In the first ruling, P2P Alliance, the Bureau ruled that an automatic telephone dialing system (“ATDS”) is not determined by whether the equipment has the capability to send a large volume of calls or texts in a short period of time. Instead, the Bureau, while recognizing that the Commission’s interpretation of the ATDS definition remains pending, ruled that “whether the calling platform or equipment is an autodialer turns on whether such equipment is capable of dialing random or sequential telephone numbers without human intervention.” The Bureau also provides an illuminating discussion of the so-called “human intervention” element of prior FCC statements regarding autodialers.

In the second ruling, Anthem, Inc., the Bureau denied a petition to exempt certain healthcare-related calls from the TCPA’s consent requirements. In this order, the Bureau breaks less new ground and instead reiterates that prior express consent must be obtained before a call (or text) is made and that the supposed value or “urgency” of the communication does not necessarily make it permissible.

Besides these two petitions, the Commission has nearly three dozen petitions pending before it on a variety of matters relating to exemptions from the TCPA’s consent requirements, the collection and revocation of consent, the “junk fax” provisions, and other questions raised by the flood of TCPA class action litigation in the last five years. If the FCC begins addressing these other pending petitions, the course of TCPA class action litigation could change significantly.

In March 2018, the United States Court of Appeals for the D.C. Circuit issued a landmark rebuke of the FCC’s interpretation of the TCPA. The case, ACA International v. FCC, reviewed a 2015 Omnibus Declaratory Ruling on a variety of matters, the most notable of which was the FCC’s expansive interpretation of an “automatic telephone dialing system” (“ATDS”), the use of which triggers therobo TCPA’s prior express consent requirements and private right of action provisions. In ACA International, the court found the FCC’s interpretation “impermissibly broad” and remanded the case to the FCC for further consideration.

Since that time, the FCC has taken comment twice on the ACA International remand, but FCC Chairman Pai has focused the agency’s efforts on identifying and reducing illegal robocalls rather than addressing the remand. Chairman Pai has repeatedly said that unwanted automated calls is a top consumer complaint and he has pursued a multi-faceted approach to preventing or blocking those calls before they reach consumers.

The Commission has

• authorized voice service providers to block incoming calls that “reasonable call analytics” identify as likely illegal calls,
• mandated that service providers implement a call authentication framework to prevent unlawfully spoofed calls,
• directed specific service providers to block certain calls or have their own calls blocked by other providers,
• proposed multiple fines exceeding $100 million each for illegally spoofed calls, and
• authorized a comprehensive database to identify when telephone numbers have been reassigned from a subscriber who may have given consent to a new subscriber.

The Anthem and P2P Alliance Rulings

Against this backdrop, the flood of TCPA class action cases has powered a rising tide of petitions for declaratory rulings addressing specific aspects of the TCPA’s requirements, from when consent is needed, how it may be obtained, and how it may be revoked. At Kelley Drye, we have chronicled these developments in our monthly TCPA Tracker and its accompanying FCC Petitions Tracker of the nearly three dozen pending petitions. The total number of petitions has risen slightly over time, as new petitions have modestly outnumbered decisions issued by the Commission.

P2P Alliance Petition (Two-Way Texting With Manual Intervention). In May 2018, the P2P Alliance, a group that represents providers and users of “peer to peer” text messaging services, sought a declaratory ruling that peer to peer messaging services did not involve an ATDS and thus were not subject to the restrictions on ATDS calls/texts contained in the TCPA. The petition sought a ruling with respect to text messaging services that enable two-way text communication, requiring a person to manually send each message. Although the Bureau declined to rule with respect to any specific platform – citing a lack of sufficient evidence regarding the how the platforms operate – the Bureau issued a ruling with several important clarifications.

First, the Bureau ruled that the ability of a platform or equipment to send “large volumes of messages” is not probative of whether that platform or equipment constitutes an ATDS under the TCPA. The Bureau declared that “whether the calling platform or equipment is an autodialer turns on whether such equipment is capable of dialing random or sequential telephone numbers without human intervention.”

This conclusion effectively puts to rest ambiguous statements in some prior orders that TCPA plaintiffs had argued brought any high-volume calling platform within the scope of the TCPA. Furthermore, the Bureau’s conclusion appears most consistent with decisions by several U.S. Courts of Appeal that have ruled an autodialer must employ a random or sequential number generator to meet the TCPA’s definition of an ATDS. The Bureau noted, however, that the “details” of the interpretation of an ATDS were before the Commission in ACA International so, until the Commission addressed that issue, the Bureau was relying solely on “the statutory definition of autodialer.”

The Bureau’s ruling contains an illuminating discussion of the so-called “human intervention” element of prior FCC statements regarding autodialers. Per the Bureau’s ruling, “If a calling platform is not capable of dialing such numbers without a person actively and affirmatively manually dialing each one, that platform is not an autodialer.” The Bureau explained the “actively and affirmatively” dialing standard as requiring a person to manually dial each number and send each message one at a time. Use of such technologies is not an “evasion” of the TCPA, the Bureau commented, because the TCPA “does not and was not intended to stop every type of call.”

Thus, while the full contours of the ATDS definition are still to be defined by the Commission, the Bureau’s P2P Alliance ruling helps to clarify that an “active and affirmative” manual process for sending calls or messages removes a platform or piece of equipment from the ambit of the TCPA. This ruling could buttress many district court rulings that have found sufficient human intervention in the operation of many calling or texting platforms.

Anthem Petition (Prior Express Consent for Healthcare-Related Calls). The Anthem petition addressed by the Bureau was filed in June 2015, one month before the FCC released the Omnibus Declaratory Ruling addressed in ACA International. (Anthem has a more recent petition addressing post-Omnibus order issues that remains pending.) In the June 2015 petition, Anthem asked the Commission to create an exemption for informational healthcare-related calls/texts initiated by healthcare providers and sent to existing patients, arguing that such communications were beneficial to patients and could be protected by an opt-out process it believed the Commission was then considering for ATDS calls. The Commission received limited comment in September 2015 (while the ACA International appeal was being litigated) and has received virtually no filings discussing the petition since that time.

In the ruling, the Bureau denied virtually all of Anthem’s requests, emphasizing instead the TCPA’s requirements for prior express consent for ATDS calls. Specifically, the Bureau ruled that “makers of robocalls generally must obtain a consumer’s prior express consent before making calls to the consumer’s wireless telephone number.” (emphasis in original). It rejected Anthem’s request for an exemption permitting such calls, subject to opt-out, and repeated that the “mere existence of a caller-consumer relationship” does not constitute consent. Importantly, however, the Bureau affirmed prior statements that a consumer who has knowingly released their phone number for a particular purpose has given consent to receive calls at that number.

To the extent that the Anthem petition sought an exemption based on the “urgency” of healthcare-related communications, the Bureau declined to create such an exception, emphasizing, however, that the “emergency purposes” exception could apply to the extent the calls/texts satisfied the Commission’s rules and its recent COVID-19 Declaratory Ruling.

In the end, the ruling likely will not change the status quo for calls and texts being made today. The Bureau emphasized previous rulings requiring prior express consent and endorsed previous statements about how such consent may be obtained. Further, the Bureau affirmed the “emergency purposes” exception, although declining to expand its scope. Thus, entities making calls or texts following prior FCC guidance should not need to make any changes as a result of the Anthem ruling.

Looking Ahead

These decisions are not the broad rulings that many hoped for when ACA International was remanded to the FCC in March 2018. Chairman Pai was highly critical of the 2015 Omnibus order from the FCC (from which he dissented) and welcomed the ACA International decision. He has focused the agency on reducing unwanted calls prior to addressing the legal interpretations called for by the remand. Now, however, with those actions at an advanced stage and with his expected time as Chairman of the FCC about to end, many are wondering if the Pai Commission will revisit the ATDS definition, revocation of consent, and safe harbor questions remanded to it. Even if it does not, however, the Commission has nearly three dozen other petitions still pending, which could provide needed guidance on discrete issues that have arisen in TCPA litigation.

We don’t know at this time which way the FCC is likely to go, or even if it will address more TCPA issues during Chairman Pai’s tenure, but enterprises and service providers should watch the FCC closely over the next few months.

Although the March agenda is relatively light, the STIR/SHAKEN and access charge items could significantly impact provider costs, tariffing practices, and billing procedures. As a result, providers should closely examine the FCC’s proposals and get their input in early in light of the agency’s recent decision to restrict in-person meetings and expand telework in response to the coronavirus pandemic. You will find more information on the key March meeting items after the break:

Mandating STIR/SHAKEN Framework: The TRACED Act mandates a number of measures designed to combat unlawful robocalls. One of the key measures in the Act is a requirement that all voice providers implement SHAKEN/STIR in IP networks and an alternative call authentication framework in non-IP networks. The draft Report and Order and Further Notice of Proposed Rulemaking responds to these mandates in the Commission’s existing call authentication docket. The draft order would mandate that originating and terminating voice service providers implement the STIR/SHAKEN framework in the IP portions of their networks by June 30, 2021. A carrier’s obligations under the proposal would vary depending on where it is in the call chain. First, a voice service provider that originates a call that exclusively transits its own network would be required to authenticate and verify the caller ID information in accordance with the STIR/SHAKEN framework. Second, a voice service provider originating a call that it will exchange with another provider would be required to authenticate the caller ID information in accordance with the STIR/SHAKEN framework and (unless technically impossible) transmit that information to the next provider in the call path. Finally, a voice service provider terminating a call with caller ID information it receives from another provider would be required to verify that information in accordance with the STIR/SHAKEN framework before delivering the call to an end user. The FCC would estimate carrier STIR/SHAKEN implementation costs to range from $15,000 to $300,000.

In the FNPRM portion of the order, the FCC plans to seek comment on whether it should extend the STIR/SHAKEN implementation deadline for smaller voice service providers (i.e., those with 100,000 or fewer subscriber lines), as well as those operating in rural areas, so long as they adopt a robocall mitigation program. The FCC also plans to ask whether it should expand the STIR/SHAKEN mandate to cover intermediate voice service providers that neither originate nor terminate calls, and require them to pass along any verified caller ID information they receive. In addition, the FCC would request input on requiring voice service providers using legacy time-division multiplexing and other non-IP technologies to either (1) upgrade their networks to IP to enable the implementation of the STIR/SHAKEN framework or (2) develop a non-IP caller ID authentication technology and adopt a robocall mitigation program in the interim. The FCC anticipates adopting procedures to exempt providers from the full STIR/SHAKEN implementation process in exchange for meeting aggressive call authentication deployment milestones. The Commission also would seek comment on implementing the TRACED Act’s prohibition on voice carriers imposing additional line item charges on consumers and small businesses for the costs of implementing caller ID authentication services.

The FNPRM also would address a topic identified in the TRACED Act for further Commission inquiry. The Act requires the Commission to examine measures to bar access to numbering resources by service providers allegedly assisting unlawful spoofing or robocalling operations. The Commission would examine a number of options for doing so, including imposing “know your customer” obligations on RespOrgs and carriers receiving numbering resources and/or imposing U.S. residency requirements for telephone numbers.

The draft order would include an expedited comment period for these questions. Comments on the proposed STIR/SHAKEN reforms would be due by May 15, 2020, with reply comments due by May 29, 2020.

Deregulating End-User Access Charges: The draft Notice of Proposed Rulemaking would eliminate FCC pricing regulation for five access charges currently included in some carrier tariffs: the Subscriber Line Charge, the Access Recovery Charge, the Presubscribed Interexchange Carrier Charge, the Line Port Charge, and the Special Access Surcharge. These charges represent the last handful of interstate end-user charges subject to ex ante price regulation by the agency. The FCC would find that increased competition in the voice service market, including by interconnected VoIP, wireless, and over-the-top providers, ameliorates the need for strict pricing controls for these charges. The Commission would seek comment on completely prohibiting carriers from tariffing the charges or whether alternative approaches are necessary to address areas where competition may be lacking. The FCC also would request input on barring carriers from assessing the charges through separate line items on customer bills. The FCC would find that the current descriptions of the charges vary significantly among carriers and unnecessary complicate customer bills. As many of the charges currently are used in the calculation of high-cost support and universal service contributions, the FCC would ask how it can ease the deregulation transition for carriers to ensure they receive sufficient support without increasing the contribution burden.

Comments on the proposed access charge reforms would be due 30 days after Federal Register publication of the item, with reply comments due 15 days later.

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Once these rules take effect, the FCC closes a significant gap in its prior rules – calls which originate outside the United States – at the same time that it acts preemptively to prohibit deceptive spoofing in a growing area – text messaging. In the process, the FCC will enhance one of its most commonly used tools in its effort to combat unlawful robocalls – fines for unlawful spoofing. Generally, the FCC has attacked parties that originate unlawful robocalls by fining them for the subsidiary violation of spoofing the unlawful calls. In telecommunications enforcement, spoofing violations are the tax evasion charges to Al Capone’s criminal enterprise.

Expansion of the Spoofing Prohibition

The first change adopted in the August 1 Report and Order was to expand the rules to cover communications originating outside the United States directed at recipients within the United States. The existing rules only applied to persons and entities within the U.S. The new rule states:

“No person in the United States, nor any person outside the United States if the recipient is in the United States, shall, with the intent to defraud, cause harm, or wrongfully obtain anything of value, knowingly cause, directly, or indirectly, any caller identification service to transmit or display misleading or inaccurate caller identification information in connection with any voice service or text messaging service.”

The second change, also incorporated in the rule above, applies the rule’s prohibition beyond voice communications to include text messages. The definition of text messages includes text, images, sounds, or other information transmitted to or from a device, specifically covering short message service ("SMS") and multimedia message service ("MMS") messages. Also covered by the rules are messages sent to or from Common Short Codes (Short Codes), which are the 5- or 6-digit codes commonly used by enterprises to communicate with consumers at high volume.

Not included in the definition is real-time, two-way voice or video communications and messages over IP-enabled messaging services so long as the communication is to another user of the same messaging service. Thus, the rules do not reach messages sent via common OTT applications such as iMessage, Google Hangouts, Whatsapp, and direct message features in Snapchat and Twitter. Rich Communications Services ("RCS") messages, which allow advanced messaging features, are also excluded. The Commission determined that Congress intended for RCS messages to fit under the statutory exclusion for “IP-enabled communications.”

The Commission also clarified its definition of “voice service” to ensure the rules cover the broader “telecommunications service,” as well as interconnected VoIP.

Implementing the RAY BAUM’S Act

The rule changes were required by amendments to the Communications Act, made by the RAY BAUM’S Act of 2018, which strengthened the FCC’s authority over spoofed calls established in the Truth in Caller ID Act of 2009. The 2009 legislation prohibited the use of misleading and inaccurate caller ID information for harmful purposes, but in a 2011 report, the FCC recommended that Congress update the rules to give the Commission authority to prohibit calls outside of the U.S. and make explicit that the Act covers text messages. The order also cited a May 2019 filing by 42 state attorneys general urging the Commission to adopt the rules.

While all voting commissioners supported the order, Commissioner Mike O’Rielly expressed some reservations prior to the vote. In particular, he said he thought the extraterritorial jurisdiction would be difficult to execute and would have preferred narrower statutory language, but did not believe it was his role to “challenge the wisdom” of the legislature. He also said the definitions of text and voice services were broader than he wanted, which he thought might cause future unintended consequences.

The new rules will go into effect on February 6, 2020, or 30 days after Federal Register publication, whichever is later.

The August agenda items impact all corners of the telecommunications industry. You will find more details on some of the most significant August meeting items after the break:

RDOF Funding and Procedures: The draft Notice of Proposed Rulemaking (“NPRM”) seeks comment on the budget, auction procedures, application processes, and deployment obligations for the RDOF. The FCC plans to target $20.4 billion in support to areas that lack access to 25/3 Mbps broadband service, which represents the agency’s current benchmark for fixed advanced communications services and an increase over the 10/1 Mbps minimum performance tier under the CAF. The FCC would award RDOF support through an auction in two phases, with the first phase targeting wholly-unserved census blocks and the second phase focusing on partially-unserved census blocks. Like the CAF auction, the FCC anticipates weighing RDOF auction bids based on performance, with higher-speed, lower-latency services preferred. RDOF bidders would be subject to similar application procedures, deployment milestones, and reporting obligations as CAF auction participants.

RDOF Data Collection: The draft Report and Order and Further NPRM would require all fixed broadband providers to submit coverage polygons depicting the areas where they provide service as well as information on the speed and technology used in providing such service. Service provider coverage claims would be subject to challenge by government entities and the public, with the FCC seeking comment in the further NPRM on how it should gather and apply this “crowdsourced” information. For now, the RDOF data collection would be in addition to the deployment data already collected by the FCC from service providers through the Form 477. The new data collection would only apply to fixed broadband providers at first, but the FCC would seek comment on the parameters for incorporating mobile broadband coverage data into the RDOF in the future. In addition, the FCC would seek input on whether to require even more precise deployment data based on user location and who should bear the burden of such data collection.

Rural Health Care Program (“RHCP”) Reform: The draft Report and Order would adopt reforms to the FCC’s RHCP, which provides financial support to rural health care providers to obtain broadband and other communications offerings at discounted rates to facilitate telehealth services. The FCC plans to revamp the RHCP’s Telecom Program that subsidizes the difference between urban and rural service rates by, among other things, requiring the RHCP Administrator to create a database of rates that health care providers would use to determine the amount of support they can receive. The FCC would prioritize RHCP funding in the event support requests exceed the cap (which was $581 million in 2018) based on the rurality of the area and whether the area faces a shortage of medical personnel. The FCC would caution that it intends to enforce limits on RHCP spending consistent with its current review of overall universal service budgets. In addition, the FCC anticipates tightening up its RHCP competitive bidding and consultant rules following a number of high-profile enforcement actions.

Streamlining Smallsat Licensing: The draft Report and Order would revise the FCC’s current one-size-fits-all satellite licensing regime and create a tailor-made path for licensing smallsats. Smallsat applicants would be subject to lower application fees, easier application processes, and quicker agency reviews, including an exemption from the agency’s processing round procedure that often delays approvals as competing satellite systems file challenges. To qualify for streamlined processing, smallsat applications must meet certain requirements, including: (1) a maximum mass of 180 kg for any single satellite; (2) no more than 10 satellites under a single authorization; (3) total on-orbit satellite lifetime of five years or less; (4) propulsion capabilities or deployment below 400 km altitude; (5) ability to share frequencies with current operations without precluding future entrants; and (6) relatively low risk from orbital debris.

Toll-Free Number Auction: The draft Public Notice would establish procedures for the auction of over 17,000 toll-free numbers in the “833” code, with applications due by October 18, 2019 and bidding set to begin on December 17, 2019. The auction would be the first time the FCC has used competitive bidding to distribute numbering resources. The auction would be run by Somos, which currently is the designated administrator of the toll free database. Parties may apply to participate in the auction individually or through a Responsible Organization, which can bid on behalf of multiple parties as long as the parties do not want the same numbers. Parties would be subject to application, anti-collusion, and default provisions similar to those used in the FCC’s recent spectrum auctions. Winning bidders would be allowed to sell the toll-free numbers obtained through the auction on the secondary market and would report such secondary market transactions to Somos.

MLTS 911 Requirements: The draft Report and Order would implement recent legislation by prohibiting the manufacture, import, sale, or lease of an MLTS unless it is pre-configured so that a user may initiate an emergency call by dialing 911 without first having to dial “9” or take other action to access an outside line. Similarly, anyone installing, managing, or operating an MLTS would not be allowed to do so unless the MLTS is pre-configured to allow 911 direct dialing. If possible, MLTS managers also must configure the MLTS to provide a notification when a 911 call is made to a central location (e.g., front desk, security office) in order to facilitate emergency response efforts. The FCC plans to adopt an assumption that an MLTS manager is responsible for any failure to comply with the 911 direct dialing or notification rules. The new rules would apply to any MLTS manufactured, imported, sold, leased, or installed after February 16, 2020. In addition, the FCC would impose “dispatchable location” requirements on MLTS and other 911-capable services, which would require the transmission of a caller’s street address and additional information such as room number, floor number, or other data to help identify the caller’s location.

Anti-Spoofing Expansion: The draft Report and Order would expand the reach of FCC enforcement against the manipulation of caller ID information for malicious purposes (otherwise known as “spoofing”) under new authority granted by legislation adopted last year. Specifically, the FCC would extend its authority to punish spoofing violations for communications originating from foreign points to recipients within the United States. The FCC also would expand the scope of communications covered by its anti-spoofing rules to include some of the most widely-used forms of text messaging as well as alternative voice services, such as one-way VoIP services. The draft item follows in the wake of numerous enforcement actions imposing large fines for malicious spoofing in 2018.

Cable Franchise Fee Restrictions: The draft Report and Order would address concerns raised by a federal appeals court regarding the fees imposed by local franchising authorities (“LFAs”) on cable operators. The Communications Act places a five percent cap on such fees, but cable operators allege that LFAs frequently seek additional benefits as part of the franchise process. The draft item would treat most in-kind contributions required by LFAs from cable operators as fees subject to the five percent cap. Moreover, the FCC would prohibit LFAs from using their franchising authority to regulate most non-cable services, including broadband services offered over cable systems. LFAs also would be prohibited from requiring cable operators to secure additional franchises or other authorizations to provide non-cable services through their cable systems.

The irony of John Oliver making robocalls in order to protest robocalls is rather funny. But, it raises the question – are these calls legal? The fact that the calls appear to be lawful – and would be legal regardless of the action Oliver called for in the program – highlights that there is an important distinction between illegal calls and unwanted calls. In the end, Oliver’s segment demonstrates some of the problems with modern efforts to apply the Telephone Consumer Protection Act (“TCPA”), a statute that was adopted well before the proliferation of cell phones in America, and seems to deter many legitimate calls while not sufficiently stopping scam calls.

Under the TCPA, it is unlawful to place an autodialed or a pre-recorded message call to certain phones without consent from the called party. Each of these elements – whether the call is autodialed or contains a pre-recorded message, the phone to which the call is made and whether consent is obtained – are relevant to determining the legality of any specific call. This makes for a complex, fact-based analysis as to whether any calling campaign is lawful or not.

The definition of an “automated telephone dialing system” or “ATDS” is one of the primary issues before the FCC today. An ATDS is defined in the statute as a device with 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.” The FCC over the years has taken an ever-expanding view of what falls within the scope of an ATDS, which has created significant uncertainty and inconsistency in federal courts that have jurisdiction over complaints alleging violations of the TCPA. The inconsistency and uncertainty has hampered legitimate efforts to provide information beneficial to consumers, and has led to a steady stream of petitions for clarification to the FCC itself.

Most recently, in 2015, the FCC adopted a new and even broader definition of ATDS that turned on a device’s “capacity” to function as an autodialer. Specifically, the FCC defined equipment as an autodialer if it contained the potential “capacity” to dial random or sequential numbers, even if that capacity could be added only through specific modifications or software updates (so long as the modifications were not too theoretical or too attenuated). Under this revised interpretation, any equipment that could be modified to dial numbers randomly or sequentially would be an ATDS – and therefore subject the caller to potential liability under the statute.

The Court of Appeals for the D.C. Circuit, which was asked to review this definition, was troubled by the “eye-popping” reach of the FCC’s interpretation, finding that it could be applied to any smartphone, and found that such a reach could not be squared with Congress’ findings in enacting the TCPA. The Court observed that the FCC’s interpretation was “utterly unreasonable in the breadth of its regulatory [in]clusion.” It rejected the FCC’s justification that a broad reach was necessary to encompass “modern dialing equipment,” concluding that Congress need not be presumed to have intended the term ATDS to apply “in perpetuity” and citing paging services as an example of TCPA provisions that have ceased to have practical significance. The Court also found that the confusion over the term “capacity” as it relates to the ATDS definition was multiplied by the FCC’s insufficient explanation of the requisite features that the covered ATDS equipment must possess. The Court set aside the prior interpretation and handed the issue back to the FCC for further analysis and explanation. In the year since that decision, the FCC sought comment on how to respond to the D.C. Circuit’s ruling and appears to be close to issuing a decision on the remanded issues. (As we have explained previously, Chairman Pai’s dissent to the 2015 ATDS definition may be indicative of how the FCC will approach the issue under his leadership.)

Which brings us back to John Oliver. Apparently concerned that the FCC would narrow the definition of ATDS, Mr. Oliver decided to take to the phones to call the FCC. And he is. He announced during his show that he had set up a program that would automatically dial each of the five FCC commissioner’s offices every 90 minutes and play a satirical pre-recorded message urging them to take action to stop robocalls.

But are these calls legal? Actually, it is very likely that they are. Oliver is sending a call containing a pre-recorded message, which satisfies the first element of the TCPA’s applicability. (The calls likely were sent with an autodialer too.) Because Oliver is calling the FCC’s office numbers – which are non-residential landline phones – those calls actually are not affected by the TCPA or the current definitional issue for the FCC. As consumers receiving political robocalls know, calls to landlines don’t require prior consent because the TCPA’s restrictions on the use of an ATDS or pre-recorded message don’t apply for landlines unless a call “introduces an advertisement or constitutes telemarketing.”

Further, the issue of revocation of consent to receive autodialed calls also does not come into play. Oliver spent some time on this show criticizing the “fine print” that some parties use for revoking consent to receive calls. However, Oliver’s explanation that the FCC could “revoke” consent for his calls by sending a certified letter to an address “buried somewhere within the first chapter of Moby Dick” that was quick-scrolled across the screen at the end of the episode, while entertaining, had no legal significance. (And, in any event, the FCC’s 2015 conclusion that consumers may “revoke consent at any time and through any reasonable means” was upheld by the D.C. Circuit upon review.) Put simply, consent is not required for the calls that Oliver is making, and revocation of consent similarly is not relevant to the calls. Nor does the TCPA limit the number or frequency of calls, so the 90-minute intervals for his calls do not amount to a violation of the statute. Finally, Oliver rightly observed during his segment that the National Do Not Call Registry only applies to telemarketing calls, so even if the FCC commissioners registered their office phone numbers on the National Do Not Call Registry, Oliver’s calls to them would not be unlawful.

What does it all mean? In part, it means that John Oliver was taking a bit of comedic license in order to be funny (which he is of course entitled to do). But more deeply, the stunt demonstrates that the TCPA isn’t really about unwanted calls, even though some will talk about the Act as if it were. Too often, the frustration of consumers is directed to unwanted calls when the proper question under the TCPA is whether calls are illegal. Moreover, an autodialed call is not necessarily unwanted, and consumers may be less concerned with how the call is placed than they are with its content. Nor are calls placed without the consent of the recipient necessarily illegal. This is true of Oliver’s calls to the FCC, but also of emergency calls, free messages from your wireless carrier and certain health-related calls, areas where the FCC has carved out exceptions to the consent rules.

Further, one lesson here is that, unlike net neutrality and other issues that are highly contentious and divisive, everyone seems to be relatively on the same side when it comes to robocalls. John Oliver and Chairman Pai would almost certainly agree that additional steps to prevent scam calls – like someone impersonating the IRS or falsely stating that a consumer has won a free cruise – are needed. And to be fair, the FCC is taking actions aimed at reducing these calls, such as allowing voice service providers to block calls from invalid, unallocated, and unassigned numbers before they ever reach a consumer’s phone, supporting development of the industry-led call authentication framework to combat deceptive spoofing, and voting to create a single, nationwide database for reporting number reassignments in order to reduce calls placed in good faith to the wrong party. But the public debate needs to be clearer – the key is figuring out whether what’s being done is effective at stopping illegal calls. Inflaming the public over every unwanted call does not help advance a workable solution to the real problem.

The current and future definition of what qualifies as an automatic telephone dialing system ("ATDS" or "autodialer") remains a hotly debated and evaluated issue for every company placing calls and texts, or designing dialer technology, as well as the litigants and jurists already mired in litigation under the Telephone Consumer Protection Act ("TCPA"). Last year, the D.C. Circuit struck down the FCC’s ATDS definition in ACA International v. FCC, Case No. 15-1211 (D.C. Cir. 2018). Courts since have diverged in approaches on interpreting the ATDS term. See, e.g., prior discussions of Marks and Dominguez. All eyes thus remain fixed on the FCC for clarification.

In this post, we revisit the relevant details of the Court’s decision in ACA International, and prior statements of FCC Chairman Ajit Pai concerning the ATDS definition to assess how history may be a guide to how the FCC approaches this issue.

DC Circuit Found FCC’s 2015 Definition of ATDS Was Too Broad

Under the statute, an ATDS is defined as a device with the capacity “to store or produce telephone numbers to be called, using a random or sequential number generator” and “to dial such numbers.” 47 U.S.C. § 227(a)(1)(A)-(B). The D.C. Circuit unambiguously concluded that in 2015 the FCC adopted an overly expansive and unreasonable view of this definition. In its 2015 Declaratory Ruling and Order, the FCC defined equipment as an autodialer if it contained the potential “capacity” to dial random or sequential numbers, even if that capacity could be added only through specific modifications or software updates (so long as the modifications were not too theoretical or too attenuated). Under this revised interpretation, any equipment that could be modified to dial numbers randomly or sequentially would be an ATDS – and therefore subjected the caller to potential liability under the statute. The FCC also made contradictory statements about the capabilities that an autodialer must possess – reaffirming and then appearing to disclaim its prior rulings on predictive dialers, and offering contradictory statements regarding the level of human intervention that would preclude a call from being auto-dialed. These statements further compounded the uncertainty surrounding autodialers.

The D.C. Circuit Court was troubled by the “eye-popping” reach of the 2015 Order’s interpretation, which could be applied to any smartphone, and found that such a reach could not be squared with Congress’ findings in enacting the TCPA. The Court observed that the FCC’s interpretation was “utterly unreasonable in the breadth of its regulatory [in]clusion.” It rejected the FCC’s justification that a broad reach was necessary to encompass “modern dialing equipment,” concluding that Congress need not be presumed to have intended the term ATDS to apply “in perpetuity” and citing paging services as an example of TCPA provisions that have ceased to have practical significance.

Although the Court did not clarify the requisite “capacity” needed—present or future—to be an ATDS, it declared that “the TCPA cannot reasonably be read to render every smartphone an ATDS subject to the Act’s restrictions.” The Court also found that the confusion over the term “capacity” as it relates to the ATDS definition was multiplied by the FCC’s insufficient explanation of the requisite features that the covered ATDS equipment must possess. Specifically, the 2015 Declaratory Ruling and Order fell short of reasoned decision making in “offer[ing] no meaningful guidance” as to the seminal questions of whether a device (1) must itself have the ability to generate random or sequential numbers to be dialed, (2) must dial numbers without human intervention or (3) must “dial thousands of numbers in a short period of time.”

By setting aside the prior interpretation, the D.C. Circuit handed the issue back to the FCC for further analysis and explanation. The FCC sought comment on how to respond to the D.C. Circuit’s ruling and appears to be close to issuing a decision on the remanded issues.

Is Commissioner Pai’s 2015 Dissent a Harbinger of the Decision on Remand?

When the FCC’s 2015 omnibus TCPA Declaratory Ruling and Order was issued, then-Commissioner Pai (now Chairman of the FCC) authored a highly critical dissent, including a direct challenge to the interpretation of an autodialer. In his view, the ruling improperly expanded the definition of an ATDS beyond the legislative mandate, and needed to be reigned back in.

Chairman Pai’s dissent took issue with the ATDS definition as overbroad and over-inclusive. He posited that only equipment that has the capability to dial sequential numbers or random numbers should qualify as an ATDS. “If a piece of equipment cannot do those two things—if it cannot store or produce telephone numbers to be called using a random or sequential number generator and if it cannot dial such numbers—” Chairman Pai asked, “then how can it possibly meet the statutory definition? It cannot.” The principal issue addressed in the 2015 order was whether the statute’s reference to the “capacity” of ATDS equipment referred to the potential capabilities of the equipment. On this front, Chairman Pai’s view was clear: he believed that the statutory definition of an ATDS was limited to the equipment’s “present capacity,” not to its potential or theoretical capacity, and his dissent focused largely on why the concept of potential capacity was a bridge too far.

Chairman Pai’s interpretation of the statute closely hues to the specific capabilities listed in the text of the TCPA—the ability to store or produce numbers using a random or sequential number generator, and to dial such numbers. The FCC’s interpretation, Chairman Pai charged, “transforms the TCPA from a statutory rifle‐shot targeting specific companies that market their services through automated random or sequential dialing into an unpredictable shotgun blast covering virtually all communications devices.” Chairman Pai was willing to claim victory for the “rifle‐shot” set, stating that if today’s callers have abandoned random or sequential dialers due to the TCPA’s prohibition, then the TCPA has “accomplished the precise goal Congress set out for it” and, if parties want to address more modern types of abusive dialing equipment, they should go to Congress for action.

Given Chairman Pai’s previous statements and the D.C. Circuit’s criticism of the prior order’s scope, it appears likely that the FCC will look only to the present capabilities of particular equipment, rather than its potential or future capacity. However, this alone does not answer the question before the agency. In 2015, Chairman Pai seemed ready to declare the autodialer definition to have achieved its goal, but now that he leads the agency, will he hold to that position?

Notably, since assuming the leadership of the Commission, Chairman Pai has made multiple statements about the need to address the “scourge” of robocalling. The FCC has taken several actions aimed at reducing abusive calls, better detecting spoofing and unlawful activity, and empowering carriers to block illegal calls and consumers to block illegal and unwanted calls. Much of these actions were detailed in an FCC Bureau report on illegal robocalls released on February 14. While it eschews any recommendations for future actions, the report details ongoing FCC and industry efforts to combat illegal robocalls, and identifies some of the challenges to FCC enforcement activities. The Commission also recently adopted a database for number assignment changes that aims to reduce misdirected calls to the wrong telephone number. Will these robocall reduction efforts give the Pai-led FCC the “cover” to narrow the definition of an ATDS, and, if so, by how much will it be narrowed?

Some narrowing of the prior definition is inevitable. Few argue that ordinary smartphones should be subject to the TCPA restrictions. But even advocates of a broad interpretation disagree on how to get there: some have argued that the FCC should maintain the prior definition but exempt smartphones, while others argued for standards that would exclude “ordinary” or unmodified smartphones. Some in the industry, on the other hand, are asking the FCC to focus more narrowly on equipment prominent in the early 1990s, when the TCPA was passed, and be less likely to include equipment that solely calls from pre-loaded lists of numbers. This would be consistent with Chairman Pai’s dissent – provided he has the other votes to achieve it. An interpretation along this line would appear to be good news for predictive dialing equipment and various dialers that involve differing levels of human intervention to complete calls.

Given the divergent interpretations in Marks and Dominguez, the FCC’s interpretation of the ATDS definition is almost certainly headed back to the courts for confirmation that the FCC’s revised definition (whatever it is) lies within the agency’s delegated powers and is sufficiently clear to pass judicial muster. Moreover, a restrictive interpretation of the legislative mandate for what can be regulated would leave to Congress the question of whether a broader definition must be considered, including how to address modern dialing equipment and other modern technologies. Several anti-robocall bills aimed at expanding the reach of the ATDS definition are already under consideration in both houses of Congress. Thus, even if the FCC adopts a narrower interpretation, we’re likely to see the ATDS issue shift to other forums in the second half of 2019.

With that in mind, and given the continual cycle of TCPA lawsuits, companies placing calls or texts and those designing calling or texting platforms should consider how participating in the FCC and subsequent proceedings can further their interests. They also would benefit from determining how the clarified ATDS definition is likely to affect their business, and whether any proactive adjustments would be helpful to prevent disruption to the business or to manage TCPA risk exposure, including evaluating whether the consent they obtain is sufficient. Kelley Drye will continue to follow these issues and provide updates through its monthly TCPA Tracker. Please contact us to join our list or if you have any questions concerning these issues.

The Truth in Caller ID Act prohibits certain forms of “spoofing,” which involves the alteration of caller ID information. While Congress recognized certain benign uses of spoofing, federal law prohibits the deliberate falsification of caller ID information with the intent to harm or defraud consumers or unlawfully obtain something of value. Back in June 2017, the FCC accused Mr. Abramovich and his companies of placing millions of illegal robocalls that used spoofing to make the calls appear to be from local numbers to increase the likelihood that the called party would pick up, a practice known as “neighbor spoofing.” The robocalls indicated that they came from well-known travel companies like TripAdvisor, but in reality the robocalls directed consumers to foreign call centers that had no relationship with the companies. Mr. Abramovich did not deny that his companies placed the spoofed robocalls, but argued that he lacked the requisite intent to defraud or cause harm, and noted that only a fraction of the consumers targeted actually answered the robocalls. Mr. Abramovich also argued that the third-party companies that hired to him to run the robocall campaign and the carriers that transmitted the robocalls should share in the liability for the violations.

The FCC disagreed. First, the FCC found that the use of neighbor spoofing and the references to well-known travel companies demonstrated an intent to defraud consumers. The FCC also found that Mr. Abramovich intended to harm the travel companies by trading on their goodwill and harmed consumers by spoofing their phone numbers, resulting in angry return calls by robocall recipients. Second, the FCC rejected the argument that liability should be based on the number of consumers who actually answered, explaining that the Truth in Caller ID Act only requires that a spoofed call be placed with fraudulent intent, not that the call actually reach a consumer. Finally, the FCC emphasized that Mr. Abramovich and his companies, not the third-party travel companies or the carriers, actually placed the spoofed robocalls and therefore bore sole responsibility for the violations. In fact, the FCC stated that the spoofed robocalls harmed the carriers by burdening their networks and engendering consumer complaints.

The fine is important for reasons beyond its size. For one, the fine came less than a year after the FCC issued the associated notice of apparent liability – an unusually quick turnaround for such a complex case that represents a shift to accelerated enforcement in line with Chairman Pai’s prior calls for a one-year deadline for forfeiture orders. Moreover, the FCC imposed the record-setting fine despite Mr. Abramovich’s claims that he cannot pay it. The FCC is required by the Communications Act to consider a party’s ability to pay when assessing forfeitures. As a result, the FCC historically will reduce a fine to approximately 2-8% of a party’s gross revenues in response to an inability to pay claim and significantly lowered fines under this framework just over a year ago. However, inability to pay is just one factor in the FCC’s forfeiture analysis and the agency determined that the repeated, intentional, and egregious nature of Mr. Abramovich’s violations warranted the unprecedented fine. While the FCC’s rejection of the inability to pay claim is not unprecedented, it leaves open the question of whether and how the FCC expects Mr. Abramovich to pay the fine. In many cases, parties receiving large fines can negotiate lower settlements with the Department of Justice when it brings a collection action on behalf of the FCC, but such settlements are not guaranteed. As a result, it appears the FCC’s primary goal was to establish a strong precedent to deter future violators rather than to actually receive payment.

Two Commissioner statements on the item also deserve attention. Although voting to approve the fine, Commissioner O’Rielly dissented in part, questioning the FCC’s assertion that spoofed robocalls cause harm regardless of whether consumers actually hear the message. Commissioner O’Rielly agreed that Mr. Abramovich and his companies intended to defraud call recipients, but he did not find sufficient evidence to indicate that Mr. Abramovich and his companies specifically considered the potential harm to consumers with spoofed numbers or the referenced travel companies. The dissent appears concerned that the FCC automatically will infer an intent to harm any time neighbor spoofing is used, even when such spoofing does not involve fraud, creating a strict liability regime. Meanwhile, Commissioner Rosenworcel highlighted the need for comprehensive regulatory reform to combat illegal robocalls. Specifically, Commissioner Rosenworcel noted the recent federal court decision setting aside key aspects of the FCC’s robocalling rules and requiring the FCC to revisit its definition of an autodialer. The Commissioner also pointed to the glut of outstanding petitions at the agency seeking exemptions and technical limitations to the robocalling rules. The Commissioner signaled that the FCC’s focus on robocalling issues will involve as much rulemaking as enforcement.

We will continue to follow the actions of the FCC and lawmakers and post any new developments regarding robocalling and spoofing here.

The actions today are limited in scope – principally targeting “spoofing” practices that use obviously invalid numbers as the purported originating number. Although the FCC recognizes that spoofing itself is permissible and valid in many instances (for example, doctors making calls from their mobile phones but sharing their office number instead), the Order targets three areas where the purported caller ID is clearly invalid. This marks the first time that the Commission has authorized call blocking in any manner, and the Order is understandably cautious, despite the broader claims made in non-telecom venues. The Order permits blocking, but does not require it. Moreover, the Order repeatedly reminds carriers that they are responsible for instances where their blocking practices are too broad or impermissibly block lawful calls. Given the generally conservative nature of common carriers, this warning is likely to limit the instances that actual blocking that is used, at least initially.

What Calls Can be Blocked?

In the Order, the Commission defines a specific set of circumstances within which a provider may preemptively block a call that the FCC has determined are “likely to be unlawful.” The specific circumstances for allowable call blocking outlined in the Order are as follows:

• Blocking at the Request of the Originating Number Subscriber. The FCC codifies a clarification made via public notice in 2016 which states providers may block calls when requested by the subscriber to which the originating number is assigned (i.e., a Do-Not-Originate (“DNO”) request). The FCC previously decided that providers are allowed to block a call from a number where the subscriber is asking that it be blocked to prevent a robocaller from making calls pretending to originate from that number. For the blocking to be valid, the number must be used for inbound calls only and the subscriber must consent to the blocking. The FCC also encourages providers to work together to share information about DNO requests to enable the system to work more effectively.
• Calls that Purport to Originate from Unassigned Numbers. Providers are now allowed to initiate blocking of a call that appears to originate from a number that the carrier knows is unassigned. The Commission explains that the origination of a call from a number that is unassigned is a strong signal that the calling party is spoofing the caller ID, likely with the intent to defraud and harm a customer. Specifically, the following three categories of unassigned numbers can reasonably be blocked by providers:
  • numbers that are invalid under the North American Numbering Plan (“NANP”) such as those that use an unassigned area code, an abbreviated dialing code, do not have the required amount of digits, or that contain a single repeated digit (other than 888-888-8888, which is a valid number);
  • numbers that have been verified as not allocated to an provider by the NANP Administrator (“NANPA”) or polling administrator (“PA”); and
  • numbers that the NANPA or PA allocated to a provider but are not currently in use (the blocking provider must be the entity to which the number has been allocated for blocking to be allowable). Thus, in effect, the “allocated but unassigned” category is likely to be rarely used to block calls.

Critically, although the FCC authorizes carriers to block certain calls, it doesn’t require them to do so, and it leaves open some risks that may discourage carriers from blocking calls. Notably, the Commission does not create a safe harbor protection for carriers, meaning that errors made in blocking calls are potentially actionable. Moreover, the Commission repeatedly reminded carriers that blocking could subject the carrier to liability if the blocked call falls outside the categories defined above. Further, the FCC warned against blocking of any calls to 911 or other emergency numbers.

In addition, internationally originated calls are subject to potential blocking. The Order notes that in many instances an internationally originated call may display a NANP number – such as in VoIP situations or in cases where a call center is involved. These calls are potentially subject to the blocking practices. Callers originating such calls should take care to ensure that proper caller ID is transmitted in practice by its originating carrier(s).

Finally, the Order “encourages” providers to adopt an easy, quick process by which a caller whose number is blocked erroneously may contact the provider and resolve the problem. This concern, however, feeds the Further Notice in the proceeding.

FNPRM

The Commission – and in particular, Commissioner O’Rielly – expressed concern that blocking not impact lawful calls. Thus, as noted above, the Order contains several warnings to carriers that they potentially are responsible if calls outside the specific categories are blocked, and it encourages (but doesn’t require) a challenge process for incorrect blocking. In the FNPRM component, the FCC seeks comment on whether to make a challenge process mandatory and, if so, how it should work. Thus the next phase of this issue will shift to instances of erroneous blocking, and how callers may address those concerns.

Additionally, the FNPRM explores the ways that the FCC can measure the effectiveness of its robocalling efforts as well as those adopted by industry. The FCC asks whether it should adopt a requirement for carriers to report the number of blocked calls, and/or to rely on data received through consumer complaints as the benchmark for effectiveness. Commissioner Clyburn noted this provision in her comments during the meeting, and suggested that these changes were adopted at her request. One can expect that Commissioner Clyburn will monitor comments on this issue closely.

With these issues, and the unknown prevalence of erroneous blocking, it’s sure that we will hear more on this in the coming months.

Intent to Cause Harm

The FCC’s investigation stemmed from consumer complaints regarding a robocalling campaign advertising insurance products sold by Mr. Roesel’s companies. A medical paging service complained to the FCC when the campaign disrupted its subscriber communications, including service at South Carolina hospitals. Based on the information provided by the complainants, the FCC traced the robocalls to an account registered to Mr. Roesel at his personal address. After subpoenaing his phone records, the FCC determined that Mr. Roesel and his companies allegedly made over 21 million unauthorized robocalls in a three-month span, averaging 200,000 calls a day. Critically, the FCC analyzed a sample of about 82,000 robocalls and found that the caller ID information transmitted belonged to unassigned numbers unconnected to Mr. Roesel or his companies. Further investigation revealed that Mr. Roesel allegedly selected these numbers to mask the source of the calls for consumers and avoid detection by authorities.

The FCC found that the deceptive spoofing, when done in conjunction with an unauthorized robocalling campaign, automatically demonstrated the “intent to cause harm” necessary to violate the Truth in Caller ID Act. Moreover, statements obtained by the FCC from a whistleblower formerly employed by Mr. Roesel indicated he knew the spoofed robocalls violated the law and targeted “economically disadvantaged and unsophisticated consumers” as well as the elderly in his campaign. The FCC determined that the campaign not only harmed the consumers called and disrupted the medical paging service, but also that his actions reduced the supply of quality phone numbers available for assignment. Specifically, because the (unassigned) numbers used by Mr. Roesel and his companies were now linked to allegedly illegal telemarketing, these unassigned numbers have no value to future subscribers.

Personal Liability

Consistent with past enforcement actions involving spoofed robocalls, the FCC found Mr. Roesel personally liable for the alleged violations. First, the FCC noted that Mr. Roesel allegedly authorized and oversaw his companies’ spoofed robocalls. Second, Mr. Roesel allegedly failed to follow normal corporate formalities, mixing personal and corporate accounts, such as by setting up the campaign under his own name and paying for the campaign from his personal funds. The FCC found such personal involvement in the alleged violations sufficient to “pierce the corporate veil” and propose fines directly against Mr. Roesel.

The proposed forfeiture represents a fine of approximately $1,000 for each of the more than 82,000 robocalls allegedly spoofed with an unassigned number. Notably, the Truth in Caller ID Act authorizes the FCC to propose an NAL against entities not holding FCC licenses, without first issuing a “warning” in the form of a Citation. By contrast, the Telephone Consumer Protection Act contains no such exemption and required the FCC to issue the Citation for the alleged unauthorized robocalls by Mr. Roesel and his companies before it can propose forfeitures. The Citation warns that the FCC may impose penalties of nearly $20,000 per unauthorized robocall if Mr. Roesel or his companies commit any further violations. Judging by the FCC’s recent emphasis on stamping out unauthorized robocalls under Chairman Pai, there is every reason to heed such warnings and expect further robocalling-related enforcement actions.

According to the NAL, the FCC began its investigation into Mr. Abramovich in response to numerous consumer complaints regarding spoofed robocalls offering vacation packages, which were purportedly affiliated with well-known companies such as TripAdvisor, Expedia, Marriott, or Hilton. In fact, TripAdvisor informed the FCC in April 2016 that it also was receiving consumer complaints about “receiving unwanted calls with prerecorded messages claiming to be on behalf of TripAdvisor.” In addition, a company called Spok, Inc. contacted the FCC in December 2015 to report “a significant robocalling event that was disrupting its emergency medical paging service.” The FCC was eventually able to trace the calls back to Mr. Abramovich and his companies. According to the FCC, subpoenas of the call records for his companies revealed that one company placed more than 95 million calls during a three month period, and upon review of a sample of those calls, staff “found that every reviewed call was spoofed.”

Based on these apparent violations, coupled with the FCC’s contention that the “falsification of caller ID was done with apparent intent to defraud, cause harm, or wrongfully obtain something of value,” the FCC proposes a $120 million forfeiture. The proposed penalty consists of a base forfeiture amount of $80 million, which according to the Commission is “a level well below the maximum in recognition of the fact that we have not previously proposed a forfeiture for this particular kind of violation, but that will still serve to put bad actors on notice that we take such violations seriously and will act as a deterrent to other large scale spoofing operations.” The NAL then proposes an upward adjustment of $40 million due to “the sheer volume of calls Abramovich made.”

This NAL is important for a number of reasons. First, it is the Commission’s first spoofing enforcement action. Although the Truth in Caller ID Act does not prohibit all spoofing – and the FCC has openly acknowledged that there are many legitimate uses of caller ID spoofing – the NAL is the first action alleging that spoofing was conducted with an intent to defraud.

Second, the size of the proposed forfeiture suggests that the Commission will be active in enforcing spoofing violations, which seems to be a priority for Chairman Pai as part of his robocall agenda. Notably, the Truth in Caller ID Act authorizes the FCC to propose an NAL against entities not holding Commission licenses, without the “warning” in the form of a Citation that is necessary in other contexts. Indeed, the two-step enforcement process is mandatory for TCPA, wire fraud and Communications Act violations, as is evidenced by the parallel Citation issued to Abramovich for TCPA and wire fraud violations stemming from the same conduct addressed in the NAL. With this streamlined enforcement process, the Pai FCC is more likely to use spoofing as the vehicle for prompt enforcement against fraudulent autodialing or prerecorded messages.

Third, the NAL is the result of a collaborative investigation between the FCC and industry players, in this case TripAdvisor and Spok. We expect to see more of this cooperation with respect to spoofing and robocalls going forward, especially involving legitimate companies whose businesses are affected by practices similar to those described in the NAL.

This NPRM is the first TCPA item adopted under Chairman Pai’s leadership. It follows the Chairman’s plea for “aggressive action” on TCPA enforcement and focuses on blocking or preventing calls that are or are likely to be unwanted. Specifically, the NPRM seeks input from the public on several issues and questions related to “robocalls,” including the adoption of rules that would allow providers to block one category of calls – spoofed calls. [Note: the NPRM does not define “robocall” in the NPRM, and the proposed rules simply refer to the blocking of calls (of any type). In the NPRM, the Commission appears to be using the term “robocall” as a broad synonym for “unwanted call,” not to refer to a call placed using autodialing technology or employing a prerecorded voice.]

The NPRM proposes to allow telecom carriers to block the following types of calls:

• Calls from certain originating numbers, upon request from the subscriber whose telephone number is being spoofed;
• Calls that present an invalid number in the callerID field (e.g., 000-000-0000);
• Calls that present a valid number format but which have not been allocated from the number pool; and
• Calls from numbers that have been allocated to a service provider but not assigned to a subscriber.

The NPRM seeks comment on ways to identify calls in the above categories and the feasibility of such a rule. In addition, the NPRM seeks comment on special considerations for internationally-originated calls, including whether it should offer consumers an opt-in to receive robocalls; and on a proposal to exclude blocked illegal calls from providers’ call completion rate calculations.

In an accompanying Notice of Inquiry (NOI), the Commission proposes to allow carriers to block calls where there is a high degree of certainty that the call is a robocall. The Commission asks for comment on methods and criteria providers can use to determine with the requisite high degree of certainty that a call is illegal; on how to formulate a safe harbor to provide certainty to providers, without providing a roadmap to the makers of illegal robocalls how to circumvent call blocking; and on mechanisms to protect legitimate high-volume callers, such as a “white list.”

Comments on each of these items are due July 3, 2017, and reply comments are due July 31, 2017. If you are interested in becoming involved in this proceeding, or have questions about how the proposed rules could impact your business, please contact the author of this post or your regular Kelley Drye contact person.

The Bureau cautioned that the Public Notice “does not disturb providers’ general obligation to complete calls” and that carriers will be expected to “take all reasonable steps to ensure that calls are not mistakenly blocked for reasons that may include reassigned numbers.” However, it did not clarify or give examples of any such measures, and in fact acknowledged that further guidance on this point may be necessary in the future.

The Bureau’s guidance comes just weeks after FCC Chairman Tom Wheeler announced the formation of the the “Robocall Strike Force,” which is set to release its initial recommendations to the Commission on October 19th for solutions to prevent, detect, and filter autodialed calls. In light of the Chairman’s vigorous TCPA agenda in recent months, we expect the Commission to continue pushing the telecommunications industry to take action on blocking techniques and other measures to reduce the number of autodialed calls to consumers for the remainder of his term.

Check back later for additional analysis of the orders, but in the meantime, we will hit a few of the highlights.

In the Report and Order, the FCC largely tracks its proposal in the NPRM. The Commission prohibited the "knowing" transmission of misleading information with an intent to defraud, and clarified that to be liable the person possessing the fraudulent intent must also cause the transmission of misleading information.

Notably, the FCC adopted its proposal to take direct enforcement action against entities that violate the rules, even if those entities are not Commission licensees or holders of Commission authorizations. This side-steps the "warn first" regime that applies to other violations.

The Commission denied the Department of Justice's requests to extend liability to VoIP providers not meeting the FCC's existing definition of "interconnected VoIP" service and to impose additional verification obligations on third-party spoofing providers.

In the Report to Congress, the FCC recommends several changes to strengthen the Act, including expansion of the Act to reach non-interconnected VoIP and to address text-messaging services. As summarized in the Report, the Commission recommended the following:

Legislative recommendations include clarifying the scope of the Truth in Caller ID Act to include (1) persons outside the United States, (2) the use of IP-enabled voice services that are not covered under the Commission’s current definition of interconnected Voice over Internet Protocol (VoIP) service, (3) appropriate authority over third party spoofing services, and (4) SMS-based text messaging services.

In its comments in response to the FCC Notice of Proposed Rulemaking, the Department urged the FCC to adopt rules regulating Caller ID spoofing providers directly. It contends that this authority is rooted in the Truth in Caller ID Act of 2009 itself and in the Commission's "ancillary" authority over non-common carriers (the same authority at issue in the Comcast net neutrality case). The Department does not explicitly mention non-interconnected VoIP providers or one-way VoIP providers in its comments, but its arguments would extend to any service provider offering spoofing services.

The Department's comments are available here.

USF Enforcement. The Enforcement Bureau entered into a consent decree with Allegiance Communications, LLC, a cable TV provider in Shawnee, Oklahoma. The Bureau's investigation concerned failures to pay Universal Service, TRS, NANPA and LNP fees, all of which are billed based on the FCC Form 499-A. The action is a settlement, so we do not know all of the facts. Nevertheless, it is clear that at one time Allegiance Communications had not paid these contributions, but "as of March 25, 2011," Allegiance had made its past due payments and submitted all required filings. In stark contrast to other USF actions where the Commission imposed substantial fines for such activities, here, the Enforcement Bureau agreed to a fine of $20,000, payable in two installments. Allegiance Communications is very fortunate, indeed.

"Robocall" Telemarketing Violations. In Security First of Alabama, the FCC proposed a $342,000 Notice of Apparent Liability for violations of the Telephone Consumer Protection Act of 1991 (TCPA). This case involved 43 unsolicited pre-recorded advertising messages ("robocalls") delivered to 33 consumers. For 16 of the calls, the FCC proposes its standard fine of $4,500 per call. However, it also concludes that Security First "spoofed" its caller ID display, which the FCC concluded was an egregious violation worthy of a $10,000 fine per call.

"Junk Fax" Forfeitures. The FCC continues to clear its decks of allegations that entities were engaging in unsolicited facsimile advertising ("junk" faxing). In two forfeiture orders released last week, the FCC fined Mexico Marketing and Travelcomm for sending unsolicited faxes to consumers. In Mexico Marketing, the Commission issued a fine of $1.6 million for 89 violations. In Travelcomm, the Commission issued a fine of $72,000 for 15 violations. These orders were resolutions of several Notices of Apparent Liability issued in 2007 and 2008 against the companies.

The NPRM contains a surprising proposal to bypass the ordinary enforcement processes the Commission uses. See below for that and other highlights of the proposal.

With respect to the caller's liability, the NPRM closely tracks the statutory language. The Commission proposes a new rule to prohibit any person or entity from displaying misleading or inaccurate caller ID information "with the intent to defraud, cause harm, or wrongfully obtain anything of value."

With respect to the service provider's liability, the Commission seeks comment on the Department of Justice's proposal to require service providers to verify that the subscriber has authority over the number to be transmitted via the service. The Commission did not take a stance on the merits of the proposal in the NPRM, however.

With respect to VoIP services, the Commission disagreed with the Department of Justice -- which sought an interpretation that would apply the rules to non-interconnected VoIP -- and proposed to apply the rules only to those services meeting its existing definition of interconnected VoIP.

Most notably, however, the Commission proposes new enforcement provisions that expand the FCC's traditional jurisdiction over entities that do not hold FCC licenses or authorizations. As we've noted before, for non-licensed entities, the FCC ordinarily must proceed via a warning first, and may impose a fine only for conduct that occurs after the warning. With respect to spoofing, however, the FCC concludes that the lack of a reference to this procedure in the Truth in Caller ID Act "suggests that Congress intended to give the Commission the authority to proceed expeditiously to stop and, were appropriate, assess a forfeiture against," unlawful spoofing. Therefore, the FCC proposes that it may impose fines for first-time violations of the Act's restrictions.

Comments on the proposal are due April 18; replies on May 3.

The NPRM is available here. An Erratum also was released by the FCC.

The DOJ letter is described in more detail below. Most notably, DOJ recommends verification obligations be imposed on providers of spoofing services and proposes an expansive definition of "IP-enabled Voice Service" that would impose obligations on services heretofore not subject to FCC regulations. If the FCC agrees, new classes of entities would be subject to compliance obligations relating to Caller ID spoofing.

The DOJ letter is available in full here. The DOJ supports regulations in the following areas:

1. Spoofing Service Providers. Citing to a floor statement by the Truth in Caller ID Act's sponsor, now ex-Representative Rick Boucher (D-Va), DOJ supports the imposition of verification obligations on providers of spoofing services. Specifically, DOJ recommends:

The Commission should consider the feasibility of requiring public providers of Caller ID spoofing services to make a good-faith effort to verify that a user has the authority to use the substituted number, such as by placing a one-time verification call to that number.

DOJ also recommends technical standards that would allow law enforcement to trace such calls to their true originating number upon appropriate authority.

2. Law Enforcement Exception. The Act excludes any spoofing conducted by any "lawfully authorized investigative, protective, or intelligence agency." DOJ recommends specific language to implement this provision.

3. Applicability to IP-Enabled Services. The Act provides that it applies to the use of "any telecommunications service or IP-enabled voice service." With respect to IP-enabled voice services, the Act provides that the term "has the meaning given to that term by Section 9.3 of the [FCC's] regulations." Section 9.3, however, defines "interconnected VoIP" services, which are a subset of IP-enabled services.

Noting the lack of a definition of "IP-enabled voice service," the DOJ argues for a definition that will expand the reach of the Caller ID regulations. The DOJ's proposed definition would reach one-way VoIP services, Skype's service (which Skype contends does not meet the FCC's definition of "interconnected VoIP" service) and possibly other uses of VoIP, such as in video conferencing or gaming. Specifically, the DOJ proposes the following definition of "IP-enabled voice services:"

The term 'IP-enabled voice service' means the provision of real-time voice communications offered to the public, or such class of users as to be effectively available to the public, transmitted through customer premises equipment using TCP/IP protocol, or a successor protocol, (whether part of a bundle of services or separately) with interconnection capability such that the service can originate traffic to, or terminate traffic from, the public switched telephone network, or a successor network.

The Department states that this definition is based on 18 U.S.C. 1039(h)(4), which protects the confidentiality of telephone records under the Telephone Records and Privacy Protection Act of 2006.

Descriptions of both developments are provided below.

Truth in Caller ID Act. On December 22, President Obama signed into law the Truth in Caller ID Act of 2009 [sic]. The Act makes it unlawful for any person to cause any caller ID system "to knowingly transmit misleading or inaccurate caller identification information with the intent to defraud, cause harm, or wrongfully obtain anything of value." The prohibition applies to caller ID used in connection with both telecommunications services and IP-enabled services (VoIP).

The FCC has 6 months to enact regulations to implement the prohibition. In addition, the FCC must submit a recommendation whether additional legislation is necessary to prohibit the provision of inaccurate caller ID information in technologies that are successors to traditional telecommunications or VoIP.

FTC Rulemaking to Strengthen Caller ID. On December 7, the FTC released a public notice seeking comment on ways to strengthen the caller ID provisions of its Telemarketing Sales Rule (TSR). According to the FTC, "spoofing" has become more common and it is seeking comment on ways to strengthen the rules to prohibit the practice. The FTC specifically identified the following issues for comment:

* How widespread is consumer use of Caller ID services to screen unwanted calls, and do consumers use other services that rely on the transmission of calling party numbers (CPN), such as call-blocking equipment, to avoid unwelcome telemarketing calls?
* Would changes to the Telemarketing Sales Rule improve the ability of Caller ID services to accurately disclose the source of telemarketing calls or improve the ability of service providers to block calls in which information on the source of the call is not available, or has been spoofed?
* Should the FTC amend the Caller ID provisions of the Rule to recognize or anticipate specific developments in telecommunications technologies relating to the transmission and use of Caller ID information, and if so, how?
* Should the FTC amend the Caller ID provisions of the Rule to further specify the characteristics of the phone number that a telemarketer must transmit to a Caller ID service? For example, should the Rule require that the phone number transmitted be one that is listed in publicly available phone directories, a number with an area code and prefix that are associated with the physical location of the telemarketer’s place of business, a number that is answered by a live representative, or automated service that identifies the telemarketer by name?
* Should the FTC amend the Caller ID provisions to allow a seller or telemarketer to use trade names or product names, rather than the actual name of the seller or telemarketer, in the name information displayed by Caller ID services?

Comments are due before the FTC by January 28. Links to relevant FTC sites are available in our Resource Center.