Compliance Blog

Hello again compliance friends! As I'm sure many of you have already heard, last Friday, was a big day in the Telephone Consumer Protection Act (TCPA) world because the U.S. Court of Appeals for the D.C. Circuit FINALLY issued its decision in ACA International v. Federal Communications Commission (FCC). The D.C. Circuit set aside and vacated parts of the FCC's 2015 Omnibus Declaratory Ruling and Order but did uphold one portion of the FCC's interpretation of the TCPA with respect to revocation of consent.

Even though the majority of this opinion restores the status quo before the 2015 Order (and to the original TCPA definition for "autodialer") and provides some relief for credit unions, the FCC must now decide how it intends to proceed with interpreting these critical aspects of the TCPA.

Clear guidelines and standards as to what is and is not permissible under the TCPA are essential for credit unions to be able to contact their members without fear of liability. Although NAFCU remains optimistic that under Chairman Pai, the FCC's interpretations will move in a more positive direction for the financial services industry, our communications with the FCC will not quit. For now though, you can rest easier knowing the 2015 Order has lost most of its bite.

Keeping that in mind, let's take a deep dive into the D.C. Circuit's analysis and some interesting questions it raised but did not decide. Ready?! Let's go!

The court evaluated and decided four challenges raised by the petitioners: (1) which sorts of automated dialing equipment ("automatic telephone dialing system" or "autodialer") are subject to the TCPA's restrictions on unconsented calls; (2) when a caller obtains a party's consent, does a call still violate the TCPA if, unbeknownst to the caller, the consenting party's wireless number has been reassigned to a different person who has not given consent; (3) how may a consenting party revoke her consent; and (4) did the FCC too narrowly fashion an exemption from the TCPA's consent requirement for certain healthcare-related calls. We will not discuss this last point because it is not relevant to credit unions. I will address the other three points in turn.

The first portion of the D.C. Circuit opinion focuses on the FCC's definition of an autodialer and how that definition affects consumers. The court held that the FCC's approach to defining what qualifies as an autodialer, based in part on prior FCC guidance from 2003 and 2008, is "utterly unreasonable" and fails the Administrative Procedure Act's (APA) arbitrary and capricious standard of review. Citing a 2015 D.C. Circuit decision, the court explained that under the APA, administrative action is arbitrary and capricious if it does not clearly articulate a comprehensible standard for assessing the applicability of a statutory category. Therefore, if a standard offers no meaningful guidance, it fails to constitute reasoned decision-making and consequently fails the APA's arbitrary and capricious review. In its analysis, the court wrestled with various examples of what it means to have the "capacity" to dial numbers randomly and sequentially, as required by the FCC's 2015 Order to meet the standard of autodialer, including whether a smartphone, the Firefox browser, or even a rotary phone can gain such autodialer functionality. The court concluded that the FCC's 2015 Order cannot be understood to exclude smartphones from the autodialer definition and that interpretation of the TCPA is unreasonably and impermissibly expansive.

Another point related to the definition of an autodialer that the court noted but did not decide is the FCC's interpretation of the meaning of the phrase "make any call using" an autodialer. The question here is whether this prohibition only applies to calls made using the equipment's autodialer functionality or to all calls made with a device that has that "capacity," even if the calls are made without any use of the equipment's autodialer capabilities. The FCC's 2015 Order, of course, adopted the latter, more broad reading of that phrase, but the court cited Commissioner O'Rielly's dissent to the 2015 Order in which he read that phrase to mean that the equipment must be used as an autodialer to make the calls before a TCPA violation can be found. Commissioner O'Rielly's reading means smartphones would not be swept into the definition of autodialer. The petitioners did not actually challenge the FCC's understanding of this phrase in their brief though, so the court declined to address or resolve the issue.

In the second portion of its opinion, the court held that the FCC's one-call safe harbor for calls made to reassigned numbers is arbitrary and capricious. The court went even further to completely set aside the FCC's treatment of reassigned numbers generally so that callers are not strictly liable for all calls made to a reassigned number. Unfortunately, the court agreed with the FCC's understanding of the term "called party" in the TCPA as the person actually reached (the present-day subscriber of the wireless number after assignment) instead of the petitioner's position that "called party" should refer to the person the caller expected to reach (whose consent has previously been obtained) because it determined that was a permissible and reasonable interpretation. Despite this, the court evaluated the FCC's use of a "reasonable reliance" approach when interpreting the TCPA's approval of calls based on "prior express consent" as justification for the one-call safe harbor for calls made to reassigned numbers. The court agreed that just a single communication may not inform the caller as to whether the number has been reassigned (the FCC even conceded this point!). Thus, the court concluded that the FCC gave no explanation of why this approach supports limiting the safe harbor to just one call or text message: "no cognizable conception of 'reasonable reliance' supports the Commission's blanket, one-call-only allowance."

Finally, on the issue of revocation of consent, the court upheld the FCC's interpretation of the TCPA in its 2015 Order. The court characterized the petitioner's concerns about the uncertainty of the FCC's standard for revocation by "any reasonable means" as overstated. The court explained that this standard actually removes "undue burden" from the caller because there is no requirement to train employees on the finer points of revocation and the caller can simply make use of clearly-defined, user-friendly opt-out methods. Furthermore, the court noted that the 2015 Order does not preclude parties from contracting for revocation procedures.

Whew! That was a lot. Now with a resolution in this lawsuit, NAFCU will continue to advocate for the fairest interpretation of the TCPA so that credit unions have clear guidance as to how it affects the way they communicate with their members about important financial matters.