In potentially its most significant action under the Telephone Consumer Protection Act (TCPA) since the 2003 overhaul of its rules ushering in the National Do-Not-Call Registry and other updates, the Federal Communications Commission (FCC) resolved nearly two dozen petitions for declaratory ruling as announced at its last Open Meeting. The Declaratory Ruling and Order delivers on the Chairman’s promised crackdown on interpretive loopholes, and does not provide the hoped-for clarity and relief petitioners sought, as we presaged here.

The FCC’s Order predominantly strengthens protections against unwanted autodialed calls and texts and prerecorded calls, especially to wireless numbers, despite the Order’s genesis in industry petitions seeking flexibility, clarity, and relief from the onslaught of TCPA litigation. On the key issue of what it means to “autodial,” the Order fosters new uncertainty which is sure to encourage even more TCPA class action litigation.  Meanwhile, the FCC’s rulings on consent needed for autodialed and/or prerecorded calls and texts are at best a mixed bag that in certain respects create new burdens on telephonic outreach, while also providing explanations and clarifications that offer only a modicum of additional freedom or flexibility in a handful of specific contexts. Though healthcare providers and financial institutions may find some favorable tidbits in the Order, others in the business community who sought certainty and less risk of financially punishing litigation likely will be disappointed. A review of the major points in the FCC’s Order follows.

The Order uses petitions by businesses seeking clarity and relief from TCPA litigation exposure – which asked the FCC to adopt interpretations of “gray areas” in the statute, rules, and/or prior FCC guidance favorable to callers – to instead largely eliminate those “gray areas” to the benefit of call recipients. The vast majority of the rulings involve issues arising from the TCPA’s restrictions on calls and texts to numbers assigned to cell phones and wireless services (which also apply to emergency numbers and other sensitive lines, like homes for the aged, hospital rooms, etc.). The Order thus reiterates that “if a caller uses an autodialer or prerecorded message to make a non-emergency call [or text] to a wireless phone, the caller must have obtained the consumer’s prior express consent or face liability for violating the TCPA. Prior express consent for these calls must [and texts] be in writing if the message is telemarketing, but can be either oral or written if the call is informational.” The Order’s guidance primarily relates to how those basic tenets apply.

On the foundational issue of TCPA liability of whether a call or text is sent via “autodialer,” the FCC takes a broad approach that deems most equipment offering efficiencies by allowing dialing at greater speed and/or volumes an autodialer. In doing so, the Order was not generous to industry efforts to gain certainty based on interpreting/engineering around the issue. Specifically:

• The Order reiterates that predictive dialers are autodialers, and reconfirms that “calls” that are autodialed are prohibited unless placed with consent of the recipient or for emergency purposes include SMS text messages.

• Under the definition in the statute and rules that autodialers are “equipment [with] the capacity store or produce [] numbers to be called using a random or sequential number generator and to dial such numbers,” the FCC finds a device will be an autodialer if it has the “potential” capacity to store or produce numbers and dial them, even if it does not have the “present capacity” to do so.

• The Order “reaffirms” that a device is an autodialer if it “generally has the capacity to store or produce, and dial random or sequential numbers… even if it is not presently used for that purpose, including… calling a set list of consumers."
  • That is, the “capacity of an autodialer is not limited to its current configuration but also includes its potential functionalities.”

• A device is an autodialer “even if, for example, it requires the addition of software to actually perform the functions described in the definition,” so long as there is “more than a theoretical potential” to perform the functions. 
• The autodialer definition and restrictions cannot be avoided by “dividing … pieces of dialing equipment that work in concert” to transmit the calls/texts.
• Rather, the “focus” is “whether equipment has the requisite ‘capacity,’ and therefore is not limited to any specific piece of equipment and is without regard to the name given the equipment for marketing purposes.”

• Thus, “various pieces of different equipment and software can be combined to form an autodialer” and will be deemed as such “if the net result of [] voluntary combination enables the equipment to have the capacity [now confirmed as “potential” capacity] to store or produce [] numbers to be called.”

• Ultimately, the Order suggests that any equipment with “the capacity to dial numbers without human intervention” so as to be able to “dial thousands of numbers in a short period of time” will be deemed an autodialer.

• Further, the Order does not establish the precise contours of the autodialer definition.  On that point, the Order:
  • States that “speed dialing” or “call forwarding” on customer equipment designed for end-users is not autodialing.

• Does not categorically exempt smart phones – saying instead that the FCC will “monitor our consumer complaints and other feedback, as well as private litigation,… and provide additional clarification if necessary” in the future.

The Order addresses several issues involving consent needed to transmit autodialed/prerecorded calls/texts to be sent to cell phones, and for prerecorded telemarketing to any phone.

• On records of consent, the Order reaffirms that regardless of the means by which a caller obtains consent, if any question arises, the burden is on the caller to prove consent, and the FCC “expects” that “responsible callers” will “maintain proper business records tracking consent.”

• The Order confirms that prior TCPA rulings/guidance remain good law, including:  allowances for wireless carriers to send free-to-end-user (FTEU) messages/texts to their subscribers without prior consent, the declaratory ruling for debt collection deeming consent to exist where the creditor obtained the number called from the customer during the transaction giving rise to the debt called about, and the allowance for a single post opt-out confirmation text.

• The Order solidifies that the “called party” from whom consent must be held is not the “intended recipient” but the “actual recipient.” This means the person who is subscribed to and pays for the service at the number called at the time the call is placed, or a non-subscriber customary user of that number included in a household, family or business plan.
  • And, if someone not the subscriber or customary user answers due to proximity to the subscriber or customary user  – such as a passenger in a subscriber’s car, or houseguest of a customary user – there is no violation if the subscriber or customary user gave consent.

• For calls/texts to a phone numbers for which consent was obtained but is later reassigned to a new subscriber who did not consent, the Order interprets the TCPA to permit one additional call to the reassigned number, over an unlimited period of time, in order to obtain actual or constructive knowledge of the reassignment. However:
  • The “one free call” exception applies only if the caller does not already have actual knowledge of the reassignment (and can show a reasonable basis to believe consent existed to make the call to the number’s previous subscriber or customary user). The burden of proving the exception lies with the caller, not the call recipient.

• Constructive knowledge of reassignment exists after the “one free call” even if the new subscriber does not inform the caller it has reached the wrong party and, in fact, even if the new subscriber never even answered the one free call.

• The “one free call” exception is not available where the wrong party is reached not because of reassignment, but rather due to “wrong number” calls where the number obtained in getting consent did not belong to person consenting, whether due to that person’s intentional misdirection, typos in provision of the number and/or its entry into a database, caller misdialing, etc.

• The Order “clarifies” that consent can be revoked and revocation may be effectuated “using any reasonable method including orally or in writing.”
  • This can be, for example, via consumer-initiated calls, during calls initiated by the entity who obtained the consent, at in-store bill-payment locations, “in writing” (likely viewed broadly to allow not only hard-copy/snail-mail but also email or text), and “other possibilities.”

• Whether any particular revocation used by a consumer was reasonable is based on a totality of facts/circumstances, including, e.g., whether consumers had a reasonable expectation they could effectively communicate revocation under the circumstances, and whether the caller could have implemented mechanisms to effectuate revocation without undue burden. 

• Callers also “may not control consumer’s ability to revoke consent.” By this, the FCC means that those who have obtained consent cannot require revocation through only specified channels or mechanisms. The Order also “cautions” consent holders not to “deliberately design systems or operations in ways that make it difficult or impossible” to revoke consent.

• The Order grants a retroactive waiver dating back to the 2013 “robocall” rule change, and extending 90 days into the future from the date of the Order, for prior written consents obtained for autodialed/prerecorded telemarketing calls/texts to cell phones before the updated disclosure requirements for such calls; after that, all prior express written consents must conform to current rules whereby “telemarketers must tell consumers that telemarketing will be done with autodialer equipment [which includes, where relevant, prerecorded calls,] and that consent is not a condition of purchase.”

The Order affirmatively sanctions certain call-to-action texting practices for one-time, on-demand text messages that facilitate purchases immediately after a consumer’s request for the text, even if the text serves a marketing function and could thus otherwise arguably require prior express written consent. For example, the Order states, this is permissible where a consumer sees an ad or other form of call-to-action and responds by texting a key word to a short-code of a seller, who responds by texting the consumer a coupon.  However, the following must be true of the text for this allowance to apply:

• it is expressly requested in the first instance by the consumer

• it is a one-time only message sent immediately in response to a specific consumer request

• it contains only information requested by the consumer and no other marketing or ads/promos

The Order also makes clear that if these criteria are not met or are exceeded – including that responding to the call-to action results in receipt of more than one text – then prior express written consent must be obtained where the autodialed text is telemarketing, and prior express consent must be obtained for autodialed non-telemarketing texts.

As to when apps, dialing platforms, and/or online transmissions lead to TCPA exposure, the Order clarifies that app/platform-providers do not “make” or “initiate” texts – and, implicitly, that sufficient “human intervention” is present to avoid autodialing – where an individual merely uses the service or app to auto-generate texts from the end-user to recipients of the end-user’s choosing.

• The FCC will (and thus courts should) determine whether autodialing is present, and whether app/platform-providers or the end-users (or both) are responsible for a call/text, based on “totality of the facts and circumstances surrounding the… call,” based on:
  • who took the steps necessary to physically place the call

• whether the app/platform-provider (or other entity) was “so involved in placing the call as to be deemed to have initiated it”

• whether the app/platform “knowingly allowed” use “for unlawful purposes”

• whether end-users, as opposed to the app/platform provider, control whether a text/call transmits, who receives it, and who is responsible for its content

• Where an app/platform-provider has “no discernible involvement in deciding whether, when or to whom” a text/call is sent, or “what such [a call/text] says,” and does not “perform related functions such as pre-setting options… that physically cause” texts/calls to transmit, the app/platform-provider will not be the responsible initiator, caller, sender.

• On Internet-to-phone texting, the Order:
  • Reinforces that SMS texts are subject to the same autodialing rules as voice calls.

• Holds that if Internet-to-phone texts are autodialed – including via text messaging apps “that enable entities to send texts to all or substantially all text-capable U.S. telephone numbers” – prior express consent is needed regardless of content, and prior express written consent is required if the text is telemarketing.

• Accordingly establishes that addressing a message to a consumer’s cell phone via a wireless domain email address (such as 5555551111@sprint.messaging.net) can trigger both special FCC CAN-SPAM rules for primarily commercial messages, as well as the TCPA.

The Order also grants exemptions for banks/financial institutions and healthcare providers from prior express consent for autodialed/prerecorded informational calls/texts under specified circumstances for certain free-to-end-user (FTEU) “pro-consumer messages” about “time-sensitive” matters.

• Specifically, the exemption applies only to the following autodialed/prerecorded calls/texts:

• The above autodialed/prerecorded calls/texts are exempted only where:
  • the calls/texts are FTEU, including not being counted against any plan limits

• the calls/texts are sent only to the cell number provided by the customer

• the calls/texts state the institution’s name/contact info (for voice, at the start of the call)

• the calls/texts are strictly limited to the above purposes and cannot include telemarketing, cross-marketing, solicitation, debt collection, or ads

• the calls/texts are “concise,” generally a minute or less for voice (unless more time is needed to obtain customer responses), and 160 characters or less for texts

• there are no more than 3 messages (whether voice or text) per event over a 3-day period, per account for banks and financial institutions, and no more than 1 message (whether voice or text) per day, with a maximum of 3 calls/texts combined per week from a specific provider

• opt-out rights are provided and there is immediate honoring of opt-outs (voice- or keypress automated and/or 800-numbers for voice, “STOP” instructions for text)

• The Order also clarifies that provision of a cell number to a healthcare provider, absent instruction to the contrary, constitutes prior express consent for healthcare calls subject to HIPAA by a HIPAA-covered entity (or business associates acting on its behalf), if the covered entity/business associate keeps calls/texts within the scope of the consent (meaning the call must be “closely related” to the purpose for which the number was originally provided, e.g., if a patient provides a number on admission to a hospital for surgery, only calls about or to follow-up on that surgery are allowed).

Regarding consumer-elected call-blocking technologies offered by carriers or third-parties, the FCC clarifies that nothing in the Communications Act or FCC rules/orders, including carriers’ call-completion obligations, prohibits them from deploying call-blocking technology, via an informed opt-in process that is triggered by consumers to stop unwanted mass calls. Regardless how a blocking technology obtains the phone numbers to be blocked, consumers may choose to subscribe so long as the carrier offering it or coordinating with the technology provider adequately discloses the risk of inadvertent blocking of wanted calls. The FCC strongly encourages carriers and services to avoid blocking autodialed or prerecorded calls from public safety entities, emergency operations centers, or law enforcement agencies, and also encourages provision of features that allow customers to ensure wanted calls are not blocked, and that allow them to check what calls have been blocked to report and correct errors.

The Order also provides guidance on collect-calling and inmate-calling services that depend on called parties first hearing a recording to accept charges and/or set up billing arrangements for the call. The FCC clarifies that such recordings will not be deemed autodialing/prerecorded-calling if done on a single call-by-call basis, and the caller provides the called party’s number and controls the call’s content other than the incidental automation/recorded-messaging necessary to facilitate it. This allowance is subject to various conditions, including that the call-setup recording/autodialing not being charged to the end user, and that the recording not including any telemarketing, solicitation, debt collection, etc.