The Federal Communications Commission (FCC) has complied with the directive in the Telephone Robocall Abuse Criminal Enforcement and Deterrence Act (TRACED Act) to review the regulatory exceptions to restrictions on autodialed and prerecorded calls/texts under the Telephone Consumer Protection Act (TCPA). In a Report and Order, it adopted the proposal to subject prerecorded informational and transactional calls to residential lines to do-not-call requirements, and it also limits how often such calls are allowed.

Once effective, the rules could require significant operational changes for companies that rely on informational/transactional prerecorded calls to residential lines, and had until now faced only minimal compliance burdens.

Specifically, for its longstanding exceptions from prior express consent requirements for prerecorded calls to residential lines for (1) noncommercial purposes, (2) commercial purposes not involving marketing, (3) nonprofit/charitable purposes, and (4) as regulated under HIPAA, the FCC has imposed the full panoply of its company-specific do-not-call rules, including automated opt-out requirements, and restricted such calls to no more than three per any consecutive 30 days for each residential line (three per week for HIPAA-covered calls).

The Report and Order also formally writes into the FCC rules exemptions for certain healthcare, financial-service, and package-delivery autodialed/prerecorded calls/texts that until now existed only under FCC declaratory rulings, which have always imposed opt-out and quantitative/frequency/length limitations. The rulemaking had also teed up revisiting the allowance for wireless carriers to transmit autodialed and/or prerecorded-calls/texts to their own customers if no cost is imposed, by requiring honoring opt-outs there as well—but the FCC ultimately declined to do so on the grounds that it was outside the scope of the TRACED Act.

The new rules take effect 30 days after the Report and Order appears in the Federal Register, though the new opt-out and quantitative/frequency requirements for prerecorded informational/transactional prerecorded calls to residential lines first require Office of Management and Budget (OMB) approval. In connection with that, the FCC built in compliance lead-time by having those rules take effect six months after OMB approval (which itself can take weeks or months).

Background

The TCPA and the FCC's implementing regulations are the principal source of federal restrictions and requirements for autodialed and prerecorded calls to cell phones and residential lines, do-not-call rights relating to telephone marketing and solicitations (in conjunction with the Federal Trade Commission and its Telemarketing Sales Rule), and unsolicited fax ads. In relevant part here, the TCPA makes it unlawful to initiate autodialed and/or prerecorded calls (and texts) to cell phones and prerecorded calls to residential lines, other than for emergency purposes or with prior express consent of the party called (or texted).

However, the statute allows the FCC to exempt certain calls from the residential-line restriction, and the FCC has exempted calls (1) for other than commercial purposes, (2) by or for nonprofits, (3) for commercial purposes that do not adversely affect privacy rights, and (4) subject to the HIPAA Privacy Rule. The statute also allows exemption from the cell phone restriction for calls not charged to the called party, subject to conditions necessary to protect privacy rights. In this latter case, the FCC has over the last half-decade used declaratory rulings to adopt allowances for non-marketing healthcare and financial-services calls, certain inmate-related calls, and package-delivery notifications.

But from the earliest years of TCPA implementation, the FCC rules exempted from the restriction on prerecorded calls to residential lines the above-listed informational and transactional messages, i.e., calls not for a commercial purposes, commercial calls for purposes other than marketing, and calls by or on behalf of a tax-exempt non-profit (the HIPAA allowance followed later). These calls have never been subject to opt-out or do-not-call obligations.

While perhaps prudent from a customer-relations and/or complaint-avoidance perspective, there has never been an obligation per se to refrain from making such prerecorded calls to residential lines upon request or objection. Nor has there been any limit on the number or frequency of these calls. The only requirement has been to disclose the name of the company calling and its telephone number as part of the call—only if it involves telephone solicitation or telemarketing did prior express written consent, do-not-call (company-specific and National Registry), automated opt-out, and related regulations come into play.

The TRACED Act, in addition to directing various FCC actions relating to call authentication, call blocking, carrier self-policing, and expanded enforcement authority over illegal "robocalls," required it to revisit the exemptions granted under the authority outlined above. The Act requires ensuring the exemptions include terms specifying the classes of parties that may make such calls and be called, and the number of such calls that are permissible, and required the FCC to finish adopting or amending any rules, as may be needed, by December 30, 2020. The FCC issued a Notice of Proposed Rulemaking (NPRM), and the Report and Order adopts the necessary rule changes.

Straight-Forward Codification of Recent Exemptions, but Major Changes for Older Ones

In significant part, the Report and Order simply codifies relatively recently created exemptions for certain financial-service, healthcare, inmate-calling and package-delivery autodialed/prerecorded calls and texts. These exceptions were already required to be transmitted only to cell numbers provided by the recipient, free to the end user, restricted to specific topics, limited in frequency and length, and subject to opt-out rights, as we outlined upon adoption here, and here.

The NPRM also considered revisiting an allowance that has existed since the FCC first implemented the TCPA, which permits wireless carriers to send autodialed and/or prerecorded messages to their own customers if it is cost-free to them, including potentially imposing opt-out requirements, but the FCC ultimately found that unnecessary under the TRACED Act. So, in each of these respects, it is "business as usual," notwithstanding any codifications the Report and Order enacted.

The changes for prerecorded informational and transactional calls to residential lines are much more significant, however. Under the rules as amended by the Report and Order, it is unlawful to initiate to any residential line a prerecorded call absent prior express written consent or an emergency purpose unless one of the subject-matter exceptions applies and compliance with company-specific do-not-call (opt-out) and quantitative/frequency limitations is maintained.

For calls for noncommercial purposes, calls for commercial purposes not involving telemarketing, and calls by or on behalf of tax-exempt non-profits, such prerecorded calls are limited to no more than three for any consecutive 30 day period to any given residential number unless consent is obtained. (For HIPAA-covered "health care" calls, the limit is three per week.) In addition, unless there is consent, all called parties enjoy full opt-out rights, which are effectuated by subjecting the calls to the full panoply of company-specific do-not-call requirements.

This latter requirement imposes not-insignificant compliance obligations that until now did not apply to prerecorded informational/transactional calls to residential lines. This includes:

• Creating and maintaining a company-specific do-not-call list for these calls, adding numbers to it upon request as quickly as is reasonably/technologically possible under the circumstances, not to exceed 30 days, and keeping each number on the list for five years from the time the request is made (and it is often prudent to keep a number on the list beyond that time if it remains assigned to the same customer);
• Having a written do-not-call policy, available upon demand to any regulator or member of the public, detailing how the company complies with these requirements;
• Disclosing, as part of the prerecorded message, not only the name of the company on whose behalf it is made and its phone number, as has previously been required, but also the name of the individual caller, and the phone number provided must be one that permits any individual to call it and make a do-not-call request during regular business hours; and
• Prerecorded messages having an automated, interactive voice- and/or key press-activated opt-out mechanism for called parties to make a do-not-call request, provided within two seconds of the above-noted disclosures along with brief instructions on how to use the mechanism, and that when used, automatically records the called person's number to the caller's do-not-call list and immediately terminates the call (and, if prerecorded messages are left on voicemail or an answering machine, they must include a toll-free number that receives calls at a later time to the automated opt-out mechanism).

As to the quantitative/frequency limits, the Report and Order notes that callers can use one of their three permitted calls to try to obtain consent to avoid the limits thereafter, so long as the calls satisfy other applicable conditions (i.e., company-specific do-not-call, automated opt-out, written do-not-call policy, etc.). For such efforts to gain consent, the burden is presumably, as everywhere else under the TCPA, on the calling party—so if a call is used to get consent, it behooves callers to record it in some way (e.g., the keypress mechanism during the prerecorded call that conveys the consent). The FCC says it will also "monitor these limits to determine whether they may require adjustment in light of … experience" under the rule, though it would be surprising if it changed the numerical limits anytime soon.

As stated at the outset, the codifications of the financial-service, healthcare, inmate-calling and package-delivery exemptions take effect 30 days after the Report and Order appears in the Federal Register, though there are no substantive changes from their respective declaratory rulings that have been operative for several years. The significant changes regarding compliance with do-not-call (opt-out) and quantitative/frequency limits for prerecorded informational and transactional calls to residential lines will allow a fair amount of lead-time for compliance, as they do not take effect until after OMB approval and the FCC announces the resulting effective date.

In the meantime, however, those changes potentially augur significant operational changes for those who have used prerecorded calls to residential lines for non-marketing purposes and have not committed significant resources to TCPA compliance, and for those who have done so but only in a telemarketing context. As such, even with significant lead time, the new year brings with it the need for companies to review their current practices with respect to non-marketing prerecorded calling, to assess what changes, if any, will be required to be in compliance once the rules take effect, and to start implementing those changes ahead of the effective date.

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