October 16, 2013 Deadline Looms – Does Increasingly Active Plaintiffs’ Bar Await?
Companies that place prerecorded telemarketing calls, or that telemarket to cell phones via text-message or automatic telephone dialing systems, should be well on their way toward compliance with new FCC rules that take effect October 16, 2013. As explained in our advisories, in 2012 the FCC revised its telemarketing rules in an effort to reconcile them with parallel FTC rules on “robocalls,” that require telemarketers who use a prerecorded message to first have prior written, signed consent from call recipients – an FTC requirement that applies equally to residential and mobile phone lines. The FCC provided a year for companies to come into compliance with its rule changes, which would have been straightforward had the FCC simply followed through on its stated intent to mirror what the FTC had done. However, in addition to following the FTC’s approach, the FCC also exceeded what the FTC did in several key ways, making the one-year lead-time, and October 16 deadline, all the more important.
The FTC’s prerecorded telemarketing rules have been in effect since 2009. The FCC attempted to follow suit in 2012. However, due to the structure of its enabling statute, the Telephone Consumer Protection Act (“TCPA”), and of the FCC regulations implementing it, the FCC not only adopted rule changes that largely parallel the FTC’s regime, but roped in other categories of telemarketing as well.
Thus, in addition to requiring prior written, signed consent for prerecorded telemarketing to residential lines and cell phones, the FCC rule changes also require such prior written, signed consent for:
- All telemarketing to cell phones placed using automated dialing equipment (which is true of virtually all commercial calls placed in volume), even if the calls involve live agents rather than recordings; and
- Telemarketing texts.
Previously, the advance permission required for such autodialed live agent calls to cells and for texts needed to satisfy only a “prior express consent” standard. Now, the above-described categories of marketing calls require consent that is in a signed writing that results in “unambiguous agreement” by the recipient to the calls, and that “clearly and conspicuously” discloses the consequences of consenting, i.e., future receipt the call(s) agreed to. Moreover, the consent cannot be a condition to purchasing any good or service. Anything falling within E- SIGN (i.e., email, webform, text message, telephone keypress, voice recording, etc.) will satisfy the “signed writing” requirement.
This has, in many instances, required companies to go out and requalify cell phone numbers for which only prior express consent had been obtained. Toward that end, the FCC gave a one-year lead-time for that purpose. That year expires 40 days from now – on October 16, 2013, after which, prior written, signed consent must be in place. The lead-time was significant not just because of the potential need to requalify, but also because careful advance planning is often required in view of the variations between the FTC and FCC rules, and of the highly nuanced interpretive issues that applying the rules can raise in the real word. Companies that must comply with these rules should accordingly seek specific legal advice crafted to their particular circumstances.
Indeed, obtaining and documenting the necessary level of consent is critical. The TCPA allows a private cause of action for violations, with statutory damages of $500 and up to $1500 per violation, with FCC fines of up to $16,000 per violation also possible. The TCPA has become a particular favorite of the plaintiffs’ class action bar over the past few years. Depending which figures and time-frames are examined, TCPA suits are up anywhere from 50% to more than 80% the last couple years. Given the high volumes of commercial calling, alleged damages can quickly mount. Seven- and eight-figure settlements are not uncommon. Just this past summer, Google settled a class action (involving its now no-longer-active “Disco” service) by creating a $6 million fund to compensate consumers who received unsolicited texts.
And as more people “cut the cord” and rely exclusively on cell phones, the more commercial calling to cell phones is likely to occur. Even for non-telemarketing, prior express consent is required for any prerecorded, autodialed, or text call to a cell phone. Being in full compliance 40 days from now is thus absolutely critical, as the only alternatives are to hand-dial or otherwise avoid autodialing calls to cell phones, or to scrub cell phone numbers from call lists. Forty days never seemed shorter.