This Post Was Co-Authored by Partner, Justine Gottshall and Counsel, Brian Schaller

The Federal Communications Commission (“FCC”) released its TCPA Omnibus Declaratory Ruling and Order (“Order”) regarding the Telephone Consumer Protection Act (“TCPA”) on July 10, 2015, which Chairman Tom Wheeler announced via a blog post and FAQ’s in late May. InfoLawGroup previously discussed the potential impact on businesses based on the initial announcement. The FCC has now released the Order and statements from the Commission, including dissents by certain Commissioners. Below are key points that your business should know about the Order.

• In almost all cases, the equipment being used is likely an “autodialer” as currently defined by the FCC.

The Order’s definition of an automatic telephone dialing system (also known as an autodialer) has significant consequences. If the equipment a company uses to make a call/text to consumers is determined to be an autodialer, then the calls/text messages must comply with the TCPA. This requires certain disclosures and consumer consents, among other regulatory hurdles. Violation of the TCPA is a serious matter, with statutory damages at $500 per violation (text/call), with the potential of going as high as $1,500 per violation. The Order has clarified – or perhaps more accurately expanded – the definition of “autodialer” to equipment/software that has the future capacity to dial randomly or sequentially. “In other words, the capacity of an autodialer is not limited to its current configuration but also includes its potential functionalities,” states the Order. This appears to be a very broad definition that, conceivably, could encompass almost all technology used to make a call or send a text message. As Commissioner Ajit Pai stated in his Dissenting Statement, under the Order “pretty much any calling device or software-enabled feature that’s not a “rotary-dial phone”—is an automatic telephone dialing system.” And, unfortunately, the Order gives little guidance or limitations regarding the equipment that falls under the autodialer definition, saying that it is a case-by-case determination. It does state that a phone with merely a speed-dial button and a rotary phone are not autodialers; and that predictive dialers and Internet-to-phone text messages to wireless numbers are autodialers. Factors in determining whether equipment is an autodialer include the amount of “human intervention” and the equipment’s ability to quickly dial thousands of numbers. The Order stopped short of naming a smart phone as an autodialer.

Key Takeaway: The FCC’s current interpretation of an “autodialer” is exceedingly broad and not limited to how the equipment actually functioned when making the call or sending the text message. Accordingly, companies will want to be conservative and typically assume their calls and text messages fall within the scope of the TCPA.

• Prior express written consent is not required for certain on demand, single response, text message programs.

The Order clarifies that certain on-demand texts sent by a company are not telemarketing, but instead fulfillment of the consumer’s request to receive the text. For single program texts to be considered “not telemarketing” and outside the requirements of obtaining prior express written consent, companies must ensure they follows certain guidelines. The texts must: (1) be expressly requested by the consumer; (2) be a one-time only message sent immediately in response to a specific consumer request; and (3) contain only the information requested by the consumer with no other marketing or advertising information. The Order emphasizes “that this ruling applies only when the on-demand text message has been expressly requested by the consumer in the first instance.” This clarification was made in response to a petition from the Retail Industry Leaders Association (RILA).

Key Takeaway: If a company has a program where it sends a single text to respond to a customer who initiates the exchange by texting in to the company, it is possible that the program will not need certain disclosures. This is especially helpful for retailers and other companies who want to give their customers on demand text offers or answer customer questions via text.

• A company could take all steps it can to discover whether a cell number has been reassigned to another subscriber, and still be held liable under the TCPA.

The Order grants a one call/text exception to discover whether a number has been reassigned. If the new subscriber does not answer the phone, does not respond to let the caller know that the number has been reassigned or does not opt out, the caller is still deemed to have “constructive” knowledge of the reassignment. And, there is no responsibility on the part of the recipient of the call or text to inform the caller of the number reassignment. “[T]he idea that a recipient should have no responsibility whatsoever to notify a company that they reached the wrong person or even to be truthful and act in good faith is preposterous,” states Commissioner Michael O’Rielly who dissented in part and approved in part. While many companies may agree with Commissioner O’Rielly, the current rule is that companies are responsible for learning whether a number has been reassigned, and, if they do not discover the reassignment, ensuring they only send a single text or make a single call to a reassigned number.

Through the Order, the FCC seems to believe that there are enough steps that a company can take to ensure that it does not call/text a reassigned number. Accordingly, the Order lists the following guidelines:

(1) include an interactive opt-out mechanism in all artificial- or prerecorded-voice calls so that recipients may easily report a reassigned or wrong number;

(2) implement procedures for recording wrong number reports received by customer service representatives placing outbound calls;

(3) implement processes for allowing customer service agents to record new phone numbers when receiving calls from customers;

(4) periodically send an email or mail request to the consumer to update his or her contact information;

(5) utilize an autodialer’s and/or a live caller’s ability to recognize “triple-tones” that identify and record disconnected numbers;

(6) establish policies for determining whether a number has been reassigned if there has been no response to a “two-way” call after a period of attempting to contact a consumer; and

(7) enable customers to update contact information by responding to any text message they receive, which may increase a customer’s likelihood of reporting phone number changes and reduce the likelihood of a caller dialing a reassigned number.

However, Commissioner Pai rejects the idea that these guidelines will protect companies that are acting in good faith, stating, “the Order offers a laundry list of ways that a caller might determine that a number has been reassigned but declines to adopt a safe harbor for good actors that carry out these practices and instead subjects them to wrong number litigation.” 

Key Takeaway: There is a risk for any company that it will be held liable for calls or texts to a reassigned number and it is a risk that cannot be fully mitigated. Each company should take every step possible to ensure it screens out reassigned numbers, but currently the FCC appears have set a strict liability standard with steps that can lessen but not fully alleviate the risk.

• Consumers have a right to opt-out – and companies cannot dictate how they do so.

The Order clarifies that consumers may revoke consent through any reasonable method, including orally. “Consumers generally may revoke, for example, by way of a consumer-initiated call, directly in response to a call initiated or made by a caller, or at an in-store bill payment location, among other possibilities.” In theory, this may seem reasonable. However, as a practical matter this may create an unreasonable burden on businesses. Commissioner Pai describes this burden when he questions whether full compliance necessitates recording and reviewing “every single conversation between customers and employees” and training cashiers “in the nuances of customer consent for TCPA purposes?”

Key Takeaway: Companies should consider the right for a customer to orally opt-out of a text message/calling program in company policies, employee guidelines and training. This is particularly important for those companies that have a large consumer facing presence, such as retailers and restaurant chains.

• Those companies that offer applications or services (“App Developers”) for others to make calls/texts received some relief from the Order.

The Order states that App Developers that develop and manage mobile Apps that allow users to text/call from those Apps could, under certain circumstances, not be liable under the TCPA because the App Developers are not initiating/making the text message. To determine whether an App Developer is liable, the Order created a complicated test. One must look to the totality of the facts and circumstances surrounding the placing of a particular call/text message to determine: 1) who took the steps necessary to physically place the call; and 2) whether another person or entity was so involved in placing the call as to be deemed to have initiated it. Other factors include: (i) the extent to which an App Developer “willfully enables fraudulent spoofing of telephone numbers or assists telemarketers in blocking Caller ID, by offering either functionality to clients” and, (ii) whether an App Developer “offers a calling platform service for the use of others has knowingly allowed its client(s) to use that platform for unlawful purposes.”

The Order applies this test to the functioning of the apps YouMail and TextMe and found that these apps do not initiate/make the call/text message. However, the Commission found that when the Glide app automatically sent invitational texts of Glide’s “own choosing to every contact in the app user’s contact list with little or no obvious control by the user,” Glide did initiate those text messages. In his Statement, O’Rielly writes that, “the distinction drawn between different types of apps is without merit. While it is true that different apps may require different levels of engagement by the user before sending messages to the user’s contacts, no messages would be sent at all but for the user signing up for the service. It is important that the user be aware that all contacts will receive a message. But assuming that is true, it is the user that should be deemed to initiate the call, not the app, as these type of messages would not be made but for the human intervention of the user. If certain recipients do not want to receive messages, it is not unreasonable to expect them to take that up with the user, not the app provider.”

Key Takeaway: At least in some cases, the company providing a service that allows users to text may not be liable under the TCPA. The Commission has endorsed this for certain apps that meet certain criteria, but it may be possible to apply the Commission’s reasoning to other types of services that merely provide the mechanism for other users, including other corporate users, to send text messages.

• Companies cannot rely on consent given by consumers prior to October 16, 2013 that were not compliant with the current prior-express-written-consent requirements.

As background, the FCC passed a prior-express-written-consent rule that became effective October 16, 2013. This rule was passed, along with a host of other amendments to the TCPA, in the “2012 TCPA Order”. The 2012 TCPA Order required that the text sender must tell consumers the “telemarketing will be done with autodialer equipment and that consent is not a condition of purchase.” Before this current Order came down there was confusion as to whether companies needed to go back to consumers who had opted-in using the old rule (no prior express written consent) and to obtain prior express written consent containing the disclosures.

In response to petitions by the Direct Marketing Association (“DMA”) and Coalition of Mobile Engagement Providers (“Coalition”), the FCC admits in the Order that certain language in the rule “could have reasonably been interpreted to mean that written consent obtained prior to the current rule’s effective date would remain valid even if it does not satisfy the current rule.” As a result, in the Order the FCC clarifies that the prior-express-written-consent requirements apply “per call and that telemarketers should not rely on a consumer’s written consent obtained before the current rule took effect if that consent does satisfy the current rule.” In recognition of this ambiguity, the Order gives the DMA and Coalition (and their members) a retroactive waiver to obtain prior express written consent required by the current rule. The Order states, “Petitioners must come into full compliance within 90 days after release of this Declaratory Ruling for each subject call.”

Key Takeaway: Businesses can no longer rely on any ambiguity in the 2012 TCPA Order. The Order is clear: the prior-express-written-consent requirements are retroactive. DMA and Coalition members are granted a window to comply and avoid liability, so DMA and Coalition members should consider taking advantage of this window. Whether this window is also open for non-DMA/Coalition members is an open issue, but all companies will want to ensure they are in full compliance as soon as possible.

Although the Order is now effective, the fight over this Order has just begun, with ACA International, the Association of Credit and Collection Professionals, reporting that it has filed a lawsuit. On its website ACA says is seeking “judicial review of the FCC’s ruling, and determination whether the FCC exercised its regulatory authority appropriately or if the agency has ignored a controlling statute in order to expand the scope and reach of the TCPA in a way that Congress never intended.”