The Federal Communications Commission (FCC) has proposed changes to its rules under the Telephone Consumer Protection Act that limit the use of prerecorded calls and automatic telephone dialing systems (also known as "autodialers"). Adopted on January 20, 2010, the FCC's proposal would create a major hurdle for debt collectors and others not engaged in sales or telemarketing ("non-sellers") who use these methods to make calls to wireless numbers. The proposal would require non-sellers to obtain a prior written agreement evidencing the consumer’s consent to such calls.

Under current FCC regulations, non-sellers who make non-emergency autodialed or prerecorded calls to wireless numbers can do so with the consumer's "prior express consent." In the case of collection calls, the FCC had ruled that autodialed or prerecorded calls to wireless numbers were made with the consumer's "prior express consent" if the consumer had given the cell phone number to the creditor for use in normal business communications, such as in a credit application. If adopted, the FCC's proposal would no longer allow a non-seller to make such calls unless it had first obtained a written agreement from the consumer that includes a clear and conspicuous disclosure that the purpose of the agreement is to authorize autodialed or prerecorded calls. Because the proposal does not allow the agreement to be required as a condition of the underlying transaction and requires the agreement to also include the cell phone number to which calls can be placed and the consumer's signature, non-sellers will be unable to use boilerplate provisions in the transaction documents authorizing prerecorded or autodialed calls to any cell phone number the consumer may provide.

The FCC's proposal would also place new burdens on sellers and telemarketers, particularly those who are not already subject to Federal Trade Commission (FTC) telemarketing rules. For entities such as common carriers (including telephone companies and airlines), banks, and insurance companies that are under the FCC's exclusive jurisdiction, the proposal would prohibit such entities from making prerecorded telemarketing calls to residential telephone lines or wireless numbers without a written agreement from the consumer that meets the standards described above. While current FTC rules require the consumer's prior written agreement for any prerecorded telemarketing calls, a prior written agreement is currently only required under FCC rules where the call is made to a residential subscriber who has listed his or her number on the National Do Not Call Registry. Otherwise, current FCC rules only require "prior express consent," which can be written or oral.

The FCC's proposal tracks the FTC's more restrictive rules in several other respects, including its requirement for all prerecorded telemarketing calls to provide an automated, interactive opt-out mechanism and its elimination of the FCC's current exception permitting prerecorded telemarketing calls to residential lines without the consumer’s written agreement or "prior express consent" where the caller and consumer have an established business relationship. Finally, the proposal would also make autodialed telemarketing calls to wireless numbers subject to the prior written agreement requirement.

Ballard Spahr's Consumer Financial Services Group is nationally recognized for its guidance in structuring and documenting new consumer financial services products, its experience with the full range of federal and state consumer credit laws throughout the country, and its skill in litigation defense and avoidance (including pioneering work in pre-dispute arbitration programs). For more information, please contact group Chair Alan S. Kaplinsky, 215.864.8544 or; Vice Chair Jeremy T. Rosenblum, 215.864.8505 or; John L. Culhane, Jr., 215.864.8535 or; Barbara S. Mishkin, 215.864.8528 or; or Mark J. Furletti, 215.864.8138 or

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