FCC Chairman Ajit Pai proposed the creation of a comprehensive reassigned numbers database, addressing a significant compliance challenge under the TCPA. The TCPA’s prohibitions on the use of automatic telephone dialing systems (ATDS) allows calls to be made with the express consent of the recipient. However, as the Chairman noted in the press release announcing this proposal, millions of phone numbers are reassigned each year. Because businesses who have received prior express consent cannot rely on consumers to inform them of a reassignment, they risk violating the TCPA by placing any calls with an ATDS to those numbers after they have been reassigned.

The Chairman’s press release and proposed order recognize this challenge and outline the establishment of a database of all phone numbers that have been permanently disconnected (and that are therefore eligible for reassignment). With a single, comprehensive, and authoritative repository for this information, business callers can check the database and determine whether a recipient’s number has become eligible for reassignment. This will allow callers to know before placing an ATDS call whether the consumer who consented to receive calls still holds that phone number—and thus whether the prior express consent is still valid.

If approved by the FCC, the proposed order would establish a database based on information provided by phone companies obtaining geographic numbers from the North American Numbering Plan. Voice providers would report all permanently disconnected numbers (i.e., numbers that have thus become eligible for reassignment) on a monthly basis. The draft order would also require an aging period of 45 days before permanently disconnected numbers may be reassigned, ensuring that eligible numbers will be in the database before reassignment occurs. An independent third-party administrator would be responsible for managing the data with funding assessed from voice providers.

Although the TCPA compliance problems around reassigned numbers have existed for years, these issues took on new importance this year after the DC Circuit set aside two components of the FCC’s 2015 Declaratory Ruling and Order in ACA International v. FCC. The ACA International decision both eliminated the FCC’s one-call safe harbor for calls placed to reassigned numbers and set aside the FCC’s interpretation of “called party” to mean the current actual subscriber instead of the intended recipient, increasing the uncertainty faced by business callers. The FCC issued a notice seeking comments on this and other issues arising from the ACA International decision in April. This was followed later in the summer by a bipartisan letter from two U.S. Senators calling for the establishment of a reassigned number database, demonstrating consensus that a comprehensive solution to reassigned numbers is overdue.

While the establishment of a reassigned numbers database would certainly be a welcome development, it would not resolve all of the compliance challenges relating to reassigned numbers that resulted from ACA International. The chairman’s draft order establishing the database specifically says it would not address “how a caller’s use of this database would impact its potential liability under the TCPA for calls to reassigned numbers” but “that use of the database will be a consideration” when the FCC does address the other topics raised in the May 2018 notice.

We recently addressed these and other TCPA compliance developments on our podcast, including the FCC’s response to a number of other issues raised by the ACA International decision around what constitutes an ATDS and how a party can revoke prior express consent to receive calls.

The FCC is expected to vote on the Chairman’s database proposal at its next Open Commission Meeting on December 12.

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.

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.

An Illinois federal judge ordered Dish Network to pay the federal government $168 million for violating the FTC’s Telephone Sales Rule (“TSR”).  The judgment is the largest civil penalty ever obtained for a violation of the TSR.  The remainder of the civil penalty was awarded to the states of California, Illinois, North Carolina, and Ohio for violations of the Telephone Consumer Protection Act (“TCPA”) and various state statutes.  In addition to permanently blocking Dish from making calls in violation of the do-not-call laws, the order requires Dish to undergo substantial long-term compliance monitoring.  Among the many costly provisions of the compliance monitoring component of the order, Dish is required to hire a telemarketing-compliance expert to prepare policies and procedures to ensure that Dish and its primary retailers continue to comply with the injunction and the telemarketing laws.

The decision follows a five week bench trial that commenced in January 2016.  A number of factors were central to the district judge’s 475-page opinion.  Significantly, the calls were placed to individuals whose numbers were listed on the National Do Not Call Registry and to individuals who informed Dish that they did not want to receive calls from them.  Notably, the court ruled in favor of the federal government on all of the TSR counts and found more than 66 million TSR violations.  It further chastised Dish for employing call centers without any vetting or meaningful oversight.  The court also admonished Dish for its refusal to take responsibility for the actions of its call centers and retailers.  Such remarks represent a growing trend of courts scrutinizing companies over their monitoring of third-party vendors and their practices.  Just last month, a North Carolina federal judge presiding over a TCPA class action, found Dish vicariously liable for its vendor’s willful and knowing violations of the TCPA and trebled the damages to $1,200 per call—more than $61 million in total.

A Dish spokesman said that Dish “respectfully disagrees” with the Illinois decision and plans to appeal.

In a letter sent last week to U.S. Department of Education Secretary Arne Duncan, four U.S. Senators urge the ED “to direct federal student loan servicers, debt collectors, and all other third parties” to delay use of the new robocall authority given by the Bipartisan Budget Act of 2015.  Two Senators are Democrats (Elizabeth Warren and Edward J. Markey) and two Senators are Republicans (Michael S. Lee and Orrin G. Hatch).

Signed into law by President Obama on November 2, 2015, Section 301 of the Budget Act amended the Telephone Consumer Protection Act (TCPA) to create a new exemption for debt collection robocalls made to cellular and residential telephone numbers.  Prior to the amendment, such calls would have been prohibited absent the recipient’s prior express consent.  As amended by Section 301, the TCPA now allows such calls to be made without the recipient’s prior express consent if such call, when made to a cellular phone, “is made solely to collect a debt owed to or guaranteed by the United States,” or, when made to a residential line, “is made solely pursuant to the collection of a debt owed to or guaranteed by the United States.”

The Senators assert that the robocall authority should not be used until the ED can “demonstrate with data that the use of this authority will provide net benefits for both student loan borrowers and taxpayers and will not result in potentially abusive debt collection practices.”  They also contend that the new robocall authority cannot be used until the FCC issues implementing regulations and that such authority can only be used for calls to student loan borrowers and not to “their relatives or references that may be secondarily responsible for the debt.”  In their letter, the Senators ask the ED to tell them by January 11, 2016 whether it agrees with their interpretations of the TCPA amendments.

The Senators’ interpretations do not appear to be supported by Section 301.  Section 301 has no explicit effective date.  In contrast, other Budget Act sections have explicit effective dates, including one section with an effective date that is tied to the issuance of implementing regulations.  While Section 301 directs the FCC, in consultation with the ED, to issue regulations to implement Section 301, it does not provide that that Section 301 is ineffective until such regulations are issued.  Also, the rulemaking authority provided by Section 301 only allows the FCC to “restrict or limit the number and duration of calls made to a telephone number assigned to a cellular telephone service to collect a debt owed to or guaranteed by the United States.”  Accordingly, such regulations would not impact robocalls to residential telephone numbers.

In addition, nothing in the language of the exemption suggests that it allows robocalls only to a student loan borrower and not to others who are liable for the loan.  The exemption’s only limitation is that the robocall must be made “solely to collect a debt owed to or guaranteed by the United States’’ or “solely pursuant to the collection of a debt owed to or guaranteed by the United States.”  Finally, the Senators are asking the ED to revisit a policy decision about the benefits of these calls that was made by the Congress in enacting the TCPA amendments and the President in signing them into law.

We will be interested to see whether the CFPB shares the Senators’ interpretations of the robocall exemption in connection with examinations of student loan servicers and debt collectors involved with federal student loans.