With its inception by Congress in 1991, the federal Telephone Consumer Protection Act (TCPA) is an attempt by Congress to exert greater protection over consumers from receiving unsolicited telemarketing.^[1] The TCPA was signed into law by President George H. W. Bush as Public Law 102-243. The TCPA limits the use of automatic dialing systems, artificial or prerecorded voice messages, SMS text messages, and fax machines often used to reach consumers with unsolicited telemarketing messages.^[2] It also includes the more colloquially known national “Do-Not-Call” Registry that prohibits companies from contacting listed customers, and is enforced by the Federal Communications Commission (FCC).

The Effect Of The TCPA On Telemarketing Communications

To prevent unwanted calls, Congress restricted the use of “automatic telephone dialing systems,” broadly limiting the use of pre- recorded voice messages and prohibited outreach to mobile phones without “prior express consent” from the call recipient.^[3] The FCC regulations impose financial penalties on all commercial telemarketers for calling phone numbers on the “Do-Not-Call” registry. For those numbers not on the registry, the regulations set a maximum rate on the number of abandoned calls and require telemarketers to transmit caller ID information.^[4] An abandoned call is a telephone call that is not transferred to a live sales agent within two seconds of the recipient’s completed greeting.^[5]

An automatic dialing system is equipment that has the capacity to store or produce telephone numbers to be called, using a random or sequential number generator, and to dial such numbers. When determining whether a system is an ATDS, the FCC and courts often focus on whether it has “the capacity to dial numbers without human intervention.” For example, if a representative must click to dial each number, then the system may not be an ATDS because human intervention is required for dialing each number. In 2015, the FCC held that “the capacity of an autodialer is not limited to its current configuration but also includes its potential functionalities.^[6]” Therefore, if autodialing features can be activated or deactivated within the system, or if autodialing features can be added through software changes or updates, those features are considered to be within the capacity of the dialing system and are subject to TCPA and FCC regulations.

In April 2021, the Supreme Court unanimously held that, “To qualify as an automatic telephone dialing system under the Telephone Consumer Protection Act, a device must have the capacity either to store a telephone number using a random or sequential number generator, or to produce a telephone number using a random or sequential number generator.^[7]”

Text Messaging and the TCPA

The FCC clarified in June 2020 that a peer-to-peer texting platform where each message is initiated by a person is not an ATDS. The logic of its clarification, that a platform that “is not capable of calling such numbers without a person actively and affirmatively manually dialing each one” is not an ATDS, would apply to similar voice click-to-dial systems as well.

The FCC has recently taken steps to crack down on the sending of unwanted text messages to consumers. On September 23, 2022, the FCC issued a Notice of Proposed Rulemaking (NPRM) in which the Commission proposed to require mobile wireless providers to block illegal text messages. The NPRM proposal would specifically direct mobile wireless providers to block text messages at the network level that purport to be from invalid, unallocated, or unused numbers, as well as numbers logged on a Do-Not- Originate (DNO) list. This action comes after the FCC’s publication of its 2022 Consumer Advisory Committee Report on the State of Text Messaging that showed a nearly 146% increase in the number of complaints the FCC has received from consumers complaining of receiving unwanted text messages.

The Constitutionality Of The TCPA

The Constitutionality of the TCPA has been challenged by telemarketers, but has been routinely upheld as protective of the privacy rights of individuals. In the 1995 case of Destination Ventures Ltd. v FCC, Destination Ventures used faxes to advertise their travel and seminars business. Destination Ventures, along with several other businesses that used the same advertising practices, argued that banning their ability to fax potential customers violated their First and Fifth Amendment rights. The claim was dismissed and the TCPA was held as not being violative of any Constitutional right.^[8]

When a Consumer Cannot Be Called

The TCPA strictly defines when a consumer cannot be called, and operationally defines consumers to include both individual persons and their households, as well as entities and financial institutions. This also includes all numbers on the “Do Not Call” Registry, including banks, insurance companies, credit unions, savings associations, and all other business entities, including third parties acting as agents or on behalf of a financial institution. Additionally, no seller or entity telemarketing on behalf of the seller can initiate a telephone solicitation to a residential telephone subscriber who has registered his or her telephone number on the national “Do-Not-Call” Registry.

While this regulation requires strict compliance, a safe harbor exists for an inadvertent violation of this requirement if the telemarketer can demonstrate that the violation was an error and that its routine practices include the following: (1) Written procedures; (2) Training of personnel; (3) Maintenance of a list of telephone numbers excluded from contact; (4) Use of a version of the national “Do-Not Call” Registry obtained no more than three months prior to the date any call is made (with records to document compliance); (5) A process to ensure that it does not sell, rent, lease, purchase, or use the do-not-call database in any manner except in compliance with regulations.^[9]

Maintaining TCPA Compliance

Companies must take the following steps to ensure compliance with the TCPA. These are mandatory provisions that must be followed:

• Maintain company-specific do-not-call lists reflecting the names of customers with established business relationships who have requested to be excluded from telemarketing. Such requests must be honored for five years.^[10]
• Telemarketing calls can only be made between the hours of 8 a.m. and 9 p.m. (local time at the called party’s location).^[11]
• All pre-recorded messages, whether delivered by automated dialing equipment or not, must identify the name of the entity responsible for initiating the call, along with the telephone number of that entity that can be used during normal business hours to ask not to be called again.^[12]
• All telemarketers must comply with limits on “abandoned calls” and employ other consumer-friendly practices when using automated telephone-dialing equipment. A telemarketer must abandon no more than 3 percent of calls answered by a person and must deliver a prerecorded identification message when abandoning a call. Two or more telephone lines of a multi-line business are not to be called simultaneously. Telemarketers must not disconnect an unanswered telemarketing call prior to at least 15 seconds or four rings. All businesses that use auto dialers to sell services must maintain records documenting compliance with call abandonment rules.^[13]

In addition, companies must ensure and maintain the following processes: (1) A process used to access the national do-not-call database;^[14] and (2) a process to ensure that the financial institution (and any third-party engaged in making telemarketing calls on behalf of the financial institution) does not sell, rent, lease, purchase, or use the national do-not-call database for any purpose except for compliance with the TCPA;^[15] and (3) a process to ensure that telemarketers making telemarketing calls are providing the called party with the name of the individual caller, the name of the financial institution on whose behalf the call is being made, and a telephone number (that is not a 900 number or a long distance number) or address at which the financial institution may be contacted.^[16]

Exemptions To The “Do-Not-Call” Registry

Telemarketers must download and check their calling list against the DNC Registry at least every 31 days unless an exemption applies.^[17] While the “Do-Not-Call” registry requires that a company does not contact a listed consumer, there are exceptions that may allow a company to contact a consumer on the registry. Specifically, a company may contact a consumer if any of the following apply:

1. The company has an established business relationship with the consumer. This includes either a three month period for prospective customers, or 18 months of past transactions with former/current customers; (2) The consumer gives their prior written consent to the company to contact them; (3) Calls by a non-profit organization; or (4) Calls which are not commercial or do not include unsolicited advertisements.

Why Federal TCPA Regulations Are Important For Businesses

Assuring compliance with federal TCPA regulations is one way an organization can avoid exposure to class action lawsuits. Both the FCC and state Attorneys General can enforce the TCPA, and may bring lawsuits in federal court for actual damages or fines of $500, whichever is greater. If a company knowingly violated the law, that amount can be tripled to $1,500 per willful violation. In addition, involvement in a TCPA litigation can result in negative public relations for an organization.

The Growth Of State TCPA Laws

Though federal in nature, the TCPA does not preempt state laws regarding telephonic solicitations.^[18] In November 2021, Florida was the first state to formally adopt its own TCPA legislation. The state’s TCPA law mirrors the federal regulations with a few elements specifically coined for intrastate telecommunications within the state of Florida. On July 1, 2021, Florida's Senate Bill 1120 became effective. The Florida Legislature contends that the federal TCPA law expressly permits state regulations that impose more restrictive intrastate requirements and expressly disclaims a complete preemption of state laws governing the regulation of unsolicited sales calls and the improper use of pre-recorded messages claims.^[19] Similar to the federal TCPA, Florida's Mini-TCPA allows aggrieved parties to bring a private action to enjoin the violating party. A prevailing plaintiff may recover actual damages or $500, whichever is greater, plus attorney fees and costs.

Washington’s Quasi-TCPA Bill

In 2022, Washington and Oklahoma also adopted their own state-versions of the TCPA. On June 9, 2022, Washington’s own quasi-TCPA bill went into effect. The bill governs “telephone solicitation,” defined as an “unsolicited initiation of a telephone call…for the purpose of encouraging the person to purchase property, goods, or services or soliciting donations.”^[20] If a called party “states or indicates” that they do not wish to be called, the caller must end the call within 10 seconds and is prohibited from calling that party again for a period of 12 months. The caller is also prohibited from selling the contact information to a third party.” Further, a private right of action is allowed in Washington for “repeated violations” valuing at $100 per violation. The new law also provides for attorney’s fees and costs which is predicted to likely incentivize TCPA plaintiffs to make claims under both the federal and state statutes where applicable. However, unlike the federal TCPA, Washington’s law does not contain a willful and knowing damages component.

Oklahoma’s Telephone Solicitation Act

Similarly, on May 20, 2022, the Oklahoma Telephone Solicitation Act of 2022 (“TSA”) was signed into law. The TSA will go into effect on November 1, 2022. The new law sets in place a new, “Mini-TCPA” in Oklahoma. The Oklahoma law allows for any called party “aggrieved by a violation” of the Act to both (i) enjoin the violation, and (ii) recover “actual damages” or $500, whichever is greater. Additionally, and perhaps most significantly, if a court finds that the calling party acted “willfully, or knowingly” in violating the TSA, the court is granted the discretion to upsurge damages “to an amount equal to not more than three times” the amount of the damages. The statute bans commercial telephonic sales if the call “involves an automated system for the selection OR dialing of telephone numbers or the playing of a recorded message,” without prior express written consent of the called party.

Michigan’s Proposed TCPA Laws – Proposed as of October 2022

On June 30, 2022, Michigan’s H.B. 6307, referred to as, “The Michigan Telephone Solicitation Act,” was introduced. If enacted, H.B. 6307 would prohibit the use of automatic dialing devices to make phone solicitations to consumers that otherwise violate the statute, or unless the list of numbers that the dialing device selects from excludes the telephone numbers of consumers listed on the federal Do Not Call Registry, and “vulnerable individuals,” defined as people ages 75 and older, or those possessing a disability.^[21] If adopted in its current form, H.B. 6307 would also include time restrictions on when calls can be placed, and include exemptions for telephone solicitations made with express, verifiable authorization, calls to existing customers, calls made by a representative of an entity using an emergency phone number, and calls made by schools or educational facilities.^[22]

The creation of TCPA statutes on the state-level suggests that state legislatures are increasingly concerned about consumer protection, concurrent with the federal regulatory agencies that regulate consumer telephone solicitations, namely the FCC. As more states adopt their own TCPA-type statutes, businesses that make telephone solicitations to consumers must be aware of the various state-level regulations, in addition to those imposed by the federal TCPA.