The Telephone Consumer Protection Act: Compliance Developments and What to Expect in 2015

The Telephone Consumer Protection Act:

Compliance Developments and What to

Expect in 2015

November 2014

Overview

• Overview of the TCPA

• Recent Developments

• Issues to Watch

Overview of the TCPA

• Congress enacted the TCPA in 1991 specifically to curb aggressive telemarketing practices:

– Using automatic dialing equipment to make

unsolicited calls to random or sequential telephone numbers

– Calling sequential telephone numbers in a way that ties up a block of telephone numbers and creates public safety risks

– Concerns about telemarketers shifting calling costs to wireless consumers

Overview of the TCPA

(cont’d)

• Imposes a number of restrictions on telemarketing

calls, faxes, and other outbound communications.

– Some restrictions apply to non-telemarketing calls

– Implemented by the Federal Communications

Overview of the TCPA (cont’d)

Two increasingly problematic provisions:

1) No autodialed or prerecorded or artificial voice calls to wireless telephone numbers, absent an emergency or “prior express consent.”

– Applies regardless of content

– The FCC and some courts have determined that this applies to text or short message service (“SMS”)

messages

Overview of the TCPA (cont’d)

2) No prerecorded or artificial voice calls to residential

telephone numbers without “prior express written consent.” • Exceptions:

– Not a solicitation or telemarketing – Not made for a commercial purpose – Emergency calls

– By or on behalf of a tax-exempt nonprofit organization – Healthcare calls subject to HIPAA

Overview of the TCPA (cont’d)

• The TCPA defines an autodialer (“automatic telephone dialing system”) as “equipment which has the capacity— – (A) to store or produce telephone numbers to be

called, using a random or sequential number generator; and

– (B) to dial such numbers.”

• The application of this definition is a key unsettled issue in today’s TCPA landscape.

• The FCC has taken the position that (at least some) predictive dialers are autodialers (more on this later).

Overview of the TCPA (cont’d)

Children with no telephone service

Adults with no telephone service

Children with

wireless service only

Adults with

wireless service only

Percentages of adults and children living in households with only wireless telephone service or no telephone

38.0 45.4

NOTE: Adults are aged 18 and over; children are under age 18. SOURCE: CDC/NCHS, National Health Interview Survey.

Perc

ent

Overview of the TCPA (cont’d)

TCPA Violations Can Be Costly

• Minimum statutory damages of $500 per call.

• Statutory damages of $1,500 per call for knowing or

willful violations.

• Class actions allowed, with no cap on damages or

de minimis exception:

Overview of the TCPA (cont’d)

Hogan Lovells has been deeply engaged in this area: • Cross-practice TCPA Working Group.

• Represent clients in court and before the FCC, Federal Trade Commission, Congress, and state agencies.

• Secured dismissals and nominal settlements for clients in TCPA actions.

• Worked with the FCC to clarify TCPA rules.

• Working with AAHAM to obtain a declaratory ruling and exemption for healthcare calls

Recent Developments

• Court decisions

– Mais

• Eleventh Circuit overturns outlier Florida case on consent • Provision of the number may be enough, but context matters • Still unsettled in some circuits

– Crunch

• Helpful autodialer case for text messaging

• Rejects FCC’s expansive interpretation of autodialer • Helpful on “capacity” issue

Recent Developments (cont’d)

• FCC decisions

– GroupMe

• A consumer’s “prior express consent” may be obtained through and conveyed by an intermediary

• However, parties remain liable for TCPA violations if, in fact, intermediaries do not obtain “prior express consent”

– Cargo Airline Association

• First-of-its-kind exemption

• Free-to-end-user voice calls and text messages for non-telemarketing package delivery notifications

– Fax Advertisements Order

• Already appealed

Recent Developments (cont’d)

• More than 30 parties have filed petitions asking the FCC to clarify issues:

– Autodialer definition

– Which party is the “caller”? – Disclosure rules

– The meaning of “called party” and liability for calls to reassigned wireless numbers

– Does the consumer have a right to revoke consent? – What does “prior express consent” require?

AAHAM

• Filed: Oct. 21, 2014

• Issue: clarification and exemption for healthcare

calls

• Proposals:

– FCC should clarify that the provision of a number to a

healthcare provider demonstrates “prior express consent” for non-telemarketing calls (voice and text) by or on behalf of that provider

– It should also grant an exemption for healthcare calls, subject to conditions

Santander Consumer USA

• Filed: July 10, 2014

• Issue: whether and how “prior express consent” for

non-telemarketing calls can be revoked

• Proposals:

– FCC should clarify that “prior express consent” to receive non-telemarketing calls and texts to cellular phones using ATDS and/or prerecorded voice messages cannot be

revoked

– If there is a right to revoke, the FCC should confirm that the caller may designate methods for consumers to

ACA International

• Filed: Jan. 31, 2014

• Petition for Rulemaking asking the FCC to

– confirm that not all predictive dialers are autodialers; – confirm that “capacity” under TCPA means present

ability;

– clarify that “prior express consent” attaches to the

debtor, not the specific telephone number supplied by the debtor when the debt was incurred; and

– establish a safe harbor for autodialed “wrong number” non-telemarketing calls to wireless phones

United Healthcare Services, Inc.

• Filed: Jan. 16, 2014

• Issue: liability for calls to reassigned wireless telephone numbers for which the caller had obtained “prior express consent”

• Proposals:

– “prior express consent of the called party” encompasses non-telemarketing, informational calls until the caller learns that the telephone number has been reassigned

– “called party” encompasses both the consenting party and the new subscriber to a reassigned number

Professional Association for Customer

Engagement

• Filed: Oct. 18, 2013

• Preview dialing and autodialer definition

– An autodialer must have the “capacity to dial

numbers without human intervention”

– The “capacity” of a system means what that

system can do at the time the call is placed,

without additional modification

Issues to Watch

• What does “autodialer” mean?

• What calls qualify as HIPAA-covered calls?

• Will there be a TCPA rulemaking?

• Will there be more industry-specific exemptions?

• What constitutes “telemarketing” when helping

someone complete an application?

• To what extent does the TCPA apply to mobile

device applications and new technologies?

• How will the FCC apply its new “prior express

written consent” requirements?

What You Can Do

• Assessing your existing data

– What level of consent can you demonstrate?

– Have you obtained additional consents under the new rules?

• Reviewing intake and account forms, calling scripts,

and other consent channels

– Are the disclosures adequate?

– Are the telephone number types specified? – Is your privacy policy sufficient?

• Analyzing the available opt-out mechanisms

• Reviewing calling policies and manuals

What You Can Do (cont’d)

• Analyzing vendor agreements for TCPA compliance and adequate protection (including vicarious liability issues) • Assessing call monitoring and recording compliance

issues

• Evaluating management of customer number changes • Ensuring adequate record retention

• Obtaining insurance

• Monitoring TCPA litigation developments and pending FCC proceedings for filings and decisions of interest • Aggressively and intelligently defending against TCPA

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Mark Brennan Partner

mark.brennan@hoganlovells.com