The Federal Communications Commission (FCC) issued a Notice of Apparent Liability (NAL) to Dialing Services LLC, finding the company apparently liable for 184 prerecorded calls to cell phones in violation of the Telephone Consumer Protection Act (TCPA) and related FCC rules, and proposing to fine the company $2,994,000, the maximum allowed by statute. Dialing Services allows users to upload prerecorded voice messages to company servers, or to create prerecorded messages by calling Dialing Services and recording a message over the phone, and then have the messages delivered to phone numbers of the clients’ choosing. In some instances, Dialing Services may have had no role in reviewing or approving the content of the messages or whether they are sent to cell phones. Nonetheless, depending on the numbers the client chooses, and the content of the message, such calls implicate the TCPA and FCC rules, which prohibit transmitting autodialed and/or prerecorded calls to cell phones other than for emergency purposes or with prior express consent of the called party, and require prior express written consent for prerecorded telemarketing. The NAL holds that liability can rest with calling platforms like Dialing Services, and not just with the clients who use the platforms to place calls.

The NAL indicates that FCC staff investigated Dialing Services in 2012, and found 4.7 million non-emergency prerecorded calls were delivered over the company’s platform in a three-month period. The FCC issued a citation, which is a prerequisite to any forfeiture (fine) for companies like Dialing Services that do not hold an FCC authorization, warning the company that further prerecorded calls in violation of the TCPA and rules would expose it to fines. Dialing Services petitioned to have the citation reconsidered and rescinded, but the FCC took no action on Dialing Services’ petition before dismissing it in the NAL.

The NAL was the result of a follow-up investigation of Dialing Services in June 2013.  The FCC found that Dialing Services’ platform had been used to deliver another 184 prerecorded calls to cell phones after the citation issued, forming the basis for the nearly $3 million forfeiture that the FCC has now proposed. The FCC did not commend Dialing Services’ apparent efforts to minimize non-compliant calls, but instead found that Dialing Services had willfully and repeatedly violated the TCPA and FCC rules, because it “made” each of the 184 calls, the calls had no emergency purpose, and no evidence was offered that either Dialing Services or its clients had obtained prior express consent for any of the calls. The FCC rejected Dialing Services’ contentions that it did not “make” any of the calls itself, but had only provided equipment, software and services that allowed its clients to make the calls, and that the company generally did not select phone numbers to which the calls were placed or have any way of knowing if its clients had obtained prior express consent.

In rejecting Dialing Services’ contentions, the FCC cited a variety of “affirmative acts” by Dialing Services to justify the fine. These included that the company provided the software platform and functionality for making the calls, leased or otherwise secured necessary telephone connections for the calls, and used software to detect whether calls were answered by a live person or voicemail and delivered the call (or not) accordingly, based on the client’s preference. The FCC also noted Dialing Services sometimes provided technical assistance to its clients, made voter lists available to them, and may have reviewed/edited clients’ messages if they appeared to be unlawful or in furtherance of fraudulent activity. In addition, the FCC noted, Dialing Services reviews phone numbers called to ensure they are valid and will connect, informs the client of the total number of calls that will result, and offers clients reports of their call history, results, and polling. These facts, and the notion that Dialing Services alone “dials” the numbers, rendered it apparently liable, the FCC held.

For similar reasons, the FCC dismissed as “unripe” Dialing Services’ petition for reconsideration of the citation, which raised objections akin to those the company offered in responding to the citation. This presents a dilemma. A citation is a prerequisite to a forfeiture for entities that do not hold FCC authorizations, which will often be the case in TCPA cases. If a citation issues in error, the NAL asserts there is no way of having it rescinded so that, if the FCC identifies other conduct it believes sanctionable, it must issue a valid citation before proposing fines.

The FCC went on to propose the maximum fine authorized by the statute – $16,000 for each of the 184 calls – finding that Dialing Services’ actions justified the heightened penalty. The FCC noted that the calls giving rise to the fine were all made after Dialing Services had already received the citation and was thus assertedly aware the calls violated the TCPA and FCC rules, as well as the “staggering number” of calls placed over Dialing Services’ platform before the citation issued (almost 5 million calls in 3 months).

The NAL is troubling for dialing platforms for a number of reasons. First, the NAL suggests that merely making facilities and services for the delivery of autodialed and/or prerecorded messages – even if the provider thereof does not craft the messages delivered or pick the phone numbers to which they are delivered – can give rise to millions of dollars of liability. In this regard, dialing platforms may not know the content of messages their clients load into the system, and thus what form of consent is required, and/or may not know the phone numbers a client selects for delivery, and thus whether they encompass numbers assigned to cell phones. There may also be no way of knowing, other than through representations required of clients, whether consent to delivery of the calls has been obtained. Conceivably, a calling platform might simply block all calls to cell numbers in an attempt to avoid liability such as that imposed here, but that would vastly diminish the value of the service for clients that have the requisite consent.

The imposition of the maximum fine seems extreme. As the NAL notes, the “base” (i.e., default or starting-point) forfeiture for TCPA violations is $4,500 per call, with the maximum fine of $16,000 representing nearly a four-fold increase in fine amount. The FCC cites Dialing Services’ prior receipt of a citation as grounds for imposing the maximum fine. But every fine against a company that is not an FCC license holder will be imposed after a citation, because the statute requires a citation before a forfeiture lies. Moreover, in this case, Dialing Services had lodged a petition to rescind the fine in which it made a case for why it should not be liable for calls resulting from its clients’ use of its platform. And Dialing Services clearly “dialed back” its calls and sought clarification of its obligations.  But the FCC basically cited as grounds for increasing the penalties the fact that Dialing Services, during the pendency of its request to reconsider the citation, continued to operate in a manner consistent with the good-faith objections it had raised.

Dialing Services is now entitled to respond to the NAL, before the FCC actually imposes the fine in a forfeiture order. But realistically, unless there is a mistake of fact or an intervening change in law, or the NAL recipient makes a proffer bearing on forfeiture amount that it had no prior ability/reason to raise (e.g., ability to pay, which can affect amount of a forfeiture), issuance of an NAL indicates the FCC will impose the almost $3 million fine.

If that happens, it suggests a kind of strict liability for calling platforms if their customers’ calls violate the TCPA and/or FCC rules. Coupled with recent court cases that have adopted a similar strict liability approach where a caller believes it has consent but in reality it does not due to, e.g., the phone number being reassigned or the person giving consent lacking authority to do so for the phone number in question, this most recent FCC development further raises the stakes for dialing platform services. In the wake of the NAL, such platforms should be asking themselves whether they should scale back any assistance provided to users with respect to message-crafting or call-list provision, in hopes of avoiding or minimizing liability should complaints to the FCC draw enforcement action.