Vedder Thinking | Articles FCC's Latest TCPA Rulings Significantly Increase Litigation Risk
Through declaratory rulings issued on Friday, June 19, the FCC expanded the scope of the TCPA in ways that will have real litigation consequences for all companies that have calling practices. Indeed, TCPA litigation has dramatically spiked in recent years (at least 2,000 TCPA cases were filed in 2014 alone), but the FCC’s latest action will further incentivize the plaintiffs’ bar.
The FCC Declined to Clarify the Definition of "Automated Telephone Dialing System"
In its ruling, the FCC merely reiterated the language of the TCPA itself—that an autodialer is any technology with the capacity to dial random or sequential numbers. This vague standard has already been the subject of much litigation, as parties dispute whether technology that is theoretically capable of random or sequential number generation (but did not use such generation to place the call at issue) falls within the definition. If courts strictly apply the definition, virtually any telephone system would be an autodialer. For example, it is easy to imagine an iPhone app that gives the user the ability to dial random or sequential numbers. Does that mean that iPhones are "capable" of random or sequential dialing and, thus, all iPhones are autodialers for purposes of the TCPA? That surely cannot be what Congress intended when it wrote the legislation, but this is the potential effect of the FCC's ruling.
What to Do Now: Evaluate the "manual" dialing systems used by your company and its vendors (because liability under the TCPA is both direct and vicarious). Companies use manual dialing systems to make calls to persons who have not given prior express consent for autodialed calls. After this ruling, plaintiffs will challenge whether a system truly is manual, and the number of calls at issue in such a case could be very high.
The FCC Imposed a Strict Standard for Revocation
Under the FCC's ruling, consumers must be allowed to revoke the consent they granted to receive autodialed calls and texts at any time. This standard fails to account for the nuance of consumer interactions with businesses, and it makes compliance difficult. As Commissioner Pai noted in his statement during the FCC's open meeting on June 18, 2015, "[H]ow could any retail business possibly comply with the requirement that consumers can revoke consent orally 'at an in-store bill payment location'?" Would they have to record and review every single conversation between customers and employees? Would a harried cashier at McDonald's have to be trained in the nuances of customer consent for TCPA purposes? The prospect makes one grimace.
What to Do Now: Identify all channels through which your business might receive a revocation, orally or in writing, and begin the training necessary to ensure that revocations are recognized, recorded and honored. Plaintiffs' lawyers are likely to argue that any calls made after a revocation may trigger the trebled damages available under the TCPA for "willful" violations.
The FCC Also Imposed a Tough Standard on Wrong-Number Calls
Under the ruling, callers have one opportunity to autodial a number that has been reassigned to a different subscriber. The FCC declined to require a national database of reassigned numbers or a lag time before phone numbers are reassigned, though the FCC encouraged carriers to voluntarily implement these practices. This is difficult because it creates liability for companies that originally obtained the proper consent and have no reason to know that the number has been reassigned. One hopes that courts will impose a requirement that the called party promptly inform the caller that the number has been reassigned, but there is no such requirement at this time.
What to Do Now: Make sure that employees are trained to record instances of being informed about wrong numbers, and remove such numbers from the dialing queues. In the context of collections, there can be a tendency to disbelieve some of these claims, but the risk of continuing to call would be great (i.e., potential willful violations). For those numbers identified as reassigned, and numbers for which there simply has been no answer for some time and ownership could be questionable, it is safer to dial manually.
For more information about the FCC's latest TCPA rulings, contact Lisa M. Simonetti at +1 (424) 204 7738, Blaine C. Kimrey at +1 (312) 609 7865 or your Vedder Price attorney.
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