Customer Development
Needless to say, we’ve come a long way since 1991. It was a year when the mullet was still sexy, when rap was just becoming mainstream, and when the World Wide Web first became publicly available on the internet. It was also the year when the Telephone Consumer Protection Act (TCPA) passed.
The advent of new communications technology has created gaps in this law and accompanying regulations. For nearly 25 years, the TCPA has remained unchanged, yet modern communications has evolved rapidly, with mobile phones largely replacing landlines as the communication method of choice. The Federal Communications Commission (FCC) has issued several interpretative regulations and orders during this time, but has been relatively quiet since 2008.
As technological advances bump up against an outdated statute, the courts have become crowded with class action lawsuits fueled by the Act’s uncapped statutory damage section. Though the TCPA was designed to protect consumers from unwanted telemarketing robocalls, today a large focus is on its requirement of “prior express consent” to communicate with consumers via cell phone (text or voice), especially when using an automatic telephone dialing system (ATDS). Rather than providing clarity, litigation has produced a patchwork quilt of differing legal interpretations.
In July, the FCC released a 140-page declaratory ruling, including policy guidance in response to 21 petitions seeking clarity on key portions of the law. Unfortunately, the ruling failed to clear up obstacles that discourage otherwise lawful and important customer communications through preferred channels, most notably cell phones. In fact, the FCC’s latest action may actually have invited more litigation.
While the FCC ruling addressed many areas of the Act, I’ll examine three of its most significant topics affecting any organization that may be contacting a customer’s cell phone.
Calling Reassigned Cell Phone Numbers
Tremendous confusion stems from the fact that the Act does not define “called party.” As a result, calls to mobile phones using ATDS or texts—even with prior consent—routinely trigger lawsuits.
Here’s the problem at its core: phone numbers are regularly reassigned, and there is no ironclad way to determine that the current mobile subscriber remains the customer who provided consent. Courts have been split on whether the “called party” means the mobile subscriber at the time of the call or the intended recipient.
The FCC ruled that the caller must have prior consent of the current mobile subscriber. But it admitted there is no commercially viable solution to verify this, and it did not offer liability protection if a business takes steps to avoid calling reassigned numbers.
Instead, the ruling allows for one call or text to a reassigned number without incurring liability, provided the business did not know the number was reassigned. But if the new mobile subscriber never responds to that call or text, how would the business know the number was reassigned? This may very well lead to more lawsuits since the Act allows for statutory damages of $500 for each unknowing violation.
Revoking Consent by Any Reasonable Method
While the TCPA is silent on whether a person can revoke consent, the FCC found that it was revocable. Moreover, the consumer may use “any reasonable method, including orally or in writing.” Given this lack of clarity, “any reasonable method” will be determined by the courts through future litigation. Commissioner Pai, in his dissent, questioned whether the FCC ruling will lead to absurd results – for example: will cashiers at fast food restaurants now have to be trained to accept customer revocation requests?
Exempting Fraud Alerts (And the Like)
There were high hopes that the FCC would exempt certain call types from the scope of the TCPA. In financial services, for instance, a petition from the American Bankers Association sought to exempt four types of financial-related calls and alerts related to: (1) potential fraud or identity theft; (2) data security breaches; (3) steps for preventing identity theft after a data breach; and (4) money transfers.
The FCC approved these exemptions, asserting they involved urgent circumstances where quick, timely communication was critical to preventing financial harm. However, the declaratory ruling placed seven conditions that collectively could limit the effectiveness of these communications.
For example, exempted text messages cannot exceed 160 characters, and must include “opt out” language and contact information as part of the character limit—a tall order! (For perspective, my last sentence exceeded this character limit.) In addition, each exempted message must be limited to a somewhat arbitrary three calls per event over a three-day period for an affected account.
Early feedback has been less than enthusiastic. It’s possible that businesses will forgo the exemptions and instead continue to rely on prior express consent. This would provide them with more flexibility to craft and deliver communications, and would involve the same compliance requirements as other customer-centric messages to mobile phones (e.g., credit line increase information from a bank or car payment notifications from an auto finance source).
So…What’s Next?
The FCC declaratory ruling was met with harsh criticism from many in the private and nonprofit sectors across virtually every industry. Not surprisingly, multiple challenges were quickly filed, arguing that the FCC went beyond its authority. Legal experts don’t expect the US Court of Appeals for the DC Circuit to rule for another 18-24 months. A quick congressional fix is also considered a long shot.
Ultimately, the FCC did not resolve many of the murky regulatory issues. Compliance will remain challenging and necessitate that businesses employ sound strategies for any telephone communication. At FICO, we’ll continue to work with clients of our FICO® Customer Communication Services to facilitate compliance with the latest FCC interpretations—so they can effectively leverage modern communications and not be stuck in a 1991 time warp.
