The Federal Communications Commission (FCC) announced that it settled a recent investigation of Sprint Corporation for failures to properly implement do-not-call requests and text-message opt-outs received from consumers. The violations came to light after Sprint reported to the FCC, as obligated by a $400,000 TCPA settlement with the agency in 2011, that various human errors and technical malfunctions within Sprint and/or its vendor caused potential noncompliance with consumers’ do-not-call and/or do-not-text preferences. To resolve its liability for this new wave of compliance issues, Sprint agreed to pay $7.5 million, and to implement a new two-year plan to ensure compliance with protections against unwanted telemarketing and texts under the Telephone Consumer Protection Act (TCPA) and FCC rules.
This is the FCC’s second major TCPA enforcement action in recent weeks. As we reported, the FCC earlier this month proposed to fine Dialing Services LLC nearly $3 million for 184 “robocalls” sent over its autodialing platform. Now the FCC has pinched Sprint as well. While technical or human error may sound like reasonable grounds for not fully complying with the TCPA and/or FCC rules, the FCC’s pursuit of Sprint indicates noncompliance will be punished even for such oversights – despite the “safe harbor” in the FCC rules for violations that result from errors that arise despite a company having appropriate compliance measures in place.
Of course, it probably did not help that Sprint already had settled TCPA charges with the FCC and the new violations occurred anyway. Nor did the fact, suggested by the magnitude of the settlement, that this second wave of violations may have included hundreds of noncompliant calls. For instance, the nature of FCC consent decrees – and of settlements generally – is that the paying party is charged for less than the full monetary value of its exposure. Here, even if the consent payment is viewed as representing Sprint’s maximum exposure, and it is assumed the FCC would have pursued the maximum $16,000/call penalty against Sprint as a repeat offender – as it did with Dialing Services – the $7.5 million payment calculates out to over 450 offending calls. And even if the FCC proceeded under the “base” or standard amount of $4,500 for TCPA violations, there could have been as many as over 1600 calls at issue.
Consent decrees entered with the FCC often include, as does that here, additional compliance obligations for the settling party, and they are often instructive for others operating in the same space. Of course, in this case, the steps are likely somewhat more onerous given that Sprint was previously subject to a prior TCPA consent decree. Nonetheless, the obligations to which it agreed are worth reviewing. The two-year compliance plan to ensure that Sprint adheres to FCC rules regarding consumer privacy and preventing unwanted calls and texts includes:
Appointment of a Compliance Officer from amongst senior corporate managers who will discharge the terms of the company’s settlement.
Development of both operating procedures and a compliance manual that ensure all relevant employees and agents are aware of and operate in compliance with the rules.
Development and execution of a training program designed to ensure relevant employees and agents are trained on the company’s “Do-Not-Call” rules and operating procedures.
Filing an initial compliance report with the FCC within 90 days, followed by annual compliance reports for two years, all of which must include detailed explanations of efforts to comply with both the Consent Decree and the FCC’s rules.
Additional reporting of all future noncompliance to the FCC within 30 days, including a detailed explanation of steps taken to remedy the noncompliance, a schedule of remedial actions, and measures the company will implement to prevent future occurrences.
Some of these steps – including appointment of a buck-stops-here officer for TCPA compliance, creation of and adherence to a compliance manual, vendor oversight, and meaningful training – are all wise steps for any company undertaking telephonic outreach that is subject to the FCC’s TCPA rules. Indeed, the consent decree offers $7.5 million worth of good reasons for getting up to snuff on such efforts, before compliance issues arise and get out of hand.