The Federal Communications Commission (FCC) has issued two public notices requesting comment on petitions that seek to mitigate some of the impact from recent changes to the new Telephone Consumer Protection Act (TCPA) rules that took effect Oct. 16, 2013. Under those revised rules, companies that market to cell phone users by autodialer, prerecorded call, or text messages must have the prior express written consent of the called party, as we explained at length here. However, some aspects of the FCC’s new consent requirements have caused consternation.
The first public notice seeks comment on a petition by the Direct Marketing Association (DMA) asking the FCC to “forbear” from enforcing the apparent requirement that a consumer’s prior express written consent contain a term advising him or her that such consent is not a condition of purchase of a good/service, so long as companies have consents (without that advice) that predate the new rules’ effective date. The second public notice seeks comment on a petition by a coalition of mobile engagement providers asking the FCC to clarify that compliance with the new consent standard would be required only for “new” customers from whom consent is being obtained after the rule’s Oct. 16, 2013 effective date. If either petition is granted, it could provide companies an additional defense to claims likely to be asserted by the very active TCPA class action plaintiffs’ bar.
The FCC’s rules have long required prior express consent before placing autodialed, prerecorded or text calls to cell phones, regardless of call content. Several years ago, the Federal Trade Commission (FTC) adopted rules for prerecorded telemarketing (to both landline and cell phones) that require prior written, signed consent; i.e., an agreement, in writing, that clearly and conspicuously discloses the consequences of consenting, that obtains an unambiguous opt-in, and that is not a condition to the purchase of any good or service. The FCC sought to harmonize its rules, which for telemarketing purposes largely track the FTC rules, by effectuating a similar change.
However, when the FCC did so, it captured not just prerecorded telemarketing to residential lines and cells, but also live-agent autodialed telemarketing to cell phones, as well as telemarketing text messages (the prior express consent standard remains the same for non-telemarketing). And although the FCC indicated in its order effecting the changes that it was adopting the same prior express written consent requirement as the FTC, the text of the FCC rule suggests the written consent language should state that consent is not a condition of purchase, rather than that simply being true as a matter of fact, as the FTC rule provides. The FCC provided a one-year lead time so that companies could update their consents to meet the new standard.
The DMA petition, filed the day after the effective date of the new rules, asks the FCC to “forbear” from enforcing the apparent requirement that prior express written consent must state that consent is not a condition of purchase of a good/service, so long as companies have consents without that term that predate the rule change. DMA also asks for forbearance from the extent to which the text of the rule suggests the prior express written consent agreement must expressly state that an autodialer will be used. DMA additionally filed, concurrent with the petition, an “emergency” request that the FCC stay the effectiveness of the new rules implicated in the forbearance petition, until the FCC issues a decision on DMA’s petition.
The mobile engagement provider petition, filed the same day as DMA’s, comes from companies operating via “the short code channel,” i.e., SMS text messaging. It asks the FCC to clarify that, if a company has prior express consent in writing to receipt of marketing messages to cell phones that satisfies the old standard and predates Oct. 16, 2013, the company may rely on those consents, and need not take additional steps under the new prior express written consent regime. Rather, the coalition requests, the FCC should clarify that compliance with the new standard would be required only for “new” customers from whom consent is being obtained, after Oct. 16, 2013.
It is unclear whether the FCC’s release of the public notices so quickly after filing of the petitions indicates that it is prepared to stay the rules, forbear, or otherwise promptly address the petitions. In some cases, such as with text-message opt-out confirmations, quick FCC issuance of a public notice on a petition is followed by quick FCC action. In other cases, the FCC might put a petition on public notice as a routine matter—even quickly, sometimes—only to take an extended time to act, or to even let the petition lie fallow after comments are filed. There are some petitions before the FCC involving TCPA issues that have been before the agency without action for as long as a decade.
In any event, it is worth noting that DMA’s petition, which asks only that the FCC “forbear” from enforcing rules, rather than for a declaratory ruling on how they apply, or a change to the rules, may not provide complete relief. To be sure, if the FCC grants the petition, that will mean the industry will be able to avoid concern over the FCC bringing enforcement actions based on the feared interpretation of the rule. But FCC forbearance does not necessarily mean that courts will preclude TCPA plaintiffs’ lawyers from relying on the text of the rule in class actions and other cases. Of course, it would strengthen defendants’ hands if the FCC converted the forbearance petition into a declaratory ruling request, or treated it as such by issuing a ruling that, rather than stating the agency would “forbear” from enforcement, instead stated that the rule should apply across-the-board in a manner consistent with what DMA seeks.
That is significant because TCPA class actions are where, at present, the greatest exposure lies, with some settlements over the past few years reaching the double-digit millions of dollars. Recently, one company settled a multi-district TCPA claim for a record $32 million, while another managed to dodge class certification where it faced potentially exposure of $54 billion—that’s right, billion, with a “B.” With so much at stake, even the focused and nuanced clarifications requested in these two petitions may factor into the very active TCPA class action practice. Comments on the petitions are due Dec. 2, 2103, with replies due Dec.17, 2013.