The Federal Communications Commission (FCC) has recently taken two significant actions addressing robocalls under the Telephone Consumer Protection Act (TCPA)—the imposition of a $2.96 million fine and the adoption of new TCPA interpretations.

The $2.96 million fine against a group of related companies and their individual owner for making robocalls in violation of TCPA is the largest forfeiture order the FCC has issued for robocall violations.

The Forfeiture Order states that the fine was imposed for “violating the [TCPA] by making or initiating 185 unsolicited, prerecorded advertising messages (a form of robocalls) to cell phones and residential telephone lines belonging to 142 consumers. These consumers never agreed to receive advertisements from the [companies], never did any business with these entities, and, in fact, overwhelmingly sought to prevent such unwanted telephone solicitations by placing their telephone numbers on the National Do-Not-Call Registry.” In its press release, the FCC stated that it had reviewed complaints from consumers who received the calls, which were made to promote travel deals, free vacations, and time-shares.

As noted in the Forfeiture Order, at the time the calls were made, TCPA rules required prior express consent for such calls to be made to cell phones and either prior express consent or an “established business relationship” for such calls to be made to residential telephone lines.  Effective October 2013, TCPA rules were revised to require express written consent for telemarketing calls that are initiated with either an autodialer or artificial voice/prerecorded message to cell phones, or use an artificial voice/prerecorded message to residential phones.  In addition, the “established business relationship” exemption for residential calls was eliminated.

The nearly $3 million fine highlights the potential for significant liability arising from TCPA violations. In addition to possible FCC fines, the TCPA is a potential gold mine for plaintiffs’ counsel, as it provides for a private right of action, statutory damages of $500 per violation, and treble damages for willful violations.

In July 2015, the FCC released the text of a Declaratory Ruling and Order containing a series of new TCPA interpretations that create significant new risks for businesses that contact consumers via telephone. The Order broadly interprets “autodialers” to include a wide array of calling equipment and software. The TCPA defines an autodialer as “equipment which has the capacity to store or produce telephone numbers to be called, using a random or sequential number generator, and to dial such numbers.”

The Order explains that equipment that could be easily modified through software changes has the “capacity” to dial randomly or sequentially. Given this broad interpretation, companies using point- or click-to-dial systems—or any phone system connected to a database of phone numbers—may need to evaluate whether their system now constitutes an autodialer under the TCPA. The Order also includes a number of interpretations relating to the TCPA’s prior express consent requirement for certain calls to mobile phones, such as how such consent can be revoked and reliance on the prior owner’s consent when a phone number is reassigned to a new consumer.

Ballard Spahr’s TCPA Task Force assists clients in navigating the complex and challenging issues that arise under the TCPA. The Task Force, which comprises regulatory attorneys and litigators, provides counsel on TCPA compliance and avoiding TCPA liability, including reviewing policies and practices and helping to design mobile text message and prerecorded and autodialed call campaigns. It also assists clients in handling scrutiny from regulators, including preparing for examinations, responding to investigations, and defending against enforcement actions. Task Force members also defend clients against TCPA class or individual actions.

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, and its skill in litigation defense and avoidance (including pioneering work in pre-dispute arbitration programs).The firm’s Resort and Hotel Group is nationally recognized for its in-depth legal, industry, and market knowledge of vacation ownership plans and timeshare resorts. The group advises timeshare and resort clients on regulatory compliance throughout the United States.

For more information, please contact Consumer Financial Services Group Practice Leader Alan S. Kaplinsky or Resort and Hotel Practice Group Practice Leader Christopher W. Payne.


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