Stay Informed

The Telephone Consumer Protection Act of 1991 (“TCPA”) has become a regular source of claims against companies who use telephone or fax systems to target potential consumers. Liability under the TCPA is fairly easy to establish, and the potential for multiple penalties and punitive damages make it an appealing mechanism for plaintiffs’ attorneys.

On July 10, 2015, the Federal Communications Commission (“FCC”) released its ruling (“Ruling”) in which it defined what constitutes an “autodialer” under the TCPA, clarified liability under the TCPA for calls made to reassigned telephone numbers, and interpreted the TCPA to give consumers the right to revoke prior consent to calls.

The TCPA’s Definition of “Autodialer”

In its Ruling, the FCC spends numerous pages dissecting the definition of “automatic telephone dialing system” (“autodialer”) under the TCPA, concluding that it encompasses “equipment which has the capacity (a) to store or produce telephone numbers to be called, using a random or sequential number generator; and (b) to dial such numbers.”

Capacity to Dial Random and Sequential Numbers

According to the Ruling, autodialers need only have the “capacity” to dial random and sequential numbers, rather than the “present ability” to do so. Therefore, any equipment that has the requisite “capacity” is an autodialer and subject to the TCPA. However, there is a limit to this broad definition. An equipment’s mere potential capacity to store and dial random numbers, does not necessarily make it an autodialer. “We do, however, acknowledge that there are outer limits to the capacity of equipment to be an autodialer. . . . [T]he outer contours of the definition of ‘autodialer’ do not extend to every piece of malleable and modifiable dialing equipment that conceivably could be considered to have some capacity, however small, to store and dial telephone numbers— otherwise, a handset with the mere addition of a speed dial button would be an autodialer.” The potential that equipment could be modified to be an autodialer must be more than “theoretical.”

Human Intervention

The Ruling also addresses whether dialing systems that require human intervention are considered autodialers. It concludes that the basic functions of an autodialer are to (1) dial numbers without human intervention, and (2) dial thousands of numbers within a short period of time. However, the Ruling stops short of finding that the need for human intervention automatically precludes the equipment from being considered an autodialer under the TCPA. The FCC expressly rejected the notion of a “human intervention” test to identify whether a dialer is an autodialer, stating that such a test would conflict with the Ruling’s definition of “capacity” of the equipment.

Therefore, it remains unclear whether speed-dialing equipment that requires human intervention is considered an autodialer if the equipment has the potential capacity to be reprogrammed to function as an autodialer not requiring human intervention. The Ruling merely states that this determination will be made on “a case-by-case” basis. It thus appears that such determinations will only occur through costly TCPA litigation.

Calls to Reassigned Telephone Numbers

The Ruling also provides clarification as to who constitutes a “called party” under the TCPA and sets forth a seller’s liability for autodialed calls to reassigned wireless numbers.

A “called party” is “the consumer assigned the telephone number dialed and billed for the call, or the non-subscriber customary user of a telephone number included in a family or business calling plan.” A “called party” does not need to be the intended recipient of the call.

In regards to reassigned wireless numbers, the FCC holds that sellers may be liable for TCPA violations if they have actual or constructive knowledge of the number reassignment. However, the FCC understands that even with safeguards in place, it may be difficult for sellers to identify reassigned numbers. Therefore, the Ruling sets forth a “one-call rule.” So long as a seller does not have actual knowledge that the number has been reassigned, it may make one call to a reassigned number without liability.

While in the Ruling the FCC indicates that it believes that “a caller receives constructive knowledge of reassignment by making or initiating a call to the reassigned number,” the one-call rule arguably provides no leeway for sellers who unknowingly call a reassigned number more than once because a customer either failed to answer the call or did not inform the seller that the number had been reassigned. Moreover, the FCC declined to create an affirmative, bad-faith defense in situations where the called party purposefully or unreasonably waits to notify the seller of the reassignment so as to accrue statutory penalties.

Revocation of Consent

Lastly, the Ruling concludes that the TCPA’s consent requirement allows consumers to revoke consent at any time and through any reasonable means if they no longer wish to receive calls. Sellers may not limit the manner in which revocation may occur.

The Ruling states that courts must look at “the totality of the facts and circumstances” to determine if the method of revocation was reasonable, including (a) if the consumer reasonably expected to “effectively communicate” the request, and (b) if the seller could implement mechanisms to honor the request “without incurring undue burdens.” The FCC’s expectation is that sellers will maintain “proper business records tracking consent,” and that such tracking will avoid “shift[ing] the TCPA compliance burden onto consumers.”

Potential Issues for Sellers

It can be expected that a number of appeals will be filed challenging the FCC’s Ruling. One major issue expected to be raised is whether the Ruling is retroactive. Traditionally, courts have held that declaratory rulings are “adjudications,” which are retroactive, unless retroactive application would result in “manifest injustice.” Given the high penalties associated with TCPA violations, applying the Ruling retroactively could have significant implications for sellers across the globe.