On Compliance: The Implications of Rejected ‘Autodialer’ Interpretation
In July 2015, the Federal Communications Commission issued a declaratory ruling and order significantly expanding the reach of the 1991 Telephone Consumer Protection Act and its implementing regulations.
The FCC’s order was contrary, in many respects, to the prevailing understanding of the TCPA and its prohibitions. Fortunately, in a recent ruling, the U.S. Court of Appeals for the District of Columbia Circuit restored sanity to TCPA Land, at least for now, and vacated parts of the FCC’s order.
TCPA, among other things, provides a caller may not initiate any call or text message (except an emergency call) to a cell phone using an autodialer or prerecorded message without the prior express consent of the called party. TCPA further prohibits the making of any telemarketing or advertising call to a wireless telephone using an autodialer or prerecorded message without prior express written consent of the called party. Civil liability for violation of TCPA is $500 per call ($1,500 per call if the violation is deemed willful).
What is an autodialer? Prior to the FCC’s 2015 order, most credit unions equated “autodialers” with robocallers—equipment that generates the telephone number to be called and places calls without human involvement. These credit unions believed TCPA was enacted to address the scourge of robocalls and trusted the initiation of individual telephone calls by a human being did not violate TCPA proscriptions.
However, in the order, the FCC upended current thinking and interpreted “autodialer” expansively to mean any equipment with the capacity to store or produce and dial random or sequential numbers, even if it is not presently used for that purpose, including when the caller is calling a set list of consumers. The FCC concluded “capacity” is to be determined by reference to potential functionality, including functionality after the addition of hardware or software.
The DC Circuit found the FCC’s order an unreasonable and impermissibly expansive view of the meaning of “autodialer.” After noting the FCC’s order could lead to the conclusion that an ordinary smartphone is an autodialer, the court concluded the FCC failed to provide any meaningful guidance as to what functions a device must perform in order to be an “autodialer.” The court vacated the FCC’s order (making it void) and left it to the FCC to provide future, more definitive, guidance consistent with the court’s order.
In a second prong of its ruling, the DC Circuit Court of Appeals addressed the circumstance in which the cell phone number of a person who has consented to be called is later surrendered by that person and reassigned to someone else. The FCC concluded in its order that in this situation the new owner of the reassigned number must be considered the “called party” for TCPA purposes and, therefore, a TCPA violation could result if the new owner has not consented to the call. However, because a caller might reasonably rely on consent of the former owner in calling a number which has been reassigned, the FCC held a caller would be allowed one call to the reassigned number (whether or not answered) to learn of the reassignment without violating the TCPA.
In reviewing the FCC’s treatment of the reassigned number issue, the court found the FCC could reasonably conclude the new owner of the reassigned number is the “called party” for TCPA purposes. However, the court questioned why reliance on the consent of the prior owner of a reassigned number should cease to be reasonable after one call. Why not two calls? Ten calls? Because the FCC failed to make a reasoned determination as to when reliance on the prior owner’s consent ceases to be reasonable, the court ruled the FCC’s entire treatment of the reassigned number issue arbitrary and capricious. The Court nullified the FCC’s order as to this issue.
In sum, although the court upheld the order in other respects, it rejected the broad interpretation of “autodialer” adopted by the FCC and demanded more reasoned analysis of the reassigned number problem.
But what does this mean? Unfortunately, both a lot and not much.
The good news is the broad interpretation of “autodialer” was rejected. On the basis of the court’s ruling, a credit union can reasonably conclude that use of a phone system that requires human intervention to select the person to be called and initiate the call and does not have the present capacity to generate and call random or sequential numbers is likely not an autodialer within the meaning of the TCPA. A credit union can also reasonably conclude a call to a non-consenting owner of a reassigned number is not necessarily a TCPA violation as long as the CU has reasonable procedures in place to prevent future calls once it learns of the reassignment.
However, other questions, such as whether a device with the present, but not activated, capacity to be an autodialer is an “autodialer” under the TCPA, remain. Resolution of these questions is now back with the FCC. One can only hope cooler, and more rational, heads prevail as these issues are reconsidered.