If you are a fan of the Bachelor reality TV series, you know that the most anticipated episode of the season is the one after the bachelor has awarded his last rose to the woman of his dreams (or so he hopes). The After the Final Rose show is intended to provide the inside scoop – the essential takeaways – from what has been a dozen episodes filled with zigs and zags as well as many unanswered questions.
That’s the kind of wrap-up that’s long overdue for the industry’s challenge to the Federal Communications Commission’s (FCC) 2015 Declaratory Ruling and Order addressing the Telephone Consumer Protection Act (TCPA), which often seemed like a reality show in desperate need of an ending. The finale arrived in March as the DC Circuit Court of Appeals finally issued its long-awaited decision. Now that action has been taken, it’s time for a Bachelor-style breakdown.
As I discussed in my last post on this topic, the FCC’s 2015 Declaratory Ruling was viewed by many as creating additional uncertainty in an area that has witnessed the chilling of the use of modern communications technology. This has been especially apparent when it comes to non-marketing messages delivered by automated voice or text to customers’ mobile phones. While the DC Circuit decision addressed four main issues, most commentary has focused on three areas: (1) Automatic Telephone Dialing Systems (ATDS); (2) Reassigned Numbers; and (3) Revocation of Consent. I will limit my discussion to these topics.
ATDS: Reform Efforts Are UnderwayThe Down and Dirty: The TCPA defines ATDS as “equipment which has the capacity to store or produce telephone numbers to be called using a random or sequential number generator and to dial such numbers.” Industry wanted the Court to interpret “capacity” as present capacity and reject the 2015 Order that declared that if the equipment has the potential to be an ATDS, it is one. The DC Circuit declined to reinterpret the term “capacity”, but instead found that 2015 Order was arbitrary and capricious because it was confusing and contradictory in its explanation of the basic features of an ATDS. Among the examples that the court highlighted was that under the 2015 Order a smart phone could be deemed an ATDS - clearly, a bridge too far. As a result, the court sent the issue back to the FCC for further review.
Expected Action: With a new President elected in 2016, the FCC has experienced a change in leadership as Chairman Ajit Pai now heads the agency under a Republican majority. Hopes for some meaningful reform is running high and industry wasted no time in filing a petition on May 3, 2018, asking the FCC for clarification around the issue of ATDS. Specifically, 18 industry organizations are calling for the FCC to issue a declaratory ruling that would “(1) make clear that to be an ATDS, equipment must use a random or sequential number generator to store or produce numbers and dial those numbers without human intervention, and (2) find that only calls made using actual ATDS capabilities are subject to the TCPA's restrictions.” The petition will be subject to a comment and reply period that will likely span 45 days in total. After that, some legal experts have indicated that the FCC could issue a declaratory ruling on this topic as soon as the beginning of 2019.
Reassigned Numbers: Relief Will Require PatienceThe Down and Dirty: The TCPA prohibits a caller from making non-marketing calls (including texts) using an ATDS unless the caller has the prior express consent of the “called party”. The FCC’s 2015 Order defined the “called party” as the current subscriber to the phone number called. However, since there are about 100,000 mobile phone numbers reassigned each day, there is no foolproof method of determining whether the consent received from the original subscriber was still valid. The industry requested the term current subscriber be interpreted as the intended recipient of the call. The FCC Order acknowledged the reassigned number problem but only provided for a one-call safe harbor – after one call, irrespective of the outcome of the call, all future calls needed prior express consent. The DC Circuit did not reinterpret the definition of “called party” but instead found that the one-call safe harbor was unreasonable. Without any viable mitigation option to address reassigned numbers, the DC Circuit found the FCC’s entire approach to this issue unreasonable and sent the matter back to the FCC for reconsideration.
Expected Action: FCC Chairman Pai appears to be encouraged by the prospects of a reassigned mobile number database. The FCC recently issued a notice proposed rulemaking on this topic. However, even if such a reassigned number database could serve as a safe harbor on the “called party” issue, this approach is at least several years away from becoming a reality. In the interim, some industry participants are exploring other options that could provide a viable safe harbor from the reassigned number issue that has been the subject of an increasing-amount class action litigation.
Revocation: Be Proactive with Your Opt-Out MethodsDown and Dirty: The TCPA does not specifically allow consumers to revoke their consent to receive calls otherwise prohibited by the TCPA, but the FCC’s 2015 Order granted consumers the right of revocation by any reasonable means. The DC Circuit upheld the FCC’s approach, but failed to provide any additional guidance that would further clarify what qualifies as a “reasonable means” of revocation. However, the DC Circuit did say that if the caller’s method for revocation is objectively reasonable and the consumer has notice of it, the caller may rely on that method. The only two cases to address the “reasonableness” issue have held that if the method of revocation is “bargained for” (e.g., as part of the customer agreement), the company may rely on the method agreed to at the outset of the relationship.
Expected Action: It does not appear that this is a high-priority item for those seeking reform measures. Organizations are being encouraged to establish a common-sense method of revocation upfront (e.g., in customer agreements) with their customers to avoid any unnecessary friction in this area going forward.
Will Reform Efforts Have a Happily-Ever After Ending?At the conclusion of each Bachelor season, one question remains: Will the couple’s happiness continue after the final rose? In the context of what many industry experts view as a favorable court decision, successful reform efforts will depend on future FCC action.
On May 14, the FCC announced that it is seeking public comment on a number of issues connected with the DC Circuit TCPA decision, including the industry petition filed on May 3. This is seen as a positive sign that the FCC may be positioning itself to take meaningful action.
The most immediate prospect for change appears to lie on the ATDS front. At FICO, many of our Customer Communications Services clients are eager for additional clarification from the FCC. Yet we will have to wait a bit longer, perhaps until early 2019, to determine whether industry’s attempts at meaningful TCPA reform will come out smelling like a rose.