Finding A Safe Path To Following The FCC’s Newest Consumer Privacy Directives

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The Telephone Consumer Protection Act (“TCPA”) was passed in hopes of restricting marketing efforts to individuals via mass or automated communication-based systems (i.e., telemarketing).  The new provisions are aimed at modernizing the TCPA and recent enforcement opinions by the Federal Communications Commission (“FCC”) and courts alike should strongly incentive all businesses to rethink their risk exposure and practices concerning consumer marketing.

Originally, the TCPA was crafted to address telephone calls made to individuals on the “do not call list” through what the FCC identified as an “automated telephone dialing system” (“ATDS”).   ATDSs were defined by the FCC as equipment possessing the capability to “store or produce telephone numbers to be called, using a random sequential number generator and . . . to dial such numbers.”  Through the years the FCC expanded this definition to include text messaging (as opposed to simply telephone calls) and, within the past year, again expanded the definition of an ATDS to include “any equipment that has the specified capacity to generate numbers and dial them without human intervention regardless of whether the numbers called are randomly or sequentially generated or come from calling lists.”  The deletion of the word “telephone” and inclusion of calling lists without a requirement for actual dialing increases the coverage of the TCPA to essentially any device through which an individual may be contacted through any numerical identifier.  With such open-ended interpretations, consumers receive far greater assurance for privacy on a multitude of devices while corporate-level compliance obviously becomes increasingly problematic.     

By statute, violations of the TCPA allow any aggrieved “person or entity” to seek penalties of $500 per unlawful contact and up to $1500 per willful violation.  Some courts have recently awarded as much as $459 million in damages for such violations in a class action context—meaning the limited “per call” figures should not be taken lightly.  Moreover, the FCC has recently noted how indirect liability may result from outsourcing telemarketing activities, stating that “even when a seller does not ‘initiate’ a call . . . . it may be held vicariously liable for certain third party telemarketing calls . . . . under federal common law principles of agency . . . .”  The FCC explicitly noted that these principles extended “not only [to] formal agency, but also principles of apparent authority and ratification.”  Thus, liability may extend directly to an entity violating the TCPA and also to entities possessing active knowledge of a third party committing violations on their behalf.     

The best course of action for businesses wishing to avoid liability remains the pursuit of a customized plan based upon a thorough review of their current practices, marketing desires, budget and other internal capabilities (personnel, facilities and the like). These factors often limit the range of possible solutions for legal compliance with respect to any issue.

After this analysis has been completed, companies should focus on complying with the newest provisions of the TCPA, which primarily target consumer consent.  Consent must now be “clear and conspicuous” and must provide three pieces of information:

  1. an assent to receive auto-generated advertisements,
  2. a statement that receipt of such advertisements is not a pre-condition of a purchase, and
  3. a specific number to which the advertisements may be transmitted.

Previously, the FCC allowed an exemption to the TCPA’s consent requirement where an entity maintained an “established business relationship” with the consumer.  Beginning on October 16, 2013, however, this will no longer be the case.  Even pre-existing clients must provide written consent before automated marketing materials may be transmitted to them. Obtaining this consent should be your company’s next priority.  Another departure from the original TCPA actually eases this process by allowing for written consent to be obtained electronically through any means authorized by the E-SIGN Act, though exceptions do apply (debt collections, academic settings and health care related calls, for example).   Lastly, any other means for mitigating liability fitting well within your company’s needs should be implemented.  One example is the outsourcing of your company’s “call list” auditing to a third party provider.  With this approach, should your company’s consumers not elect to receive marketing communications, a third party organization would assume the responsibility for deleting their contact information from your contact list.  The added layer of liability insulation, increased contact list accuracy and decreased stress of internalizing this process all strongly support the decision to utilize third party auditors.

Topics:  FCC, Marketing, Privacy Policy, TCPA, Telemarketing

Published In: Communications & Media Updates, Consumer Protection Updates, Privacy Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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