FCC Adopts Rule Closing the Lead Generator Loophole

Venable LLP

Venable LLP

The Federal Communications Commission (FCC) adopted a revised rule to restrict forms of lead generation involving texts and calls to consumers on December 13, 2023. The revised rule implementing the Telephone Consumer Protection Act (TCPA) will require one-to-one consent for certain types of regulated calls and texts—so-called robotexts and robocalls.

The new rule will take effect six months after publication in the Federal Register, or 30 days after announcement in the Federal Register of the Paperwork Reduction Act approval of the restrictions on information collection prescribed by this new rule, whichever is later, around June or July 2024.

The rule requires that, to obtain “prior express written consent” under the TCPA, consumers must give their consent to receive calls and texts from the specific sellers they wish to contact them (i.e., “one-to-one consent”). According to the FCC, this requirement ensures that consumers consent only to contact by sellers they wish to hear from.

  • The consent must be in response to a clear and conspicuous disclosure to the consumer, and the content of the ensuing texts and calls must be logically and topically associated with the website where the consent was given.
  • The term “prior express written consent” will be amended to mean “an agreement, in writing, that bears the signature of the person called that clearly and conspicuously authorizes no more than one identified seller to deliver or cause to be delivered to the person called advertisements or telemarketing messages using an automatic telephone dialing system or an artificial or prerecorded voice.”
  • “Clear and conspicuous” means notice that would be apparent to a reasonable consumer. In addition, if compliance with the federal Electronic Signatures in Global and National Commerce Act (the “E-Sign Act”) is required for the consumer’s signature, then all of the elements of E-Sign must be present.
  • The FCC further states that the burden is on the texter or caller to prove that they have consent that satisfies the TCPA and FCC rules. “They may not, for example, rely on comparison websites or other types of lead generators to retain proof of consent for calls the seller makes.  And, in all cases, the consent must be from the consumer.” The FCC also states that the consumer’s consent is not transferrable or subject to sale to another caller, because it must be given by the consumer to the seller.
  • The FCC claims the rule preserves the ability of comparison shopping websites to provide consumers with comparison shopping opportunities while protecting them from abuse.  
  • A lead generator may offer a consumer a checkbox list that allows the consumer to choose each caller that they wish to hear from. 
  • The written consent agreement must include a clear and conspicuous disclosure providing certain information to the person signing.

When passing the rule, the FCC rejected commenters’ proposal to permit consent to a hyperlinked list of sellers, effective for only a limited number of sellers to whom the consumer is matched. 

The FCC further notes that texters and callers may avail themselves of other options for providing comparison shopping information to consumers, such as manually dialed or non-prerecorded or artificial voice calls or texts, email, or information displayed directly on the third-party website.

The FCC previously concluded that the equipment used to originate Internet-to-phone text messages to wireless numbers via email or via a wireless carrier’s web portal is an “automatic telephone dialing system” as defined in the TCPA, and therefore calls made using the equipment require consent.  However, because the ruling pertains to “prior express written consent,” which applies only when an ATDS is used, the Duguid ruling might minimize the breadth of the enforcement of the FCC’s rule, depending upon the equipment used to make texts or calls.

The FCC ruling also requires terminating mobile wireless providers to block all texts from a particular number when notified by the FCC of illegal texts from that number and codifies that the National Do-Not-Call Registry’s protections extend to text messages.

The FCC and other federal regulators, including the FTC, have been raising concerns about “robotexts” and “robocalls” for years, including in enforcement actions. But, since an FCC notice of proposed rulemaking 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,” there has been significant backlash from organizations that state that the rule unduly harms business, including small businesses, and offered suggestions to refine the rule, which were rejected. It is yet to be seen whether the rule will be challenged in court. In the meantime, lead generators and lead buyers should begin taking steps to comply with the rule.  

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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