Frequently Asked Questions on Caller ID Technology
Kelley Drye Client Advisory
February 22, 2011
What Federal laws govern the use of Caller ID technology?

Section 310.4(a)(7) of the Telemarketing Sales Rule ("TSR"), which is enforced by the Federal Trade Commission ("FTC"), requires that telemarketers transmit identifying information to Caller ID services.

The Federal Communications Commission ("FCC") adopted regulations pursuant to the Telephone Communications Privacy Act ("TCPA") that require that any person or entity who engages in telemarketing must transmit "caller identification information." 47 C.F.R. § 64.1601(e). The text of the FCC regulations is not identical but is substantially similar to Section 310.4(a)(7) of the TSR.

Section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45 et seq. prohibits unfair or deceptive acts or practices in the marketplace.

The Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., (which is enforced by the FTC) provides that debt collectors may not, in connection with the collection of a debt, place telephone calls "without meaningful disclosure of the caller's identity." 15 U.S.C. § 1692d(6). For reasons described below, it is not yet clear how this provision affects certain practices involving Caller ID.

What do the Federal laws say with regard to the use of Caller ID technology as it relates to telemarketing?

Congress and the FTC have interpreted the term "telemarketing" to include marketing to consumers to induce the purchase of goods or services. Telephone communications with consumers about account information, including such basic functions as status of payments, the recovery of debts, and the detection of identify theft/fraud deterrence, do not fall within this definition. In other words, telemarketing does not include telephone calls about debt collection.

Federal laws require telemarketers to identify a telephone number at which the person or entity being called can contact the telemarketer during regular business hours. Specifically, the TSR provides that it is an abusive telemarketing act or practice for any seller or telemarketer to engage in "[f]ailing to transmit or cause to be transmitted the telephone number, and, when made available by the telemarketer's carrier, the name of the telemarketer, to any Caller ID service in use by a recipient of a telemarketing call." See 16 C.F.R. § 310.4(a)(7). The TSR permits the substitution of "the name of the seller or charitable organization on behalf of which a telemarketing call is placed, and the seller's or charitable organization's customer or donor service telephone number, which is answered during regular business hours." Id.

Similarly, the FCC's rules specify that "caller identification information must include either the CPN [calling party number] or ANI [automatic number identification], and when made available by the telemarketer's carrier, the name of the telemarketer." 47 C.F.R. 64.1601(e)(i). Furthermore, "the telephone number so provided must permit any individual to make a do-not-call request during regular business hours." Although the FCC's regulations generally permit a calling party to protect its anonymity by blocking Caller ID information, Section 64.1601(e)(2) unequivocally prohibits telemarketers from blocking the transmission of such information.

Neither the statutes, nor the FTC or FCC rules prohibit the assignment of a telephone number to, or use of a telephone number by, a telemarketer that has not established a physical presence in the rate center with which the telephone number is associated so long as callers can reach the telemarketer by dialing the number during regular business hours. This includes a number assigned to the telemarketer by its carrier, the specific number from which a sales representative placed a call, the number for the party on whose behalf the telemarketer is making the call, or the seller's customer service number.

The Federal statutes provide the opportunity for states to enact and implement additional rules regarding telemarketing. But the federal statutes do not generally preempt state regulation of telemarketing activities that is more restrictive than the federal regulations.

What do the Federal laws say with regard to the use of Caller ID technology as it relates to debt collection?

As mentioned above, because debt collectors do not engage in telemarketing, the TSR does not apply to their activities. The Federal Debt Collection Practices Act ("FDCPA") provides that debt collectors may not, in connection with the collection of a debt, place telephone calls "without meaningful disclosure of the caller's identity." 15 U.S.C. 1692d(6).

The practice which allows a caller to display a local area code on a recipient's Caller ID service instead of displaying the actual area code from which the call originates has not been held to be illegal by either a court or the FTC. In 2008, the FTC brought a case charging that a debt collector violated the FDCPA provision by making collection calls that both did not display the debt collector's name and changed the calling party's number so that it would display a telephone number with the borrower's local area code. The case settled without the court addressing the merits of the claim.

Although the filing of the suit indicates the FTC had concerns about this practice in 2008, several recent events have occurred which suggest the practice should not be prohibited. First, as discussed below, it is clear from Congressional statements and the text of the recently-passed Truth in Caller ID Act that Congress believes such practice in the context of debt collection is legitimate. Second, due to the popularity of number portability, more than 350 million cellular and VoIP numbers are not associated with the physical location of the caller, which renders the purported reason for this requirement meaningless. Third, in the telecom industry there is a history of using foreign exchange service (also known as "FX service" or "Virtual NXX service"), which assigns telephone numbers to a customer in a local calling area different from the one where the customer is physically located. Finally, the FTC, in a report following a debt collection workshop held in February 2010, indicated that Section 805(b) of the FDCPA puts limitations on the ability of debt collectors to reveal information to third parties, such as friends, family members other than spouses, and co-workers regarding a consumer's debts. These limitations recognize that such disclosure through Caller ID could cause harm to a consumer's reputation. The report also notes that one court has questioned whether it is even technologically practicable for debt collectors to convey information sufficient to meaningfully disclose their information on the small screens on telephones to display Caller ID information.

Thus, despite the absence of a definitive ruling, there are compelling reasons to think that the practice which allows a caller to use technologies or methods that allow a debt collector to display a local telephone number on a recipient's caller ID, when the collector is not located in the recipient's local area should be permitted, particularly if the recipient can reach the debt collector by dialing the number appearing in the Caller ID.

Are there any state laws governing telemarketing that apply to Caller ID technology?

Yes, certain states have adopted laws aimed at prohibiting the transmission of deceptive Caller ID information or requiring telemarketers to transmit specified information. See, e.g., Anti-Caller ID Spoofing Act, La. Rev. Stat. tit. 51, ch. 19-C; Okla. Stat. Ann. §§ 776.22, 776.23; Internet Caller Identification Act, Ill. Comp. Stat. § 517/10.

What do the state laws say?

State requirements include recently adopted statutes that specifically prohibit the use of computers or Internet telephone equipment to insert false information into Caller ID systems. See, e.g., Anti-Caller ID Spoofing Act, La. Rev. Stat. tit. 51, ch. 19-C; Okla. Stat. Ann. §§ 776.22, 776.23; Internet Caller Identification Act, Ill. Comp. Stat. § 517/10. While most state statutes simply prohibit blocking or interfering with Caller ID services, several state laws impose obligations on telemarketers to transmit specific information, such as codes that identify the name of the telemarketer, or a telephone number at which consumers can contact personnel of the entity responsible for the telephone call. See La. Rev. Stat. § 844.2.A.(1) (telemarketer must have identification code that will correctly identify the name of the telephone solicitor); Mont. Code Ann. § 30-14-1412 (telemarketer may substitute "name and number that accurately identify the entity causing the call to be made and a working telephone number at which the entity's personnel can be contacted."); N.H. Rev. Stat. § 539-E:5-a (telemarketer may not prevent "caller identification information for telephone solicitor's lines used to make telephone calls" from being shown by caller identification device); Tex. Bus. & Comm. Code Ann. § 304.151(b)(2) (telemarketer may not fail to provide caller identification information in a manner that is accessible by a caller identification service if the telemarketer is capable of providing the information in that manner); Ill. Comp. Stat. Ann. § 413/15(c) (live operator soliciting sale of goods or services may not impede display of "the solicitor's telephone number"); 2010 Tenn. Pub. Acts, Ch. 684 (requiring that automatic dial announcing devices display the number utilized by the dialing equipment, unless the device displays a telephone number that has an area code within the state or a toll-free number that is answered during regular business hours and the name of the person is displayed along with the telephone number).

How does the newly passed Truth in Caller ID Act affect existing law?

The Truth in Caller ID Act requires the FCC to adopt regulations to implement the law. It is clear from the Congressional statements and the text of the law that Congress was focused on preventing harmful and nefarious Caller ID spoofing upon consumers. In the final House floor debate, Members noted the importance of distinguishing between legitimate and harmful practices.

Representative Rick Boucher stated that "[b]y prohibiting the use of caller ID spoofing only where the intent is to defraud or deceive, this measure will address nefarious uses of the technology while continuing to allow those legitimate uses." He further noted that in certain legitimate uses, "there is not intent to cause harm, which is an element of the crime of deception." Representative Eliot Engel similarly stated that the "bill outlaws the deceptive use of caller ID spoofing technology if the intention of the caller is to deceive and harm the recipient of the call." And the House Committee Report suggests that, "to be legally actionable, fraud and deceit require the intent to cause harm to the person to whom misleading information is being conveyed."
Representative Clifford Stearns made the clearest statements to this effect on the floor of the House. He noted that the bill specifically prohibited "manipulating caller ID information with the intent to harm others" and that "[d]eception with intent is our target." Representative Stearns added that the language in the Act was carefully crafted to ensure that it did not encompass legitimate services that could manipulate caller ID for legitimate reasons.

For example, domestic violence shelters often alter their caller ID information to simply protect the safety of victims of violence. Furthermore, a wide array of legitimate uses of caller ID management technologies exists today, and this bill protects those legitimate business practices. For example, caller ID management services provide a local presence for teleservices and collection companies. These calling services companies are regulated by the Federal Trade Commission and Federal Communications Commission, which require commercial callers to project a caller ID that can be called back. This bill is not intended to target lawful practices protecting people from harm or serving a legitimate business interest.
Representative Eliot Engel subsequently echoed this analysis and noted that that the reason for the "intent to defraud or cause harm" in the Act language was because "we don't want some legitimate reasons to use this technology to be outlawed." 
How does the pending FCC rulemaking affect the existing TSR?

Because the FCC does not enforce the TSR, the pending FCC rulemaking proceeding implementing the Truth in Caller ID Act does not directly affect the existing TSR.

How is the FTC's Advanced Notice of Proposed Rulemaking (ANPRM) related to the above?

The FTC's ANPRM seeks comment on whether the TSR should be amended to reflect the current use and capabilities of Caller ID technologies, particularly regarding whether the TSR should be amended to better achieve the objective of the Caller ID provisions; regulate services that misrepresent, conceal, or obscure the identity of telemarketers or sellers; or require oral disclosure of the identity of the telemarketer on whose behalf a call is being made to require additional or more specific disclosures.

The ANPRM expressly notes that current technologies make it possible for telemarketers to select the numbers that are transmitted to Caller ID services. Moreover, the ANPRM found that these technologies can be used to serve legitimate interests of telemarketers, sellers, and charitable organizations in altering the caller number and name displayed by Caller ID services. In making these statements, the ANPRM expressly noted that the Truth in Caller ID Act described legitimate reasons for manipulation of Caller ID information in business and non-business calls.