August 2017

Recent News

FCC Imposes Potential Liability on Technology Platforms for Involvement in Unlawful Robocalls

On July 26, 2017, the FCC released the text of the Forfeiture Order adopted at the Commission’s July 2017 open meeting against Dialing Services, LLC for enabling unauthorized prerecorded message calls (a/k/a “robocalls”) by third parties to wireless phones in violation of the TCPA.  The Forfeiture Order is significant for a number of reasons – not the least of which was Republican Commissioner Michael O’Rielly’s strong dissent questioning the action’s legal and policy bases.  This marks the first time that the FCC has imposed liability on a company that enables robocalling campaigns by third parties, even when the company does not directly create the robocall messages or direct who will receive the robocalls.  Moreover, the Commission’s use of a different (and arguably lesser) standard than the “high degree of involvement” standard applicable to fax broadcaster liability could trigger a new wave of litigation for calling platform vendors and other applications that enable or permit mass calling or texting.  Additional information about the Forfeiture Order is available on our blog

FCC Proposes $82 Million Penalty for Spoofed Robocalls

At its August 2017 Open Meeting, the FCC issued a Notice of Apparent Liability for Forfeiture (“NAL”) proposing over $82 million in fines against Philip Roesel and the insurance companies he operated for allegedly violating the Truth in Caller Act by altering the caller ID information (a/k/a “spoofing”) of more than 21 million robocalls in order to generate sales leads and avoid detection by authorities.  Mr. Roesel allegedly inserted unassigned telephone numbers into the caller ID field in order to avoid detection as the true originator of the call.  The FCC separately issued a Citation against Mr. Roesel and his companies for allegedly violating the TCPA by transmitting the robocalls to emergency, wireless, and residential phone lines without consent.  Additional information about this enforcement action is available on our blog.

Senate Passes Spoofing Prevention Act

On August 3, 2017, the Spoofing Prevention Act of 2017 (S. 134) was passed by unanimous consent by the Senate and transmitted to the House of Representatives.  The bill, sponsored by Sen. Bill Nelson (D-FL), proposes modifications to numerous provisions of the TCPA.  First, it would expand the scope of the anti-spoofing section to include calls originated by a person outside the U.S. if the recipient of the call is within the U.S.  Second, it would define “text message” to mean “(i) …a message consisting of text, images, sounds, or other information that is transmitted from or received by a device that is identified as the transmitting or receiving device by means of a 10-digit telephone number; [or] (ii) … a short message service (commonly referred to as ‘SMS’) message, an enhanced message service (commonly referred to as ‘EMS’) message, and a multimedia message service (commonly referred to as ‘MMS’) message.”  Third, the bill would require the FCC, in coordination with the Federal Trade Commission, to develop consumer education materials to help consumers identify scams and other fraudulent activity typically associated with spoofing and raise awareness of technologies available to protect consumers from unlawful spoofing.  Finally, the bill would require the Comptroller General to issue a report within 18 months of passage on activities by the FCC and FTC related to spoofing. 

The proposal to codify the definition of a “text message” could have a significant impact on companies that transmit marketing messages via automatic text to consumers.  Although the FCC has long interpreted the TCPA to cover text messages, it has not formally adopted a definition as to what constitutes a “text message,” and historically has focused on short message service (SMS) transmissions.  Thus, adding “text message” to the defined terms in the Act may expand the scope of text communications that are subject to the TCPA.

A companion bill in the House of Representatives was passed in January (H.R. 423).  However, the House version had some inconsistencies with the Senate legislation.  Thus, there are two procedural options for advancing the bill: (1) the House can vote on the Senate version, and if passed, the bill will be sent to the President for his signature; or (2) the House and Senate bills can be “reconciled,” at which point both chambers will need to vote on the legislation a second time.
 

FCC Petitions Tracker

Kelley Drye’s Communications group prepares a comprehensive summary of pending petitions and FCC actions relating to the scope and interpretation of the TCPA.

Number of Petitions Pending
  • 19 (+9 seeking a retroactive waiver of the opt-out requirement for fax ads)
  • 1 petition for reconsideration of the rules to implement the government debt collection exemption
  • 1 application for review of the decision to deny a request for an exemption of the prior-express-consent requirement of the TCPA for “mortgage servicing calls"
  • 3 requests for reconsideration of the 11/2/16 fax waiver in response to petitions by 22 parties
  • 1 request for reconsideration of the 10/14/16 waiver of the prior express written consent rule granted to 7 petitioners

New Petitions Filed
  • Amerifactors Financial Group, LLC – seeking a declaratory ruling that the TCPA does not apply to fax advertisements that the recipient receives through an online fax service or on a device other than a fax machine  (filed 7/13/17)

Upcoming Comments
  • Call Authentication Trust Anchor – Notice of Inquiry; FCC 17-89  (Comments due 8/14/17; Replies due 9/13/17)
  • Amerifactors Financial Group, LLC – petition seeking a declaratory ruling that the TCPA does not apply to fax advertisements that the recipient receives through an online fax service or on a device other than a fax machine  (Comments due 8/17/17; Replies due 9/1/17)
  • Advanced Methods to Target and Eliminate Unlawful Robocalls – Second Notice of Inquiry; FCC 17-90  (Comments due 8/28/17; Replies due 9/26/17)
     
    *Note: Although the most recent “ringless voicemail” petition was withdrawn in June 2017, the FCC continues to receive dozens of consumer comments opposed to exempting such services from the TCPA.

Decisions Released
  • No decisions addressing filed petitions
  • Best Insurance Contracts, Inc. and Philip Roesel – NAL for spoofed robocalls  (released 8/4/17)
  • Dialing Services, LLC – Forfeiture Order for robocalls  (released 7/26/17)
  • Call Authentication Trust Anchor – Notice of Inquiry; FCC 17-89  (released 7/14/17)
  • Advanced Methods to Target and Eliminate Unlawful Robocalls – Second Notice of Inquiry; FCC 17-90  (released 7/13/17)

Click here to see the full FCC Petitions Tracker.
 

Cases of Note

Michigan District Court Rejects Far-Reaching Definition of “Sender” Under the TCPA

On July 17, 2017, the U.S. District Court for the Eastern District of Michigan rejected an expansive definition of “sender” under the TCPA, determining that the mere inclusion of a company’s products on a fax advertisement does not render that company a “sender” and subject to liability for any violations associated with the fax advertisement.

The lawsuit stems from August and September 2016 unsolicited fax advertisements sent by Mohawk, Inc., which promoted pharmaceutical products produced by defendants Pfizer, Inc. and Bristol-Myers Squibb Company. Plaintiff Health One Medical Center, Eastpointe PLLC alleged that these faxes did not contain the required opt-out notice, in violation of the TCPA. Further, the plaintiff argued, these defendants qualify as “senders” under the TCPA because the faxes promoted their products, and they are therefore liable for them and their content. The defendants filed motions to dismiss for failure to state a claim, and defendant Bristol-Myers Squibb also argued that the Court lacked personal jurisdiction.

Specifically, the defendants argued that they cannot be held liable for the faxes because the plaintiff failed to allege facts showing (1) any action or inaction on their part; (2) participation in the creation or transmission of the faxes; (3) a business relationship between them and Mohawk; (4) awareness that Mohawk sent the faxes; (5) that they sold products to Mohawk or knew Mohawk was selling their products; or (6) awareness of Mohawk. In granting the motions, the Court concluded that accepting the plaintiff’s argument that an advertisement that includes an entity’s products subjects that entity to liability as a sender “would lead to absurd and unintended results by vastly expanding the scope of liability.” Health One Med. Ctr., Eastpointe, P.L.L.C. v. Mohawk, Inc., No. 16-cv-13815, 2017 U.S. Dist. LEXIS 110285, at *8 (July 17, 2017).

North Carolina District Court to Rule on First Amendment Challenge to TCPA

In June and July 2017, a bi-partisan group of political organizations and the federal government filed briefs in support of cross-motions for summary judgment in a case challenging, on First Amendment grounds, the constitutionality of the TCPA. The case is before the U.S. District Court for the Eastern District of North Carolina. See Am. Ass’n of Political Consultants, Inc. v. Sessions, No. 5:16-cv-252 (E.D.N.Y.).

The political groups include the American Association of Political Consultants, Democratic Party of Oregon, Public Policy Polling, Tea Party Forward PAC, and Washington State Democratic Central Committee. The groups argue that the TCPA’s prohibition on placing autodialed telemarketing calls or text messages to cell phones without obtaining prior express written consent (47 U.S.C. § 227(b)(1)(A)(iii)) violates the Constitution because:
 
  • By creating a content-based exemption for debt collection calls, it places an illegal content-based restriction on speech; and
  • It is not narrowly tailored to further a compelling governmental interest, nor the least restrictive means for achieving that interest (i.e., fails the strict scrutiny test).

The government argues that the prohibition is a time, place, and manner restriction of the method, rather than the content, of the autodialed calls and text messages, and is therefore content-neutral. Further, the government contends that the prohibition would survive a strict scrutiny analysis because it is narrowly tailored to serve the compelling governmental interest in protecting consumer privacy, and does so by the least restrictive means, as the prohibition lacks a comparable alternative. The government also requests that, if the Court finds the debt-collection exemption unconstitutional, it sever that provision and leave the remainder of the prohibition intact.

The Court’s decision on these cross-motions could have a great impact on businesses’ ability to place autodialed telemarketing calls and text messages.