Be Prepared: The New TCPA Ruling May Affect How You Do Business

The TCPA restricts how businesses communicate with consumers through residential telephones, cell phones, text messages and faxes. It requires consent from a consumer before a business may contact the consumer using automated dialing systems, prerecorded messages or artificial voices, and the type of consent needed depends on the mode of contact and content of the message. Litigation over the act has steadily increased as businesses struggle to navigate the TCPA's often esoteric requirements while utilizing latest technology to communicate with consumers.

The TCPA has swift, often monumental penalties, providing for a penalty between $500-$1,500 for each call, text or fax that violates the Act. For example, in August 2014, Capital One announced a $75.5 million dollar settlement arising from claims that Capital One and other defendants used autodialers to call cell phone numbers without the requisite consent. In May 2015, Walgreens settled a class action for $11 million over text messages that reminded customers about prescription refills. Last week, a state court awarded a single plaintiff $225,000 for 153 calls made by Time Warner Cable about past due balances when it was using a phone number originally provided to the company that was later reassigned to an unrelated customer.

In light of these kinds of rulings, on Friday, the FCC issued a 138-page ruling to address questions raised by companies in a broad-range of industries - from banking to health care to restaurants. The ruling primarily focuses on communications via cell phone and text messages. Here are a few highlights:

The definition of an autodialer is broad. The TCPA only restricts calls and text messages to cell phones when the calls are made using an "automatic telephone dialing system" or "autodialer." The question of whether the platform used to make the calls or texts is an autodialer is thus central to a plaintiff's claim under the TCPA. The FCC adopted a very broad definition, ruling that dialing equipment that simply has the capacity to store or produce and dial random or sequential numbers meets the TCPA's definition of "autodialer." This broad definition contradicts many recent court decisions, and in the words of one of the dissenting commissioners to the ruling, "transforms the TCPA from a statutory rifle-shot targeting specific companies that market their services through automated random or sequential dialing into an unpredictable shotgun blast covering virtually all communications devices."

Consent by consumers can be revoked by any "reasonable means." Consumers must give consent to be contacted on their cell phones by autodialers, and depending on the content of the message (marketing versus non-marketing/informational), prior express written consent or prior express consent is required. However, the TCPA is silent on how that consent may be revoked. The FCC confirmed in its ruling that businesses cannot limit the method of revocation, and it can be made by a consumer via any "reasonable means," which includes oral or in-person revocation. Businesses will bear the burden of keeping adequate business records to demonstrate consent or revocation of consent.

Consent of the "Called Party" means the subscriber or the "customary user." The TCPA requires that a business have the consent of the "Called Party," and in recent years, there has been much debate on whether that means the subscriber of the cell phone or the intended recipient of the call. Many businesses have held liable for calling a cell phone that either did not belong to the person who gave consent to be contacted on the phone (such as a spouse or boyfriend) because courts have found that only the subscriber-the person whom pays the bill and whose name is on the cell phone account-had the ability to give consent. The FCC ruling clarified that consent may come not only from the subscriber, but also from the "non-subscriber customary user of a telephone number included in a family or business calling plan." This ruling is significant in that it removes the obligation from businesses to verify that their customers who provide consent on applications or in other documents are the subscribers to the cell phone.

Calls to reassigned numbers may violate the TCPA, subject to the "one-call exemption." In ruling that the consent of the subscriber is required for cell phone calls, the FCC confirmed that calls to reassigned numbers may violate the TCPA. In other words, where one subscriber had a cell phone number and authorized calls to that number, if the number is reassigned to a new subscriber, then the new subscriber's consent is required. Callers who make calls without knowledge of reassignment and with a reasonable basis to believe they have valid consent to make the call are permitted to initiate one call after reassignment as an opportunity to gain actual or constructive knowledge of the reassignment and cease future calls to the new subscriber. The FCC emphasized that "caller best practices" can facilitate detection of number reassignment before calls are made, even though the FCC acknowledged that there is no comprehensive public directory of reassigned number data provided by cell phone carriers.

The takeaway:
There are a host of issues the TCPA raises that are far too extensive and detailed to mention here, but the takeaway from the FCC's ruling on Friday is that we can expect more litigation and consumer lawsuits against businesses for violating the TCPA, and we can expect the rules governing the FCC to continue to evolve as technology develops.

In considering whether your business may be exposed to liability under the TCPA, consider the following questions:

1. Do you use artificial or prerecorded messages to contact residential phones?
2. Does your business send text messages or call cell phones using an automatic telephone dialing system?
3. Does your business send faxes for marketing purposes?
4. Does your company maintain an internal do-not-call list, and does it suppress calls to those on the national do-not-call registry?

If you are concerned that your business may be engaging in actions that could subject your business to liability under the TCPA, you should consider creating and maintaining written TCPA compliance policies and programs. Businesses must obtain the proper consent for each type of communications and must keep records to document their compliance. It is important for business to develop TCPA compliance programs in conjunction and coordination with marketing programs that is properly supervised and reviewed as the TCPA's regulation continues to evolve.