and the ATR provisions are currently stayed by order of the Texas federal district court hearing the lawsuit filed by two trade groups challenging the Payday Rule.  However, in its most recent order extending the stay, the court directed the parties to file another joint status report by August 2.  Thus, lenders continue to lack certainty that the stay of the payment provisions will remain in effect after August 2.  Even if the court extends the stay past August 2, lenders will remain at risk that the stay could be lifted at any time.

The Bureau called the comments it received about extending the compliance date for the payment provisions “outside the scope of the proposal,” as it also did comments seeking modifications to the payment provisions, revisions to the scope of covered loans or the entities to which the Payday Rule applies, or rescission of the entire Payday Rule.  The CFPB also noted that several commenters suggested that the payment provisions should be reassessed in light of the Bureau’s proposed approach to unfairness and abusiveness in its proposal to revise the ATR provisions.  The Bureau states that it intends to separately examine these issues and will determine whether further action is warranted, which might include a request for information or an advance notice of proposed rulemaking.

The FCC announced that it has approved the declaratory ruling previously circulated by Chairman Pai that would allow voice service providers to start offering default call-blocking programs that are based on reasonable analytics.

The FCC also voted to adopt a notice of proposed rulemaking that, as described in the FCC’s press release, would “require service providers to implement the SHAKEN/STIR caller ID authentication framework, if major voice service providers fail to do so by the end of this year.”  (SHAKEN is an acronym for “Signature-based Handling of Asserted Information Using toKENS” and STIR is an acronym for the “Secure Telephone Identify Revisited” standards.)  The press release states that the NPRM will also seek comment on the FCC’s creation of “a safe harbor for providers that block calls that are maliciously spoofed so that caller ID cannot be authenticated and that block calls that are ‘unsigned’.”

The press release indicates that the declaratory ruling would allow providers to offer opt-in blocking tools based on consumers’ contact lists or other “white list” options.  The white list could be updated automatically as consumers add and remove contacts from their smartphones.

The FCC’s announcement that it was considering the declaratory ruling sparked considerable concern among providers of consumer financial products and services about the ruling’s potential impact on legitimate calls, including collection calls from creditors or debt collectors. As a result of the efforts of trade groups, the FCC is reported to have agreed to modify the declaratory ruling to address industry concerns.  Apparently in response to industry concerns regarding the need for customers to be properly notified they will be automatically opted-in to call blocking technology, the FCC’s press release states that providers can offer default blocking “as long as customers are informed and have the opportunity to opt out of the blocking.”

Industry trade groups also urged the FCC to include in the ruling a “safety valve” mechanism for legitimate callers to challenge the blocking of their calls or stop their numbers from being blocked.  While not reflected in the FCC’s press release, in his statement about the vote approving the declaratory ruling and NPRM, Chairman Pai stated that he recognizes “that some who make legitimate calls have expressed concern about our decision today” but “believe[s] that we’ve appropriately addressed their concerns by making clear that any reasonable call-blocking program offered by default must include a mechanism for allowing legitimate callers to register a complaint  and for having that complaint resolved.”

The declaratory ruling will go in effect upon its release on the FCC’s website.  The deadline for filing comments on the NPRM will be established upon its publication in the Federal Register.