The Federal Communications Commission (FCC) has issued a notice asking for comment on what constitutes an automatic telephone dialing system (ATDS) under the TCPA following the Ninth Circuit’s September 20, 2018 decision in Marks v. Crunch San DiegoIn May 2018, the FCC issued a notice announcing that it was seeking comments on several TCPA issues following the D.C. Circuit’s decision in ACA International v. FCC.  The FCC’s new notice states that it is now seeking comment “to supplement the record developed in response to our prior Public Notice.”  Comments are due by October 17, 2018 and reply comments are due by October 24, 2018.

In Marks, a unanimous Ninth Circuit three-judge panel held that the TCPA’s definition of an ATDS includes telephone equipment that can automatically dial phone numbers stored in a list, rather than just phone numbers that the equipment randomly or sequentially generates.  This decision departed sharply from the post-ACA International decisions by the Second and Third Circuits, which had narrowed the definition of an ATDS.

The TCPA defines an ATDS as equipment that “has the capacity—(1) to store or produce telephone numbers to be called, using a random or sequential number generator; and (2) to dial such numbers.”  The Ninth Circuit concluded that the statutory definition of an ATDS was “ambiguous on its face” regarding whether it is limited to devices with the capacity to call numbers produced by “a random or sequential number generator” or also includes devices with the capacity to store numbers and to dial such numbers automatically.

In its notice, the FCC states that the ACA International court “held that the TCPA unambiguously foreclosed any interpretation of the TCPA that ‘would appear to subject ordinary calls from any conventional smartphone to the Act’s coverage.’”  The FCC raises the following series of questions in an effort to obtain further comment on how to apply the ATDS statutory definition in light of Marks and “how that decision might bear on the analysis set forth in ACA International”:

  • To the extent the ATDS definition is ambiguous, how should the FCC exercise its discretion to interpret such ambiguities?
  • Does the Marks interpretation mean that any device with the capacity to dial stored numbers automatically is an ATDS?
  • What devices have the capacity to dial stored numbers and do smartphones have such capacity?
  • What devices that have the capacity to dial stored numbers also have the capacity to automatically dial such numbers and do smartphones have such capacity?

The FCC also asks for comment on any other issues addressed in Marks that it should consider in interpreting the ATDS definition.

The Senate Committee on Commerce, Science, and Transportation has scheduled a hearing for tomorrow, August 16, titled “Oversight of the Federal Communications Commission.”  The Committee’s website indicates that the hearing will examine policy issues before the FCC and review the FCC’s ongoing duties and activities.

The witnesses scheduled to appear are the four sitting FCC Commissioners (Chairman Pai and Commissioners O’Reilly, Carr, and Rosenworcel).  The FCC’s response to the D.C. Circuit’s ACA International decision, particularly with regard to the TCPA robocall prohibition, is expected to be a significant focus of the hearing.

 

Two U.S. Senators, one a Republican and the other a Democrat, have sent a letter to FCC Chairman Pai to encourage the FCC to proceed with a rulemaking to create a database of reassigned telephone numbers.

The TCPA’s autodialed call prohibition excepts calls made “with the prior express consent of the called party.”  In its March 2018 decision in ACA International v. FCC, the D.C. Circuit set aside the FCC’s one-call safe harbor as well as its interpretation that the “called party” means the current subscriber rather than the intended recipient.

In April 2018, the FCC published a notice in the Federal Register seeking comment on a variety of issues relating to the creation of a reassigned numbers database, including how the ACA decision impacts its ability to create a safe harbor from TCPA liability for callers who voluntarily use such a database.

In their letter, the Senators discuss various features that should be part of a database, such as comprehensiveness, accuracy, and accessibility.  They also suggest that a safe harbor from TCPA liability for making calls to reassigned numbers may be appropriate where (1) the caller took all reasonable steps to properly use a reassigned numbers database, (2) the call to the reassigned number resulted from inaccurate information in the database, (3) the caller had the consent of the call’s intended recipient, and (4) the caller took appropriate steps to stop calling the reassigned number and reported the inaccuracy.

 

The FCC has issued a notice announcing that it is seeking comments on several TCPA issues following the D. C. Circuit’s decision in ACA International v. FCC.  Comments are due by June 13, 2018 and reply comments are due by June 28, 2018.

The FCC’s notice follows the filing of a petition by several industry trade groups seeking clarification of the TCPA’s definition of “automatic telephone dialing system” (ATDS) in light of the D.C. Circuit decision.  The FTC seeks comment on the issues described below.

  • What constitutes an ATDS
    • The TCPA defines an ATDS 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.” The D.C. Circuit reversed the FCC’s interpretation of “capacity” as overly expansive.  The FCC seeks comments “on how to more narrowly interpret the word ‘capacity’ to better comport with the congressional findings and intended reach of the statute.”
    • The FCC seeks comment on the functions a device must perform to qualify as an ATDS. The D.C. Circuit set aside the FCC’s interpretations regarding whether a device must be able to generate and dial random and sequential numbers to be an ATDS and whether a device must be able to dial numbers without human intervention to be an ATDS.  The court also noted that uncertainty was created by the FCC’s statement that another “basic function” of an ATDS is “to dial thousands of numbers in a short period of time.”  Among the questions asked by the FCC are whether, to be “automatic,” a system must dial numbers without human intervention and dial thousands of numbers in a short period of time (and, if so, what constitutes a short period of time).  It also asks whether a system can be an ATDS if it cannot dial random or sequential numbers.
    • The D.C. Circuit noted that the statutory prohibition on making calls using an ATDS raised the question of whether the prohibition only applies to calls made using a device’s ATDS functionality.  The FCC seeks comment on that question.
  • How to treat calls to reassigned numbers
    • The TCPA’s autodialed call prohibition excepts calls made “with the prior express consent of the called party.” The D.C. Circuit set aside the FCC’s one-call safe harbor as well as its interpretation that the “called party” means the current subscriber rather than the intended recipient.  The FCC seeks comment on how to interpret the term “called party” for calls to reassigned numbers.
  • How a called party can revoke prior express consent to receive calls
    • The D.C. Circuit upheld the FCC’s ruling that a called party can revoke consent to receive autodialed calls at a wireless number “at any time and through any reasonable means that clearly expresses a desire not to receive further messages.”  In response to concerns that the ruling would make it burdensome to adopt systems to implement revocations using methods chosen by consumers, the court observed that “callers will have every incentive to avoid TCPA liability by making available clearly-defined and easy-to-use opt-out methods” and that, if such methods were afforded to consumers, consumers’ use of  “idiosyncratic or imaginative revocation requests might well be seen as unreasonable.”  The FCC seeks comment on “what opt-out methods would be sufficiently clearly defined and easy to use such that ‘any effort to sidestep the available methods in favor of idiosyncratic or imaginative revocation requests might well be seen as unreasonable.'”  (In its 2017 Reyes decision, the Second Circuit held that TCPA consent cannot be revoked when it is part of the bargained-for exchange memorialized in the parties’ contract.)
  • Whether contractors acting on behalf of federal, state, and local government are “persons” under the TCPA (The issue as to federal contractors is raised by two pending petitions for reconsideration of the FCC’s 2016 Broadnet Declaratory Ruling.  The FCC states that it is seeking renewed comment on the petitions in light of the D.C. Circuit’s decision.)
  • The interplay between the Broadnet ruling and the 2015 TCPA amendment that removed a prior express consent requirement for autodialed calls ”made solely to collect a debt owed to or guaranteed by the United States.” The FCC asks whether its 2016 Federal Debt Collection Rules would apply to a federal contractor collecting a federal debt if a federal contractor is not a “person” under the TCPA.  (The FCC also seeks renewed comment on a pending petition for reconsideration of its 2016 Federal Debt Collection Rules because the issues raised in the petition include the applicability of the TCPA’s limits on calls to reassigned numbers and such limits were addressed by the D.C. Circuit.)

Ballard Spahr’s TCPA Team has deep experience in FCC comment letters and related filings.

 

 

 

Yesterday, a coalition of numerous trade organizations, including, among others, the U.S. Chamber of Commerce, the American Bankers Association, the Consumer Bankers Association, and the Mortgage Bankers Association, filed a Petition for Declaratory Ruling with the Federal Communications Commission (the “FCC”), seeking clarification of the definition of “automatic telephone dialing system” (“ATDS”) under the Telephone Consumer Protection Act (“TCPA”).  Specifically, Petitioners request that, in light of the D.C. Circuit’s recent guidance on this topic in ACA International v. FCC, the FCC (1) confirm that to be an ATDS, equipment must use a random or sequential number generator to store or produce numbers and dial those numbers without human intervention, and (2) find that only calls made using actual ATDS capabilities are subject to the TCPA’s restrictions.

The Petition sets the stage for its request by explaining that the TCPA’s original purpose was to prevent a specific type of abusive call by telemarketers, but that its implementation has resulted in a whirlwind of litigation against legitimate businesses attempting to lawfully communicate with their customers.  The Petition further asserts that the current state of TCPA litigation is hurting businesses, not helping consumers, and instead is just serving as a boondoggle for plaintiffs’ lawyers.  The Petitioners then urge the FCC to use the D.C. Circuit’s recent decision in ACA as an opportunity to rationalize the dysfunctional TCPA landscape.

Turning to their specific requests, the Petitioners argue that the FCC should not deviate from the straightforward text of the TCPA in defining ATDS.  Thus, Petitioners contend that for equipment to constitute an ATDS, it must be able to generate numbers in either random order or sequential order, be able to store or produce those numbers, and be able to dial those numbers.  The Petitioners also request the FCC to make clear that if human intervention is required in generating the list of numbers to call or in making the call, then the equipment in use is not an ATDS.

In addition, the Petitioners argue that the FCC should make clear that the ATDS functions must be actually – not theoretically – present and active in a device at the time the call is made.  Thus, a device that requires alteration to add auto dialing capability is not an ATDS.  Rather, the capability must be inherent or built into the device for it to constitute an ATDS.  For example, if a smartphone required downloading an app or changing software code to gain autodialing capabilities, the smartphone would not qualify as an ATDS.

Finally, the Petitioners request that the FCC clarify that a caller must use the statutorily defined functions of an ATDS to make a call for liability to attach.  As such, a device’s potential capabilities would not be relevant to determining whether it is an ATDS, because the inquiry will focus only on the functions actually used to make the call or calls in question.

The Petitioners repeatedly urge the FCC to take prompt and speedy action on their Petition.  Significantly, the FCC is now controlled by Republicans, two of whose dissents from the FCC’s 2015 TCPA Declaratory Ruling and Order demonstrate that they strongly prefer a narrow interpretation.  We will keep a close watch on the progress of the Petition, and report on developments as they occur.

As we previously reported, on March 23, 2018 in Washington, D.C., the FTC and FCC will co-host a joint policy forum that will cover recent policy changes and enforcement actions as well as the agencies’ efforts to encourage private sector technological solutions.  We believe the event will be of interest to clients who launch legitimate account management or marketing campaigns from autodialers as well as those whose names have been misappropriated by fraudulent telemarketers.

Because it comes on the heels of the D.C. Circuit’s March 16 decision addressing a number of critical issues involving the Telephone Consumer Protection Act’s restrictions on the use of autodialers, the forum is likely to include a discussion of the decision.  Ballard has issued a legal alert summarizing the decision and will hold a webinar on April 3, 2018 in which the participants will address the decision’s implications and its potential impact on pending and future TCPA litigation.  (Our legal alert includes a link to register for the webinar.)

The tentative agenda and other information about the event, including how to access a live video feed, can be found here.

 

The decision last week by the U.S. Court of Appeals for the D.C. Circuit on petitions seeking review of the Federal Communications Commission’s 2015 Declaratory Ruling and Order implementing the Telephone Consumer Protection Act (TCPA) represents a partial victory for the industry.

In the decision, the D.C. Circuit reversed the FCC’s guidance on the definition of an automatic telephone dialing system going back to 2003, leaving only the TCPA’s statutory definition.  That definition does not, on its face, include predictive dialers.

The decision creates some uncertainty about TCPA liability for calls to reassigned numbers.  In addition, callers continue to face the challenge of capturing revocations sent by consumers using methods other than those prescribed by the caller.

On April 3, 2018, from 12 p.m. to 1 p.m. ET, Ballard Spahr attorneys will hold a webinar—The D.C. Circuit’s TCPA Decision: What It Means to Your Business.  The webinar registration form is available here.

Click here for the full alert.

The Federal Trade Commission (“FTC”) and Federal Communications Commission (“FCC”) have announced they will host a joint policy forum (“Forum”) in Washington, D.C. on March 23 titled, “Fighting the Scourge of Illegal Robocalls.” The Forum will cover recent policy changes and enforcement actions as well as the agencies’ efforts to encourage private sector technological solutions. We believe the event will be of interest to clients who launch legitimate account management or marketing campaigns from autodialers as well as those whose names have been misappropriated by fraudulent telemarketers.

The agenda will be posted on the event page when it becomes available. The FCC will likely use the venue to announce a “Second Further Notice of Proposed Rulemaking” on reducing unwanted calls to reassigned phone numbers, which is scheduled for a vote during the agency’s March 22 meeting.  According to the FCC, the notice would:

  • Propose to ensure that one or more databases are available to provide callers with the comprehensive and timely information they need to avoid calling reassigned numbers.
  • Seek comment on the information that callers who choose to use a reassigned numbers database need from such a database.
  • Seek comment on the best way for service providers to report that information and for callers to access that information, including the following three alternatives:
    • requiring service providers to report reassigned number information to a single, FCC-designated database;
    • requiring service providers to report that information to one or more commercial data aggregators; or
    • allowing service providers to report that information to commercial data aggregators on a voluntary basis.
  • Seek comment on whether, and if so how, the FCC should adopt a safe harbor from liability under the Telephone Consumer Protection Act for those callers that choose to use a reassigned numbers database.

This follows rules that became effective last month permitting voice service providers to proactively block calls from certain numbers that are suspected to be fraudulent. (You can read our summary of the FCC’s Report and Order adopting these rules here.)

A central theme of the Forum is likely to be collaboration between the FTC and FCC as well as between the agencies and the private sector. Such collaboration helps the agencies prevent and target illegal robocall scams, such as the spoofing scheme that made nearly 100 million robocalls and illegitimately invoked the names of major hotel and travel brands to sell vacation packages, resulting in a $120 million forfeiture order by the FCC in June 2017. Spoofing, which is a common tool used in robocall scam campaigns, involves altering or manipulating caller ID information to hide or falsify the identity or number of the calling party.

On April 23 (one month after the Forum), the agencies will host a “Stop Illegal Robocalls Expo” for consumers. Companies that offer technologies, devices and applications to minimize or eliminate illegal robocalls may request to exhibit at the Expo by contacting the FCC staff listed here by midnight on March 23.

On Thursday, December 14, the Federal Communications Commission voted 3-2 to reverse its 2015 order classifying the provision of broadband internet access services as a “telecommunication service” subject to Title II of the Communications Act of 1934, and restoring the classification of broadband internet access services as an “information service” under Title I of the Communications Act.  This reclassification moves the provision of broadband internet services from treatment as a utility (with greater governmental oversight over the provision of the utility’s services) to treatment as another offering by a telecommunications service provider.

The December 14 Order consequentially rescinds the rules prohibiting blocking of lawful internet content and applications, throttling or degrading lawful internet traffic, and paid prioritization of certain internet traffic.  These three prohibitions form the core of the “net neutrality” rules – essentially, the rules that required all internet traffic to be treated equally.

The FCC reversal on net neutrality could impact consumer payments in a couple of ways.  First, fintech companies (generally speaking, young companies with fewer resources whose business models are supported by fast, cheap internet access) which find their internet speeds either throttled or more costly may be outcompeted by larger, more established businesses which can more easily pay for higher internet speeds.  This may result in fewer fintech companies bringing new ideas and products to market.

A more direct impact may be felt in peer to peer payment platforms.  One could imagine two or three reasonably similar mobile device based payment applications, which have purchased (or can afford) varying degrees of internet access.  If one P2P platform takes 1-2 seconds to transact, while another takes 10-15, from a user experience perspective it is reasonable to assume the slower platform will quickly be abandoned in favor of the quicker platform.  Again, this favors providers with either larger margins or deeper pockets that can afford to pay for faster internet access, or a model that introduces tiered pricing for speeds.  One can imagine P2P platforms offering free and premium versions of their platform, with a premium version introducing higher access and settlement speeds.

Relatedly, the FCC and the Federal Trade Commission signed a memorandum of understanding on December 14 in which the FTC agreed to monitor the broadband market, and investigate and take enforcement actions against internet service providers for unfair or deceptive acts or practices (using the FTC’s authority under Section 5 of the FTC Act).  While the FTC is focused on UDAP issues with respect to the provision of internet services, might the CFPB look at internet speeds (and their disclosure) in connection with consumer financial services and identify potential issues for purposes of its authority to prohibit unfair, deceptive, or abusive acts or practices?  For example, would banks or platform providers need to disclose their internet speed, and could they face a UDAAP challenge if their transactions failed to meet such speeds?

Following the FCC’s vote, New York Attorney General Eric Schneiderman announced his plans to “lead a multistate lawsuit to stop the rollback of net neutrality.”  According to media reports, nearly 20 states, including Massachusetts, Mississippi, Hawaii, Maine, Vermont, and Illinois, have indicated that they intend to participate in Mr. Schneiderman’s lawsuit.

The FCC has issued a Report and Order and Further Notice of Proposed Rulemaking (Order) adopting new rules to allow voice service providers to proactively block calls from certain numbers that are suspected to be fraudulent. The November 16 Order seeks to prevent fraud or identity theft that often accompanies calls which “spoof” or manipulate Caller ID information. The new rules expressly authorize voice service providers to block robocalls that appear to be from telephone numbers that do not or cannot make outgoing calls, without running afoul of the FCC’s call completion rules.

The new rules apply to four types of calls: invalid numbers (such as those with fictional area codes); unassigned numbers; numbers assigned to a provider but not in use; and valid numbers that the subscriber has placed on a Do-Not-Originate (DNO) list. The DNO list prevents spoofing by blocking calls purporting to be from the legitimate numbers. Commissioner Rosenworcel, providing the lone point of dissent, noted that the new rules do not prohibit carriers from charging consumers for the call blocking services.

The FCC  “strongly encourage[s]” providers to cooperatively share information about numbers that subscribers have requested to be blocked; however the FCC declined to prescribe a sharing mechanism and has not mandated that providers proactively block calls. The FCC made clear that a provider that blocks calls that do not fall within one of the four specific types of calls will be liable for violating Section 201(b) of the Communications Act and associated regulations, which generally prohibit call blocking as an unjust and unreasonable practice. The FCC’s new rules do not extend to text messages and prohibit the blocking of emergency calls.

The Notice of Proposed Rulemaking requests input in two specific areas. First, the FCC seeks comment on the optimal methods to rectify erroneously blocked calls, such as a formal “challenge” process with dedicated timeframes for correction. The Order only encourages companies to adopt procedures to easily identify and fix blocking errors—it does not mandate compliance with a particular mechanism. Second, the FCC seeks comment on ways to measure the effectiveness of its efforts to regulate robocalling. In particular, the FCC is interested to know whether it should institute reporting requirements and, if so, whether that reporting should include a measure of false positives blocked under the new rules. The FCC also invites comment on the benefits and costs of such requirements. Public comments may be submitted through January 23, 2018.