Compliance Alert: Here's what you need to know abot the FCC's Declaratory Ruling on the Telephone Consumer Protection Act that has been released to the public.
Background and History
In Jan. 2014, ACA International
filed a Petition for Rulemaking with the Federal Communications Commission (FCC) asking for important clarifications of the Telephone Consumer Protection Act (TCPA). The petition sought clarity and confirmation on a number of points, including the following key issues:
- Confirmation that just because a predictive dialer CAN be an Automatic Telephone Dialing System (ATDS or autodialer), it does not mean that every predictive dialer MUST be an ATDS covered under the TCPA;
- Confirmation that the "capacity" of autodialer means the "present ability" of the dialing system rather than potential future ability;
- Establishment of a safe harbor for autodialed "wrong number" calls to wireless numbers;
- Clarification that prior express consent attaches to the person incurring a debt, not the wireless number.
On June 18, 2015, the FCC approved a Declaratory Ruling and Order
on the TCPA, which was released to the public on Friday, July 10. The ruling resolves 21 petitions, including the petition filed by ACA International. The FCC adopted the ruling in a narrow 3-2 party-line vote with the Commission's three democrats voting in support of the ruling, and the two republican Commissioners issuing scathing dissents.
The FCC claimed the ruling will reaffirm "the TCPA's protections against unwanted robocalls" while "encouraging pro-consumer uses of robocall technology and responding to a number of requests for clarity from businesses and other callers." The ruling will affect the practices of a number of industries, including the debt collection industry, especially with regard to the use of autodialers to contact consumers on wireless devices.
The following is a summary of the most important clarifications in the ruling as they relate to the debt collection industry.
Analysis of the Ruling
Definition of Automatic Telephone Dialing System (ATDS)
The TCPA defines the term "automatic telephone dialing system" to mean equipment which has the capacity to: (1) store or produce telephone numbers to be called, using a random or sequential number generator; and (2) dial such numbers.
Although the definition of an ATDS hinges on the "capacity" of a dialer, neither Congress nor the FCC has defined this term. As a result, courts have been forced to determine what capacity means under the TCPA, namely whether capacity refers to the present ability of a dialer to meet the statutory elements of an ATDS or whether it must only possess some hypothetical future ability to do so, regardless of how it is being used or its current functions and configurations.
The FCC's ruling clearly espouses a "future" reading of capacity. First, the FCC confirms that capacity is not limited to how dialing equipment is actually used, nor is it impacted by calling from a set list of consumers. Second, and significantly, the ruling states, "We agree with commenters who argue that the TCPA's use of 'capacity' does not exempt equipment that lacks the 'present ability' to dial randomly or sequentially. We agree that Congress intended a broad definition of autodialer, and that the Commission has already twice addressed the issue in 2003 and 2008, stating that autodialers need only have the 'capacity' to dial random and sequential numbers, rather than the 'present ability' to do so. Hence, any equipment that has the requisite 'capacity' is an autodialer and is therefore subject to the TCPA."
In evaluating capacity, the FCC states that there must be more than a "theoretical potential" that the equipment could be modified to satisfy the autodialer definition. Whether or not a dialer possesses capacity will be determined on a case-by-case basis.
On the issue of predictive dialers, the FCC concluded that all predictive dialers are categorically an ATDS, regardless of whether they possess the statutory elements at the time a call is made.
Referring to earlier TCPA rulings, the FCC stated that it had already "affirm[ed] that a predictive dialer constitutes an automatic telephone dialing system" because "[t]he hardware, when paired with certain software, has the capacity to store or produce numbers and dial those numbers at random, in sequential order, or from a database of numbers." Essentially, the FCC now claims that its phrase, "when paired with certain software," implies a future-looking analysis of capacity, i.e. the present configuration of the predictive dialer is not what is determinative. Instead, because the FCC assumes all predictive dialers are software-controlled, the FCC found that all predictive dialers can therefore be modified through software changes to possess the requisite capacity needed under the TCPA.
In reaching this conclusion, the Commission noted that it had previously declined to distinguish between calls to wireless telephone numbers made by dialing equipment "paired with predictive dialing software and a database of numbers" and calls made "when the equipment operates independently of such lists and software packages." The Commission found that the TCPA's unqualified use of the term "capacity" was intended to prevent circumvention of the restriction on making autodialed calls to wireless phones and emergency numbers and found that as a result "a predictive dialer falls within the meaning and statutory definition of 'automatic telephone dialing equipment' and the intent of Congress."
Manually Dialed Calls and Human Intervention
Because the TCPA only prohibits calls to wireless numbers without consent when made with an autodialer, some petitioners asked the Commission to clarify that equipment which depends on some element of "human intervention" is exempt from the definition of an autodialer. Although this request was based on language from previous TCPA orders which seemed to support such a clarification, the FCC declined to take this position. Instead, the FCC stated, "We also reject [the petitioner's] argument that the Commission should adopt a 'human intervention' test by clarifying that a dialer is not an autodialer unless it has the capacity to dial numbers without human intervention. Because the Commission has previously rejected a restrictive interpretation of autodialer in favor of one based on a piece of equipment's potential ability, we find that [the petitioner's] argument amounts to a simple variation on the 'present ability' arguments we reject[ed]." In other words, just because equipment presently depends on human intervention to dial wireless numbers does not preclude it from being modified in the future to dial automatically.
In addition, the FCC specifically declined to provide any general rules of applicability for a human intervention standard that could be administrable industry-wide. Instead, the FCC stated, "How the human intervention element applies to a particular piece of equipment is specific to each individual piece of equipment, based on how the equipment functions and depends on human intervention, and is therefore a case-by-case determination."
As far as manual dialing, while the ruling seems in some places to suggest that manually dialed calls are a solution for shielding TCPA liability, the only example the FCC offered of equipment that would actually be safe to manually dial from was an old-fashioned rotary phone. Consequently, manual dialing alone is insufficient to shield from TCPA liability if the underlying calling equipment has the ability, either presently or through future modification, to store or produce, and dial, random or sequentially generated numbers.
Dividing Equipment between Entities
The FCC also made clear that dividing the functions of dialing equipment between two or more entities would not allow the equipment to escape the definition of an ATDS. In one of the petitions before the FCC, the petitioners argued that equipment should not be considered an ATDS if two separate companies divided the storage and calling functions of dialing equipment between the two entities. The petitioners argued that their equipment should not be considered an autodialer because neither system, acting independently, had the capacity both to store or produce numbers, and dial those numbers as required by the TCPA.
The FCC rejected this argument, stating "We conclude that such equipment can be deemed an autodialer if the net result of such voluntary combination enables the equipment to have the capacity to store or produce telephone numbers to be called, using a random or sequential number generator, and to dial such numbers. The fact that two separate entities have voluntarily entered into an agreement to provide such functionality does not alter this analysis."
Summary of Analysis
In its latest ruling, the FCC has taken the most expansive view yet as to what constitutes an ATDS. The following is a summary of conclusions that can be drawn from the ruling:
- Any dialer that has the hypothetical future ability to be modified to store or produce, and dial, random or sequentially generated numbers constitutes an ATDS, regardless of its current functionality. Such determinations will be made on a case-by-case basis.
- Virtually all modern dialing equipment would seem to meet the FCC's expansive interpretation of an ATDS.
- All predictive dialers are categorically an ATDS, regardless of whether they possess the statutory elements at the time a call is made.
- Present use or present ability of calling equipment is not relevant to an ATDS determination.
- Equipment which cannot dial without human intervention is not automatically shielded from TCPA autodialer liability. A case-by-case determination is necessary to ensure that the equipment has no ability to meet the statutory elements of capacity through hypothetical future modification.
- Manually dialing calls will not shield TCPA liability if the underlying calling equipment has the ability - either presently or through hypothetical future modification - to meet the statutory elements of capacity.
- Dividing the functions of dialing equipment between two or more entities will not exempt the equipment from the TCPA if the combination of the equipment enables it to have the capacity to store or produce telephone numbers to be called, using a random or sequential number generator, and to dial such numbers.
- There is no comprehensive or exhaustive list of what would be considered an ATDS, leaving the FCC free to consider future technologies and equipment on a case-by-case basis.
Under the TCPA, a caller must have the prior express consent (oral or written) of the "called party" in order to call a wireless phone with an ATDS or with a prerecorded message. Importantly, in a previous 2008 ruling on the TCPA, the FCC clarified that the provision of a wireless number to a creditor on a credit application constituted the prior express consent of a consumer to be called on that number. The TCPA also provides a "called party" with a private right of action for calls that violate the statute. Notably, the TCPA does not define the term "called party" leaving questions as to whether a called party is the current subscriber to the number, the customary user of the number, or the intended recipient of the call. Given the large number of wireless number reassignments, this ambiguity has prompted a substantial amount of litigation in instances where callers inadvertently call a number for which they have consent, but the number has been reassigned without their knowledge.
In the 2015 ruling, the FCC explicitly rejected the assertion made by petitioners that the term "called party" should refer to the intended recipient of the call. Instead, the FCC clarified that the term "called party" refers to the subscriber (i.e. plan holder) or a non-subscriber customary user of the number.
The FCC's interpretation of "called party" has huge implications for reassigned numbers. Because the term "called party" only refers to a current subscriber or a customary user of the number, consent to call the number does not transfer when the number is reassigned to a new subscriber. This means that once a number is reassigned to a new subscriber, any consent to call that number lapses and any subsequent autodialed or prerecorded message calls to that number would violate the TCPA.
However, in an apparent effort to address the voluminous evidence in the record that callers have no guaranteed means to identify and therefore avoid dialing a number that has been unknowingly reassigned, the FCC also clarified that callers using an ATDS will have a one call "safe harbor" for a single call or text to a reassigned number to gain actual or constructive knowledge of a reassignment. Notably, this "safe harbor" is extremely limited in scope and only allows a single call attempt, whether or not the caller gains actual knowledge that the number was reassigned. On this point the FCC stated, "If this one additional call does not yield actual knowledge of reassignment, we deem the caller to have constructive knowledge of such." This means that even if the recipient of the call does not answer the phone, any subsequent calls would violate the TCPA if the number had in fact been reassigned to a new subscriber. The FCC also clarified that this single call covers all company affiliates, including subsidiaries. For example, two affiliated entities may only make one call in total.
It's important to note that the FCC also clarified that in instances where other individuals answer the phone due to their proximity to a subscriber or customary user who provided consent, there is no TCPA violation.
Revocation of Consent
Although the TCPA and its regulations are both silent regarding a consumer's right to revocation, the new ruling clarifies that consumers have the right to revoke any prior consent to receive autodialed or prerecorded message calls in any reasonable way at any time. Consent can therefore be revoked orally or in writing and can likely be done through a variety of communication methods. The FCC opined that the reasonableness of the consumer's revocation will be assessed by looking at the "totality of the facts and circumstances surrounding that specific situation."
Residential Numbers Ported to Wireless Service
Questions have also persisted with respect to numbers that are ported from residential lines to wireless lines. The TCPA requires the prior express written permission of the called party to place automated sales calls to residential lines, but the statute exempts debt collectors from this requirement so long as their calls to residential lines do not introduce or include any advertisement or solicitation. Thus, under this section of the statute, a debt collector can call a residential number with an ATDS regardless of whether the collector has the prior express consent of the consumer. However, there has been confusion over how a consumer's decision to port their wireline number to a wireless number impacts consent.
The 2015 ruling resolves this ambiguity by finding validly-obtained consent survives when a consumer ports his or her number as long as the consent is not revoked. The FCC noted that it is the consumer's "prerogative and responsibility to revoke the consent" if he or she does not wish to receive certain calls after porting.
The ruling makes clear, however, that the original consent obtained must be sufficient for the same type of call to a wireless number. So, for example, if a consumer provides a residential number to a creditor, thereby establishing consent, the creditor or his agents (e.g., a debt collector) would still be able to use an ATDS or a prerecorded message to call the number even after it has been ported.
It's crucial to understand, however, that if a residential number is ported to a wireless service and the number was NOT obtained in a way that granted consent (for example, by skip tracing), any ATDS or prerecorded message calls would violate the TCPA once the number has been ported to a wireless service. This is because even though debt collection calls can be made with an autodialer to wireline numbers without first obtaining consent, these same calls must have valid prior express consent before being made to wireless numbers.
Burden of Proof
As far as which party is responsible for demonstrating whether or not consent exists, the 2015 ruling reaffirms the Commission's previous position that that the burden of proof lies with the caller rather than the called party. This means it is the caller's duty to establish that consent was provided by the recipient of the call.
Summary of Analysis on Issues Related to Consent
- The term "called party" refers to the current subscriber (i.e. plan holder) or a non-subscriber customary user of the wireless number, not the intended recipient of the call.
- When a wireless number is reassigned, consent to call the number does not transfer with the number, making autodialed calls to the number a TCPA violation.
- Callers have a one call "safe harbor" for a single call or text to a reassigned number to gain actual or constructive knowledge of reassignment.
- By "one call" the FCC really means "one attempt" regardless of whether actual knowledge of the number's reassignment is obtained.
- A single call to a reassigned number covers all company affiliates, including subsidiaries - two affiliated entities may only make one call in total.
- In instances where other individuals answer the phone due to their proximity to a subscriber or customary user who provided consent, there is no TCPA violation.
- Consumers have the right to revoke any prior consent to receive ATDS or prerecorded message calls in any reasonable way at any time.
- "Reasonableness" for revocation of consent is not defined, but is assessed by looking to the "totality of the facts and circumstances surrounding that specific situation."
- Revocation of consent may be oral or in writing.
- Porting a telephone number from wireline service to wireless service does not revoke prior express consent.
- It is the consumer's "prerogative and responsibility to revoke the consent."
- Any consent obtained to call a residential number that has since been ported to a wireless service must be sufficient for the same type of call to a wireless number.
- The burden of proof in establishing consent lies with the caller rather than the called party, meaning it is the caller's duty to establish that consent was provided by the recipient of the call.
The FCC's 2015 ruling also reaffirms previous positions of the FCC on certain issues. The FCC has previously stated that text messages are considered calls under the TCPA, and the new ruling reasserts this stance. Therefore, text messages that are sent with any technology meeting the definition of an ATDS will be subject to the TCPA. The FCC has also reaffirmed that with respect to ATDS calls to wireless numbers, there is no distinction between telemarketing calls and informational calls and both are subject to the TCPA.
The FCC explained that certain financial service calls (fraud, identity theft, and data breaches) and certain healthcare-related calls (such as prescription refill reminders and appointment notifications) are exempted from the TCPA. On this point, the FCC required that other than not being charged to the called party, these messages must adhere to specific conditions, including being devoid of any marketing and debt collection content, and containing an easy way to opt out of future messages.
Call Blocking Technology
The ruling makes clear the telephone carriers can now offer ATDS call blocking technologies to consumers. The FCC has given a green light for carriers to implement "market-based solutions" that consumers could use to stop unwanted ATDS calls.
Practical Considerations and Possible Solutions
Companies who wish to continue using ATDS and prerecorded message calls need to closely review their current practices and determine strategies for compliance with the new ruling. The following list includes some important considerations and possible compliance strategies that may help to reduce liability and help mitigate risks.
- Virtually all modern calling equipment would seem to meet the FCC's expansive interpretation of an ATDS. As a result, prior express consent will need to be obtained in most instances before making calls to wireless numbers.
- Manual dialing is not necessarily a solution. Even manual dialing does not get around the need to obtain prior express consent if the equipment that is being used to manually dial could be modified to be an ATDS.
- A dialer that relies on human intervention to function, for example the use of dialing equipment in "preview mode" where a representative must select a number on a computer screen and click a mouse to dial the number, will not exempt calls from TCPA liability if the equipment could be modified to function as an autodialer.
- Obtaining prior express consent will not necessarily be a shield from liability in certain circumstances, for example when a wireless number is reassigned to a new subscriber or when a consumer claims he or she revoked consent.
- Consent should be well documented as the burden of demonstrating consent lies with the caller.
- Revocation of consent must be documented quickly and communicated to any necessary staff members so that numbers can be immediately removed from any call lists to prevent subsequent ATDS calls.
- Technology to scrub call lists for wireless numbers exists, and such technologies should be employed and used as frequently as possible to prevent any ATDS calls to ported residential numbers if the numbers were not obtained in a manner that grants consent.
- Technology to scrub for and detect reassigned wireless numbers should also be employed and used as frequently as possible.
- Companies should consider reviewing their current ATDS practices with their own attorney to determine that best strategies to avoid liability and manage the risks associated with the use any modern dialing equipment.
Call Center Services International understands the heavy compliance burden this ruling places on the entire collection industry, as well as many other sectors of the financial services community. For this reason, CCSI makes a concerted effort to keep our team of call center agents and supervisors updated with the most recent related compliance material.
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