May 15, 2019

Recent News

FCC to Address Two Call Blocking Items at its June Meeting
 
On May 15th, the FCC provided a preview of two TCPA-related items that will be addressed at its June 6, 2019 Open Meeting.  First, the FCC announced that it will consider a declaratory ruling that allows telecommunications carriers to block incoming calls – on an opt-out basis, rather than an opt-in basis.  This measure would clarify that telecommunications carriers do not breach their common carrier obligations by blocking calls using analytics or other methods to identify unwanted calls.  The ruling would open the possibility that carriers block certain calls rather than merely labeling them, as many do today.  Second, the FCC will open a rulemaking to propose a safe harbor for carriers that block incoming calls from unauthenticated sources, once the call authentication system known as SHAKEN/STIR is implemented.  The proposal would exempt carriers from liability in certain instances if a call is blocked as being unauthenticated. 
 
The FCC’s actions do not address the pending TCPA issues remanded to the agency in the ACA International case, nor do they address any of the pending petitions summarized in Kelley Drye’s FCC Petitions Tracker.


CFPB’s Long-Awaited Debt Collection Rule Would Impose New Limits on Debt Collection Calls and Texts

On May 7, the Consumer Financial Protection Bureau released its proposed rule governing debt collection, which would impose new requirements for debt collectors related to when and how a consumer can be contacted and what can and must be said when a consumer is reached.  Industry and other stakeholders have long anticipated the proposed rule, which follows a July 2016 outline of proposals and November 2013 Advanced Notice of Proposed Rulemaking, previously discussed here.  
 
The proposed rule would impose new requirements on “debt collection” calls that would apply in addition to existing TCPA and state requirements, including:
 
  • Call frequency limitations. The proposed rule would generally prohibit collectors from calling consumers more than seven times per week regarding a specific debt and require a collector to wait at least a week before calling the consumer once a conversation takes place. While consumer advocates have argued that this provision would effectively green light seven calls per week in connection with each consumer debt, debt collectors would continue to be subject to preexisting laws that already prescribe requirements for contacting consumers by phone generally, such as the TCPA. 
  • Text messages as acceptable communication methods with new limitations.  The proposed rule acknowledges that text messages are regularly used for debt collection purposes and permits that use subject to certain restrictions, such as requiring instructions that permit the consumer to opt out from receiving messages.  The proposed rule would also create a new category of messages called a “limited-content message,” which would only contain certain information and not be deemed a “communication” for purposes of general limitations under the Fair Debt Collection Practices Act.
 
Interested parties should review the proposed rule closely to assess how the new requirements could impact current and future practices.  Comments on the proposed rule are due 90 days from publication in the Federal Register, which should take place shortly.


Chairman Pai Announces July 11 SHAKEN/STIR Robocall Summit
 
Before major voice service providers deploy SHAKEN/STIR standards, FCC Chairman Ajit Pai will convene a summit focused on the industry’s implementation of the caller ID authentication framework to combat illegal robocalls and caller ID spoofing. The summit will showcase the progress that major providers have made toward their goal of deployment later this year and provide an opportunity to identify any challenges to implementation and how best to overcome them.

The summit will be held on July 11, 2019 in the Commission Meeting Room at FCC Headquarters.


FCC Takes First Step Toward Implementing Reassigned Number Database

Following adoption of the Reassigned Number Database order, on April 16, 2019, the FCC issued a Request for Information (RFI) on procurement for a reassigned number database (RND).  The FCC proposes to combine the RND function with two other numbering administration functions, the North American Numbering Plan Administration and the Number Portability Pooling Administrator functions.  This RFI will be used to assist the FCC in getting a database running as quickly as possible.  A request for proposals is expected to be issued over the Summer, after the FCC receives proposed technical requirements for the RND.

Meanwhile, the FCC received two petitions for partial reconsideration of the Reassigned Number Database order.  A joint filing by three industry organizations asked the FCC to separate the RND function from other number administration functions.  A filing by PACE asked the FCC to exclude toll free numbers and business numbers from the database, arguing that there is no benefit to including such numbers in a reassigned number database.  Comments on the petitions for reconsideration will be due May 22; replies are due on June 3.

 

Legislative Update

Congress Takes Unanimous Action in Fight Against Robocalls

Robocalls have been a hot topic of discussion at multiple congressional hearings, with legislative efforts to combat robocalls proving to be a rare instance of bipartisan agreement. The most successful bill to date is the Telephone Robocall Abuse Criminal Enforcement and Deterrence (“TRACED”) Act, introduced by Sens. John Thune (R-S.D.) and Ed Markey (D-Mass.) and unanimously approved by the Senate Commerce Committee in March. Generally, the TRACED Act:
 
  • Gives the FCC the ability to fine intentional offenders up to $10,000 per call;
  • Lengthens the statute of limitations for FCC enforcement against intentional TCPA violators to three years;
  • Obligates the FCC to require voice service providers (providers of voice communications to end users) to implement the STIR/SHAKEN authentication framework to determine call authenticity;
  • Requires the FCC to promulgate rules to, among other things: (1) provide a safe harbor for voice service providers for the “unintended or inadvertent” blocking or misidentification of trust of calls; and (2) “help protect a subscriber from receiving unwanted calls or text messages from a caller using an unauthenticated number”; and
  • Creates an interagency working group made up of representatives from the FTC, FCC, Department of Commerce, State Department, Homeland Security, and the CFPB to study prosecution of violations of the TCPA.

 
In a recent Senate Appropriations Committee Hearing regarding FCC and FTC budgets, FCC Chairman Ajit Pai endorsed the measure, calling it “a step in the right direction.” It is unclear when the measure will head to a floor vote, but it has strong support from legislators, the FCC, the FTC, businesses, and consumer groups.
 
Separately, Senator Richard Durbin (D-Ill.), along with a number of other Democratic senators, recently introduced the Protecting American Consumers From Robocalls Act, which will expand the TCPA’s private right of action by removing the requirement that the potential plaintiff receive multiple calls within a 12-month period, and allowing consumers to receive $500 per violation, as opposed to “up to” $500. We will keep you apprised of any movement with this bill.

 

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

  • 31 petitions pending
  • 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”
  • 1 request for reconsideration of the 10/14/16 waiver of the prior express written consent rule granted to 7 petitioners
  • 10 applications for review of fax waiver orders under the Anda progeny (these applications for review were not addressed in the Nov. 14, 2018 Bureau order)
  • 1 application for review of the CGB order issued on 11/14/18 eliminating the opt-out language rule for solicited faxes (and 2 oppositions to the application for review)

Upcoming Comments
  • None

Decisions Released
  • None since January 2019 report


Click here to see the full FCC Petitions Tracker.


 

Cases of Note

4th Circuit Declares Government Debt Exemption to the TCPA Unconstitutional, But Leaves the Rest of the Statute Intact

Since its adoption, the TCPA has periodically been attacked as unconstitutional on grounds that it violates the First Amendment right to free speech due to its content-based restrictions. Until recently, those attacks have generally failed, leaving defendants with the threat of potentially crippling statutory damages. On April 25, the Fourth Circuit announced that part of the TCPA, an exemption for calls to collect government debts, is unconstitutional and will be stricken from the Act.

This decision was announced in the case of American Association of Political Consultants, Inc. (AAPC) et. al v. Federal Communication Commission (FCC). The Fourth Circuit agreed with the AAPC that the debt-collection exemption was content based, and consequently that strict scrutiny test was appropriate. As explained by the Court:

Under the debt-collection exemption, the relationship between the federal government and the debtor is only relevant to the subject matter of the call. In other words, the debt-collection exemption applies to a phone call made to the debtor because the call is about the debt, not because of any relationship between the federal government and the debtor… In these circumstances, the debt-collection exemption to the automated call ban constitutes a content-based speech restriction.

The Court also concluded that the debt-collection exemption fails strict scrutiny because it is under-inclusive as it authorized many of the calls that the TCPA was enacted to prohibit. They also found that there was no compelling government interest, as the exemption cut against the privacy interests that Congress sought to safeguard by the TCPA.

Although the Court held that the debt-collection exemption was unconstitutional, it did not invalidate the entire statute as the appellant and many defendants in pending lawsuits had hoped. Instead, it determined that the appropriate remedy was to sever the exemption, leaving the rest of the statute intact.


AT&T Win That Narrowly Defined ATDS Appealed to Seventh Circuit

The plaintiff in Gadelhak v. AT&T Services, Inc., has appealed U.S. District Judge Edmond E. Chang’s ruling in AT&T’s favor, which held that texts sent using software that did not “randomly or sequentially” choose numbers, but instead dialed from a pre-selected list, did not qualify as an automated telephone dialing system, or “ATDS,” under the TCPA.

The case involved AT&T’s practice of creating lists of affiliate customer telephone numbers used to send out surveys and promotions. The plaintiff alleged that he had received several Spanish language texts from AT&T even though he was not a customer, did not speak Spanish, and his number was on the National Do Not Call List. Judge Chang examined the meaning of the term ATDS in light of the invalidation of the FCC’s 2015 Declaratory Ruling, which the D.C. Circuit found adopted two irreconcilable definitions of the term ATDS. In the absence of binding authority, the Court found that “the numbers stored by an ATDS must have been generated using a random of sequential number generator” to fall within the statutory definition.

The Court noted that under the TCPA, an ATDS has “‘the capacity to store or produce telephone numbers to be called, using a random or sequential number generator,’ and then call the numbers.” The Court found that the plain statutory language required more than mere storage and automatic dialing of telephone numbers. The Court similarly dismissed the plaintiff’s arguments that several other exemptions within the TCPA would be rendered meaningless if ATDS were defined so narrowly, finding that these exemptions would still apply to the prohibition against calls made using an artificial or prerecorded voice. 

The Court found that because AT&T’s system did not have the capability to randomly or sequentially generate numbers, it was not an ATDS and not prohibited under the TCPA. In so finding, the Court disagreed with the Ninth Circuit’s opinion in Marks v. Crunch San Diego, LLC, which defined ATDS as equipment that has the capacity to either store numbers to be called or to produce numbers randomly or sequentially. The case presents an opportunity for the Seventh Circuit to weigh in on the issue.

The decision is Gadelhak v. AT&T Services, Inc., No. 1:17-cv-01559 (N.D. IL), Dkt. No. 86.


 
District Court Finds Allegations of a “Distinctive Click and Pause” Sufficient to Allege ATDS Use

The district court for the Eastern District of Pennsylvania denied a motion to dismiss a TCPA claim, finding that the plaintiff had adequately alleged that an ATDS had been used to place the call at issue when he alleged that he heard a “distinctive click and pause.” The court also found that the plaintiff had standing and that the court had jurisdiction.

The plaintiff owns a business called “Final Verdict Solutions,” which warns on its website that telemarketers will be sued if they call in violation of the TCPA.  The website also lists the plaintiff’s cell phone number, which he uses for business and personal use, and is listed on the National Do Not Call Registry. The defendant alleged that the plaintiff is a serial TCPA plaintiff, who hopes for and encourages telemarketing calls.

The plaintiff alleged that he received a call from the defendant, which was allowed to proceed to voicemail, and left a message that included a “distinctive click and pause,” followed by a representative saying “hello.” The defendant moved to dismiss, arguing that the plaintiff had failed to allege the use of an ATDS in violation of the TCPA.  The court disagreed, finding that the allegation that plaintiff heard a “distinctive click and pause” raised a plausible inference that Defendant used a predictive dialer with the present capacity to generate and dial phone numbers. The court noted that it would be impossible for a TCPA plaintiff to make allegations regarding the technical capabilities of a device prior to any discovery on the issue. The court observed that there is simply no way for a plaintiff to know those details prior to discovery, and to require them at the pleadings stage would be to place too high a barrier to survive dismissal.  

The defendant also moved to dismiss, arguing that because plaintiff was a serial TCPA plaintiff, his claim was not within the “zone of interests” that the TCPA was designed to protect, and thus the plaintiff lacked standing. The court disagreed, noting that there was no evidence that the plaintiff’s phone had been purchased and used solely to receive calls in violation of the TCPA. The court further noted that the fact that the plaintiff had filed other TCPA lawsuits was not evidence of anything other than plaintiff exercising his rights under the TCPA. Finally, the court noted that the fact that the plaintiff derives a profit from his lawsuits doesn’t remove him from the zone of interests; to the contrary, it is “exactly what Congress intended.”

The decision is Shelton v. Nat’l Gas & Elec., LLC, No. 17-4063, (E.D. Pa), Dkt. No. 17.