New FCC Robocall Rules Could Boost Litigation, Costs for U.S. Companies

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By Lydia Beyoud

June 23 — U.S. companies could see more litigation and higher compliance costs under Federal Communications Commission changes to robocall rules, communications practitioners told Bloomberg BNA.

The FCC approved a declaratory ruling further tightening rules under the Telephone Consumer Protection Act of 1991 by a contentious 3-2 vote at its June 18 meeting.

The new rules have yet to be released publicly. But based on descriptions by FCC officials, they appear to take a strong stance against business communications with consenting customers by phone, text or fax.

“Industry is going to have to double down on its compliance effort to avoid what I expect to be at least a continued wave of litigation at the rate we've seen, if not an uptick in the litigation,” said Reed Freeman, a partner with Wilmer Cutler Pickering Hale and Dorr LLP in Washington.

When the rules are published, the definition of what constitutes an autodialer machine will have some of the widest-reaching implications, practitioners said June 23. Depending on how the definition is written, it could leave a wide range of companies with potential liability for TCPA violations.

The dissenting commissioners indicated the autodialer definition had been significantly expanded to include any equipment with the capacity to dial random or sequential numbers, regardless of whether it is used for that purpose.

“It almost begs the question, other than hand-dialing a call, what might not be an autodialer,” Freeman said. “If that’s the case, that would fundamentally change the way companies do calls and texts because so much of the modern economy is automated in some way.”

An expansive definition could lead to less efficiency in reaching consumers with calls and text messages, including communications that are transactional in nature rather than marketing, Freeman said.

Marc Roth, a partner with Manatt, Phelps & Phillips, LLP in New York, said he was surprised that the commission didn't revise its TCPA rules to define an autodialer as technology currently used, rather than just the capability, to sequentially dial numbers. “I can understand why the commissioners didn't want loopholes in the law, but they could've added some language to make it more difficult for frivolous actions to be brought under the law,” Roth said.

Robocalls constitute consumers' primary complaint to the FCC, with over 215,000 complaints filed with the agency in 2014, according to agency statistics. The FCC may have been trying to bow to consumer demand for abusive automated calls and texts to be reeled in, but it appears the agency has done it in a way that will restrict businesses' ability to communicate with their customers, said Daniel JT McKenna, a partner with Ballard Spahr LLP in Philadelphia.

“From a consumer standpoint, I view this as a bit of cutting off your nose to spite your face,” McKenna said.

‘Small Winners.'

TCPA rules cover a wide range of American businesses, but call centers and text transmittal platform businesses may be exempt from the tighter TCPA restrictions, Roth said. Those businesses likely aren't liable under the law because they don't initiate communications; their clients do, he said.

Mobile applications such as Skype that transmit texts to a consumer's phone are also likely to escape TCPA-related lawsuits under the new rules for similar reasons, he said. Instead, their clients may be deemed liable.

“That's what's screwy about the application of TCPA to sending texts,” Roth said. The law was written prior to the advent of texting and was never intended to address texts, he said.

As of April 30, at least 905 TCPA lawsuits had already been filed this year, according to the website WebRecon, which tracks TCPA litigation and complaints.

With the potential for an increase in litigation, companies will have an equally increased need for compliance procedures, the practitioners said.

Compliance Measures

That could be particularly difficult when it comes to calls to reassigned numbers and the ruling's definition of consumers using “any reasonable means” to revoke consent, said McKenna.

The rules provide one chance for a caller to avoid TCPA liability if they place a call to a reassigned number, even if the caller previously had a customer's consent to call that number, FCC officials said. In their petitions to the FCC instigating the ruling, businesses had asked the commission to clarify that the rules would only apply to intended rather than actual recipients.

It's unclear how that safe harbor will be defined, whether it will constitute one unanswered call, a call to voicemail, an answered call during which a consumer informs the caller of a wrong number, or some other definition, said McKenna. The ability to accurately capture a single wrong number call is difficult, depending on a company's system, he said.

The order begins by interpreting the statute and saying the correct reading of the statute is the consent of the actual subscriber rather than the intended recipient, an FCC official told reporters following the commission's June 18 meeting.

The official said the item describes tools available to detect reassignment, but practitioners said no definitive national database exists.

“To impose liabilities on companies making calls to people they believe they have consent to call is going to cause a real problem in the industry,” said McKenna.

Businesses will have to be very careful in recording consumers and taking their word for it that the number has been reassigned and promptly put that on a call suppression list, Freeman said.

‘Reasonable Revocation' Definition

The ruling doesn't provide an exhaustive set of reasonable methods for consumers to revoke their consent, in part because the commission wasn't making new rules that listed exhaustive methods, the FCC official said. He did say that the order will mention common methods, such as stopping by a store or kiosk and telling a company not to call anymore.

The devil will be in the details of that definition, said Roth. The commissioners' comments suggest that a visit to a place of business is “a very real scenario” that could be a logistical problem for large companies with many employees, such as restaurants, he said.

Companies could be responsible for setting up policies and procedures to ensure all employees, anywhere can receive such a request from a customer and implement it. They will also have to trust that their employees take the right action to help them avoid TCPA exposure, Roth said.

Expanding Exemptions

Financial institutions and health care and pharmaceutical providers appear to have received an exemption for certain communications, according to the FCC's description of the new rules. That could be a boon for the financial industry in particular, because many TCPA cases have been filed against banks and other financial entities, said Jim Snell, a partner at Perkins Coie LLP in Palo Alto, Calif.

“The exemption for these industries could stem the tide of litigation against them, depending on the details of the ruling,” Snell said.

There are other industries and entities that “unequivocably” need to be added to that exemption, including schools that contact guardians about a student's absence, McKenna said. “They’re not contacting people for anything about sales or an existing business purpose, but for consumers’ protection,” he said.

McKenna said he hoped the FCC would explicitly broaden the carve out for other safety and consumer protection purposes prior to publication of the item. “If they aren't, then frankly the FCC has done a disservice to the consumers,” he said.

Until the FCC issues the text of the new rules, firms are left to watch and wait.

“We’re going to have to see how the final wording comes out. All we have is something just short of talking points at this stage. We’re eagerly awaiting the actual wording of the decision by the FCC,” said Freeman.

To contact the reporter on this story: Lydia Beyoud in Washington at lbeyoud@bna.com

To contact the editor responsible for this story: Heather Rothman at hrothman@bna.com