Compliance Blog

Written by Brandy Bruyere, Regulatory Compliance Counsel

On July 10, 2015, the Federal Communications Commission (FCC) issued a Declaratory Ruling and Order (Order). The Order responds to 19 petitions from various businesses and organizations that, in part, sought clarification of the FCC’s changes to the Telephone Consumer Protection Act (TCPA) which became effective in October 2013. Some of these changes included:

• Prior express written consent requirement for telemarketing calls made to cellphones using an autodialer or prerecorded message (i.e. “robocalls”);
• Prior express consent for telemarketing calls made to residential phones (i.e. landlines);
• Removal of a previous exemption for having a prior business relationships with consumers

Recall that the TCPA and its accompanying regulations limit the use of phone calls and text messages for both telemarketing and informational purposes, particularly where communications are sent using an automated dialing system or a prerecorded artificial voice. The FCC received numerous requests to clarify the 2013 changes including:

• What constitutes an “autodialer;”
• Who is the “maker” of a call particularly when certain applications or software are used to facilitate texts or calls;
• Establishing and revoking consent including who is considered the “called party” and is able to provide consent;
• Consent when a wireless phone number is reassigned to another consumer; and
• Grant of certain limited waivers for financial institutions.

The Order itself is about 40 pages long, with separate statements issued by the members of the Commission. This blog will highlight some of the more concerning parts of the Order, beginning with the limited exemption for financial institutions.

Limited Exemption for Free-to-End-User Calls by Financial Institutions

Four kinds of calls and texts will be exempt from the TCPA if the message is free to the consumer and relates to fraud or identity theft, possible data breaches, conveys information regarding preventing or remedying the harm of a data breach, or relates to pending money transfers. See, Order p. 63. However, to meet the exemption, these calls and texts:

• Can only be made to the number provided to the credit union by the member;
• State the name and contact information of the credit union;
• Are strictly limited in purpose, i.e. no telemarketing, cross-selling, or similar component;

The credit union also cannot initiate more than 3 messages per event over a three-day period and must offer members “an easy means to opt out” of the messages, honoring such opt-outs immediately. For more details on this exemption, see p. 63-68 of the Order.

Autodialer

In response to requests for clarification as to what systems are considered autodialers, the FCC Order notes that autodialers include those systems with the “potential ability” to serve as an autodialer, even where those functions are not activated on the system. (Emphasis added). Unfortunately, the FCC declined to adopt a clear standard, reasoning that the level of “human intervention” that is necessary for particular equipment to avoid functioning as an autodialer varies widely across products, so instead whether a particular system is an “autodialer” is a “case-by-case determination.” See, Order, p. 15.

Revoking Consent

The Order also states that consumers can revoke their consent to receive covered calls “through any reasonable means” and flatly rejected requests to allow callers to designate particular methods for consumers to revoke consent. Instead, consumers can revoke orally or in writing by “any reasonable method,” including by phone or in person at a business’s location. See, Order, p. 33, 36. Additionally, the FCC rejected arguments that oral revocation presents recordkeeping burdens, and instead “expect[s] that responsible callers…will maintain proper business records tracking consent.” See, Order, p. 38.

Reassigned Wireless Numbers

The FCC also received requests to clarify callers’ liability when a consumer who granted consent to receive calls is no longer assigned a wireless number, and that number is reassigned to a new consumer who has not granted consent. One petitioner asked for a one year grace period where the caller would not incur liability for calls made to the new number. See, Order, p. 49. Instead, the FCC Order allows callers to avoid liability only for the “first call to a wireless number following reassignment.” Under the Order, after the first call “without reaching the original subscriber,” the caller can reasonably be “considered to have constructive knowledge” that the number was reassigned. See, Order, p. 50. Unfortunately, this does not account for the realities of how many consumers use phones. For example, if a consumer with a reassigned number does not answer, but provides no identifying information in his or her voice mail message, the caller would have no reason to believe the number was reassigned, yet still incur liability for future calls.

Credit unions that utilize robocalls or similar automated systems for communicating with members by phone, including text messages, should review the Order closely. Limiting the credit union’s liability under the TCPA may require consultation with legal counsel with expertise in these matters as the Order is quite technical and includes standards that apply on a case-by-case basis.

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