Compliance Blog

By Ann Kossachev, Senior Regulatory Affairs Counsel, NAFCU

Hello compliance friends! Last week you all learned a bit about the Federal Communications Commission’s (FCC) latest rulemaking to establish a reassigned numbers database. That database is intended to resolve part of an issue litigated in the landmark case ACA International v. FCC. In that case, the U.S. Court of Appeals for the D.C. Circuit, ruled against the FCC on two of the three challenges raised by the petitioners from the FCC’s 2015 Order that are relevant to credit unions, including the overly broad definition of “autodialer” and the one-call safe harbor for reassigned numbers.

So where is the FCC now? NAFCU met with the FCC on several occasions in 2018 and is looking forward to continuing that trend in 2019 to make sure that credit unions are able to contact their members without fear of violating the TCPA. The FCC has assured NAFCU that it is diligently working on rulemakings to resolve the issues from ACA Int’l. We have reason to believe that the FCC is likely to pursue a piecemeal approach instead of an omnibus rulemaking to address the definition of autodialer, the definition of “called party,” and even the appropriate standard for how consumers can revoke their consent. Considering that the autodialer definition is the linchpin of the TCPA structure, we are likely to see that decided first. Unfortunately, some recent federal appellate court decisions across the country have muddied the waters when it comes to the definition of autodialer.

Back in June 2018, the Third Circuit in Dominquez v. Yahoo, Inc. and the Second Circuit in King v. Time Warner Cable, Inc. largely upheld the D.C. Circuit’s approach in ACA Int’l and said an autodialer must have the “present capacity,” meaning the current functionality to dial numbers randomly or sequentially. That sounds good, right? Then things started to get complicated. In September 2018, the Ninth Circuit decided a case titled Marks v. Crunch San Diego, LLC and even though the court concluded that the D.C. Circuit correctly held that only the statutory text of the TCPA remains (meaning all of the FCC’s previous rulings on the autodialer issue had been thrown out by its decision) it said the TCPA is ambiguous and an autodialer must include equipment that can automatically dial numbers stored on a list, regardless of whether human intervention is required.

In response to the Marks case, the FCC issued a notice requesting feedback on the effect of this decision on the FCC’s ability to interpret the term autodialer. NAFCU told the FCC that this decision has created immense confusion in not only the Ninth Circuit, but also across the country because now there is a circuit split on what qualifies as an autodialer. This public notice from the FCC was the second of its kind in 2018 – the first was issued in the spring and related to unresolved issues from the ACA Int’l decision. NAFCU submitted comments to that notice as well.

Another TCPA-related court case even made its way up to the Supreme Court. In November 2018, the Supreme Court decided to review PDR Network, LLC v. Carlton & Harris Chiropractic, Inc. The case centers around what constitutes an “advertisement” under the TCPA and was granted review by the Supreme Court because a lower appellate court determined that a federal trial court should have automatically deferred to the FCC’s interpretation of “advertisement” under the TCPA instead of the trial court interpreting the statute itself. This could have a huge impact on the FCC’s rulemaking authority and how courts interpret FCC guidance going forward. We will be keeping a close eye on all developments in this case.

To further complicate the TCPA landscape, a bipartisan bill called the TRACED Act was introduced late last year to enhance enforcement of the TCPA against illegal robocalls. The bill would permit the FCC to work with the Bureau of Consumer Financial Protection and the Department of Justice to more aggressively bring lawsuits against businesses that place illegal robocalls in violation of the TCPA. But wait, illegal robocalls are the bad ones that we want to stop harassing us during work and at the dinner table, right? That’s correct; but this bill does not draw a clear line between illegal and legitimate robocalls (including calls your credit union may make using an autodialer). Plus, why would the FCC suddenly start going after more bad actors on its own so long as there is a private right of action in the TCPA? Plaintiffs’ attorneys will continue to line their pockets while the FCC could try to expand its authority under the TCPA, but likely fail – see the 2015 Order and the ACA Int’l decision. So what’s the good news here? This bill is unlikely to be reintroduced and voted on in the new Congress. But it is still something we need monitor because it signals bipartisan support for cracking down on illegal robocalls and even updating the TCPA itself! That could mean we see more legislation like this introduced in the 116^th Congress.

For now, keep in mind the following: (1) the FCC is working on a rulemaking for the definition of autodialer and other issues stemming from the ACA Int’l decision – we will likely see a proposal sometime in 2019; (2) a centralized reassigned numbers database will be set up but it’s unclear when because there is no implementation date for its recent Order; (3) a lot may change regarding courts’ deference to the FCC depending on the Supreme Court’s decision in the PDR case; and (4) as always, NAFCU will continue to fight for your best interests when it comes to the TCPA and obtaining more regulatory flexibility from the FCC.

Finally, don’t miss out on our compliance webinar tomorrow! January 8: Loan Servicing in a Rising Risk Environment