TCPA Tracker - February and March 2023
On February 23, 2023, the FCC issued a Report and Order (the “Order”) which took aim at unlawful texting, marking the first time the FCC has taken action regarding text messages. In addition to the invasion of privacy also associated with unwanted calls, the FCC sees unwanted texts as posing additional risks to subscribers with their potential to exacerbate consumer fraud and identity theft scams. The FCC concurrently issued a Notice of Proposed Rulemaking (“NPRM”). In this post, we summarize key aspects of both the Order and the NPRM.
Rule and Order Summary
Specifically, the Order requires that mobile wireless providers (i) compile a Do Not Originate (“DNO”) list that includes “invalid, unallocated, or unused phone numbers,” as well as numbers “for which the subscriber to the number has requested that texts purporting to be from that number be blocked” and (ii) block all calls on that DNO list at the network level. The FCC determined that no reasonable consumer would want to receive text messages that spoof a number that is not in operation, or worse that purports to be from a well-known or trusted organization. However, the requirement to block numbers on a reasonable DNO list does not apply to texts messages from valid short codes. Blocking texts on a DNO list is similar to the existing requirements for blocking of unwanted voice calls by gateway providers, and is consistent with many of the voluntary measures many providers already have in place.
The FCC believes a mandatory rule on this topic is needed as for several reasons including: (i) spoofed texts are likely to be illegal; (ii) illegal texts may contain links to malware (a problem voice calls do not have); (iii) the volume of unwanted text messages is increasing; (iv) consumers expect texts from familiar, trusted numbers, and open texts faster and at a greater rate than email, which makes them more susceptible to fraud; and (v) the approach places little burden on wireless providers and benefits subscribers. Because of the heightened risk of fraud posed by spoofed texts, the FCC felt it could no longer rely on provider’s voluntary efforts to block texts.
Further, in order to mitigate the risk of erroneous blocking, the order will also require each mobile wireless provider to create a single point of contact to report erroneous blocking of text messages. This point of contact is intended for senders of texts that were blocked to resolve any issues with the blocking carrier, and to have a number removed from the DNO. The single point of contact for reporting erroneous text blocking proposed by the Order is similar to existing requirements for voice calls.
Notice of Proposed Rulemaking Summary
At the same time it released the Order, the FCC issued a Notice of Proposed Rulemaking (“NPRM”) that was discussed at the FCC’s March 16, 2023 meeting. Comments will be sought from the public after that meeting, and then either a Further Notice of Proposed Rulemaking or a final Report and Order will issue sometime thereafter. Any new FCC Report and Order stemming from this process will become final after publication in the federal register, likely later this year.
Two of the NPRM’s topics would apply to all businesses involved in text marketing and would mark serious changes to current practices:
- Closing the lead generator loophole
The “lead generator loophole” or using one consent to send multiple marketers’ messages could dramatically alter existing business practices, and the standard for “clear and conspicuous” disclosure of prior express consent required by the TCPA. The NPRM proposes to ban the practice of obtaining a single consumer consent as grounds for delivering calls and text messages from multiple marketers on subjects beyond the scope of the original consent.
One example of this practice, as cited by a commentator, is an insurance company website seeking consent for calls and texts from insurance companies and other entities, with “partner companies” (potentially several thousands of them) in a page accessible via a hyperlink. The commentators argue that the express invitation or permission to receive calls or texts can only be provided by the consumer directly to the seller.
The FCC wants to require that consent be considered granted only to callers/texters (1) who would be logically and topically associated with the website that solicits consent; and, (2) whose names are clearly disclosed on the same web page (i.e., without a hyperlink). The FCC asks for further comments on this proposed requirement, including whether prior express consent for calls/texts must be made “directly to one entity at a time.”
More broadly, the FCC is seeking comment on the extent of the problem of calls and texts sent outside the scope of a consumer’s consent, and whether the proposed rule will clarify consent and help eliminate unwanted and illegal text messages and calls.
- Extending Do-Not-Call Protections to Text Messages
The FCC comments in the NPRM that, “[a]lthough the Commission has stated that ‘text messages’ are ‘calls’ for TCPA purposes, it has never stated that text messages are subject to DNC protections.” The FCC says that it has already folded calls to cell phones into DNC protections, and now seeks to clarify that DNC rules apply both to voice calls and texts. Through comments to the NPRM, the FCC wants to know if extending DNC protections to marketing texts would further protect consumers from unwanted calls. It is highly likely that the outcome of this NPRM is that the FCC will say that marketing texts are subject to DNC restrictions.
Additional NPRM topics contemplate extending existing carrier requirements for blocking illegal voice calls to text messages:
- Block Texts upon Notification from the Commission
The NPRM seeks comment on whether to require mobile wireless providers to block text messages when the FCC finds a scam is likely. As a result, any “Notification of Suspected Illegal Traffic” from the FCC’s Enforcement Bureau should result in blocked texts. This measure is likely to be implemented, as it follows requirements already in place for call blocking. Comments are invited from carriers to see if there are any reasons the model in place for blocking calls in this manner will not be effective for texts.
- Text Message Authentication
Noting that the Order declined to adopt these requirements based on the current factual record, the NPRM seeks further comment on how and whether the Commission can encourage efforts to develop caller ID text message authentication solutions, and the extent that bad actors are spoofing their phone numbers and identities in sending robotexts and other unwanted messages. Voice caller ID authentication has been successful in stemming the tide against spoofed calls, but it is not currently clear that the concept can be adapted to text messages.
The NPRM is proposing some rules that will fundamentally alter how many businesses obtain consent, including in the lead generation space. There is a high likelihood these rules will be enacted, likely later this year, and we will be watching developments closely.
We are available to assist any parties interested in filing comments with the FCC in response to any of the issues in the NPRM, and to help inform the Commission on these issues.
MARCH 2023 CASES
Inadequate Allegations, Use of Passive Voice Fatal to Plaintiff’s TCPA Claim
The Western District of Washington recently dismissed prerecorded voice and do-not-call claims due to several insufficiencies in the complaint. A group of plaintiffs filed a class action complaint against Defendant Assurance IQ and Boomsourcing LLC for alleged pre-recorded telemarketing calls placed by Assurance IQ through its platform provider Boomsourcing.
First, the Court held that the allegations in the complaint were insufficient to plausibly allege that the calls placed to the Plaintiffs’ phones were prerecorded. Courts in the Ninth Circuit require a plaintiff alleging lack of consent in a TCPA claim to plead “circumstances that could support an inference that the calls were placed with an artificial or prerecorded voice,” rather than simply “echo or recite the Act’s statutory language.” Without more detailed allegations, such as the “tenor, nature, or circumstance of the alleged calls,” or other facts demonstrating that a human was not on the other end of the call, the Plaintiffs’ allegations did not suffice.
Next, several Plaintiffs alleged that their numbers were “registered on the National Do Not Call Registry.” The use of passive voice in this regard, the Court found, left open the interpretation that the numbers could have been registered by previous owners of those numbers rather than Plaintiffs themselves. Additionally, Plaintiffs attempted to invoke statutory language applying to “residential subscribers,” but chose to describe that their numbers were for “personal use,” which the Court held does not necessarily equate with residential use. The vagueness of these allegations led the Court to conclude that the Plaintiffs failed to state a claim in this regard as well.
Ultimately, the Court found that the Complaint was too barebones in all regards, and granted the Defendants’ motion to dismiss.
Rogers et al. v. Assurance IQ, LLC & Boomsourcing, LLC, No. 2:21-CV-00823-TL, 2023 WL 2646468 (W.D. Wash. Mar. 27, 2023)
TCPA Claims Dismissed in Entirety by Massachusetts District for Failure to Establish Defendants’ Authority over Telemarketers, and Lack of Standing to Pursue Claim Based on Alleged Failure to Maintain Internal Do-Not-Call-List
In Doane v. Benefytt Techs., Inc., Plaintiff alleged that he received more than thirty calls on his cell phone between May and August 2018 from Defendant Benefytt Technologies, Inc. (formerly Health Insurance Innovations, Inc.) (“Benefytt”). Plaintiff, who alleged that his phone number was listed on the FTC’s and the Massachusetts do-not-call registries, alleges that he attempted to identify the calling parties after receiving a series of calls in early June, 2018. He avers that the caller stated in one call that he was an agent for the National Health Enrollment Center, and that Plaintiff was receiving calls in response to his request for health insurance, which Plaintiff denied making. Despite that denial, Plaintiff went on to provide his name, age, email, address, and credit card information to the caller. Additionally, Plaintiff was sent a link to an application form which was required for the insurance policy to take effect, and though he did not sign it while on the phone, Plaintiff said he would sign the application at a later time. The application form listed Benefytt’s operating name at the time, Health Insurance Innovations, Inc., in the header and footer. Plaintiff then received several more calls from different numbers regarding this application.
Based on these facts, Plaintiff filed suit against Defendants alleging violations of the TCPA, and the Massachusetts Telemarketing Solicitation, Massachusetts Consumer Protection, and Right to Privacy Acts. The court ultimately granted Benefytt’s motion to dismiss on all counts.
The Court found that the Plaintiff did not have standing to pursue a TCPA claim for defendant’s alleged failure to maintain and internal do-not-call list. Plaintiff did not request to be placed on the internal do-not-call list until August 3, 2018, after the complained-of calls, and subsequently did not allege that he received any calls after that date. Therefore, the Court found that Plaintiff’s alleged injuries were not traceable to any TCPA violation.
Furthermore, the Court held that Defendants’ were not vicariously liable for the acts of the National Health Enrollment Center, who allegedly placed the calls, because Plaintiff did not adequately assert facts to support that Defendants had actual or apparent authority over the telemarketers, nor did they ratify the allegedly illegal calls. The Court found Plaintiff’s bare assertions that Defendants oversaw the day-to-day activities of the callers to be “entirely conclusory.” The Court also found that Plaintiffs did not sufficiently allege Defendants had “full knowledge” of the calls, despite a pre-existing TCPA class action and some negative online reviews.
Doane v. Benefytt Techs., Inc., No. CV 22-10510-FDS, 2023 WL 2465628 (D. Mass. Mar. 10, 2023)
The District of New Mexico recently ruled that calls made by the city of Albuquerque to notify residents of socially distanced town halls were exempt from TCPA liability because they fit under the TCPA’s emergency purposes exception.
The Court first dismissed the city’s claim that it was not a “person” within the meaning of the TCPA and instead focused on Defendant’s argument that COVID-19 constitutes an emergency under the TCPA and that the calls at-issue related to that emergency. Under the TCPA, calls or texts made for an emergency purpose are exempt from the TCPA’s “written express consent” requirement for making prerecorded calls. The ‘emergency purpose’ exception is interpreted broadly, and the FCC has stated that the COVID-19 pandemic constitutes an emergency under the TCPA. Therefore, government officials “may lawfully communicate information about the novel coronavirus as well as mitigation measures without violating federal law.”
Relying on an FCC example of a call made by county officials to inform citizens of various COVID-19 safety measures, the Court concluded that the calls to inform about the town halls fell within the emergency purpose exception. The Court rejected Plaintiff’s argument that because the calls themselves did not explicitly mention COVID-19, that they were not made for an emergency purpose. The Court explained that the prerecorded calls were not only made during the pandemic, but were also “necessitated by the fact that the pandemic required information to be communicated remotely.” Additionally, the Court was unmoved by the fact that a less intrusive method of communication may have been available, as “the TCPA does not require the government to be as restrained as possible when disseminating information during an emergency.”
Because the Defendants’ conduct “clearly” fell into the “broad emergency purposes exception to liability under the TCPA,” the Court dismissed Plaintiff’s TCPA claim.
Silver v. City of Albuquerque, No. 122CV00400MISGBW, 2023 WL 2413780 (D.N.M. Mar. 8, 2023)
FEBRUARY 2023 CASES
Eleventh Circuit Will Again Address Whether a Single Text Message Can Confer Standing Under the TCPA
The Eleventh Circuit recently announced they will rehear, en banc, an appeal of a settlement approval in Drazen and Godaddy.com, LLC v. Pinto. In August of 2019, the Plaintiff, Susan Drazen, filed a complaint against GoDaddy.com in the Southern District of Alabama alleging violations of the TCPA for calls and texts advertising GoDaddy’s services. Drazen and plaintiffs in two other related cases purported to bring a class action on behalf of similarly situated individuals. After negotiating with GoDaddy, Plaintiffs submitted a proposed class settlement agreement to the District Court for a class consisting of “all persons within the United States who received a call or text message [from GoDaddy between] November 4, 2014 [and] December 31, 2016.” The class as defined included members whose injury consisted of receipt of only a single text message.
In Salcedo v. Hanna (discussed here), the Eleventh Circuit held that the receipt of a single unwanted text message was not a “sufficiently concrete injury to give rise to Article III standing.” The District Court here ordered briefing on the standing issue, and the parties amended the class definition, but did not remove those who received only a single text. The District Court held that only the named plaintiffs must have standing, and sought to solve any standing issue by removing the lone named plaintiff whose injury consisted of a single text message. The District Court then certified the class for settlement, despite the fact that several unnamed class members would not have standing to bring suits themselves in the Eleventh Circuit.
Pinto, a class member, objected to the settlement on grounds relating to the award of attorney’s fees. Ultimately, in July, 2022, the District Court approved the settlement over Pinto’s objections, and Pinto appealed to the Eleventh Circuit. The Eleventh Circuit, sua sponte and without briefing by the parties, raised the issue of Article III standing. The Court held that every class member, named and unnamed, must have Article III standing under Eleventh Circuit precedent in order for a class settlement to be approved, even if they reside in a different circuit and would have standing in their own circuit. Because some members of the proposed class had received only one text message, and would lack standing, the Eleventh Circuit vacated the approval of the class settlement.
Recently, the Eleventh Circuit agreed to rehear the appeal, sitting en banc. The Eleventh Circuit will again address whether receipt of a single text message confers Article III standing. Additionally, the Eleventh Circuit pondered in its initial ruling whether the receipt of a single cellphone call is sufficient to confer Article III standing under the TCPA, but declined to decide the issue without briefing by the parties. That question may be addressed by the Eleventh Circuit on its rehearing, in addition to the issue of a single text message.
Drazen v. Pinto, 41 F.4th 1354 (11th Cir. 2022), reh’g en banc granted, opinion vacated, 61 F.4th 1297 (11th Cir. 2023)
The Eastern District of New York recently dismissed a TCPA claim brought against Defendant Reliance First Capital, LLC. Plaintiff alleged that he received approximately eighteen calls from Defendant in a span of eight months. Plaintiff alleged that he received seventeen calls from the same number, and then, on the eighteenth, answered and “spoke to an agent who was soliciting refinancing product and identified their company as [Defendant].” At that time, Plaintiff instructed the agent to “stop calling him,” which the Defendant did. Plaintiff brought suit under Section 227(c)(5) of the TCPA, which prohibits making more than one “telephone solicitation call,” within a 12-month period, to a “residential telephone subscriber” who has registered his or her telephone number on the National Do-Not-Call registry, without the prior consent of the recipient.
First, the Court found that Plaintiff failed to allege that he received more than one “telephone solicitation” in a 12-month period. A “telephone solicitation,” under the TCPA, is a “telephone call or message for the purpose of encouraging” the recipient to engage in business with the caller, and must be made without the recipients “express invitation or permission,” and does not include calls or texts to persons with whom the caller “has an established business relationship.” Here, the Court held that Plaintiff did not allege that Defendant did not have permission to call him, nor that he did not have a business relationship with the Defendant. Plaintiff also did not allege facts regarding the content of the calls such that the Court could infer that the purpose of the calls was to encourage him to engage in business with Defendant. The Plaintiff rather concluded, “without any factual support,” that the purpose of the call was to “solicit refinancing products.” Further, the Court noted that although Plaintiff alleged eighteen calls, he only answered one. Thus, Plaintiff only alleged “receipt” of one phone call in a 12-month period. The Court refused to consider the other calls received by Plaintiff as “telephone solicitations” from Defendant, even though they were “close in time and from the same number,” because Plaintiff failed to allege facts sufficient to demonstrate that those calls were “telephone solicitations” as defined by the TCPA. The Court noted that these failures, on their own, were sufficient to dismiss the claim.
Further, the Court held that Plaintiff did not adequately plead that he was a “residential subscriber.” The Plaintiff alleged receipt of calls on his cell phone. While the Court noted that some courts have found that a cell phone may satisfy the “residential telephone subscriber” element, a Plaintiff must allege facts establishing that his cell phone is actually used for “residential purposes.” Plaintiff here failed to do so. Here, the Complaint contained only conclusory allegations that Plaintiff’s cell phone number was not “associated with a business, has never been held out by Plaintiff to the public, and is primarily for personal use,” and failed to allege “any facts from which the Court could infer that the phone number is used for residential purposes.”
Gillam v. Reliance First Cap., LLC, No. 21CV4774JMAJMW, 2023 WL 2163775 (E.D.N.Y. Feb. 22, 2023)