Recent Court Rulings Provide Some Relief on Telemarketing Restrictions

FCC to Revisit TCPA Rules 

By Michael A. Gruin, Esq

Telemarketing remains a significant sales channel for retail energy suppliers.  But as many suppliers know, telemarketing entails a variety of compliance risks, most notably, the threat of class action lawsuits under the Telephone Consumer Protection Act (“TCPA”).  In addition to establishing the national Do Not Call registry, the TCPA also prohibits most unsolicited calls or text messages to wireless phone numbers using either an “automatic telephone dialing system” (ATDS)  or an artificial or prerecorded voice.  Making prohibited calls to cell phones from an ATDS can expose marketers to up to $1,500 in statutory damages per violation.   The TCPA has spawned a cottage industry of professional plaintiffs and class action lawsuits against companies that use telemarketing as a sales channel, and energy suppliers are squarely in the cross-hairs of these litigants. 

Part of the problem has been the Federal Communications Commission’s (“FCC”) very broad interpretations of the TCPA.  In 2015, the FCC issued a Declaratory Ruling that defined an “automated telephone dialing system” so broadly that even basic smartphones could be considered ATDS’s, and the FCC stated that a calling system could qualify as an “automatic” dialer even it if still required human intervention to make a call.   Under these standards, making calls to wireless numbers using almost any system or process could expose telemarketers to violations of the TCPA.

However, in a long-awaited decision earlier this year in the case of ACA International v. FCC, the U.S. Appeals Court for the District of Columbia Circuit held that the FCC’s interpretation of what constitutes an ATDS was improper.   The Court strongly criticized the FCC’s interpretation of what constituted an autodialer, noting that the FCC’s guidance was so unclear that “parties are left in a significant fog of uncertainty about how to determine if a device is an ATDS.”  The Court overturned many of the FCC’s interpretations, and the FCC is now revisiting what qualifies as an ATDS, taking into account such factors as whether the system generates random numbers to be called, and whether human intervention to dial a call prevents the system from being an “autodialer”.  The FCC has accepted comments from interested parties and is expected to issue a new rulemaking or declaratory ruling on the issue in the near future.  Notably, the current composition of the FCC is much different than it was in 2015, and the current chairman of the FCC strongly dissented from the FCC’s 2015 Order.  As a result it appears likely that the FCC will provide a more favorable interpretation on what qualifies as an ATDS, and provide clearer guidance on such issues as predictive dialers, dialing from lists, and whether human intervention prevents a call from being an “autodialed” call.   

Following the ACA decision, other courts have the adopted the decision’s findings to dismiss lawsuits that claimed that calls or texts were being sent from an “autodialer”, because the calling system did not have the present capacity to function as an autodialer.  Because of these decisions and the current composition of the FCC, the legal and regulatory framework for telemarketers may be getting somewhat more favorable, at least at the federal level. However, it is important to remember that many states have their own separate restrictions on telemarketing, and state attorneys general continue to aggressively pursue Do Not Call complaints  and other complaints related to deceptive telephone sales involving both traditional technologies and new technologies such as “ringless voicemail”.  Similarly, class action lawyers will continue to look for opportunities to seek large financial payouts for violations of calling rules. As such, suppliers and telemarketers must remain vigilant and take all appropriate measures to ensure that they are complying with the current state and federal requirements.

_____________________________________________

By Michael A. Gruin, Esq.  Partner, Stevens & Lee