On March 16, 2018, the U.S. Court of Appeals for the D.C. Circuit handed down a decision in the closely watched case of ACA International, et al. v. Federal Communications Commission, et al.1Among other things, the Telephone Consumer Protection Act of 1991 (“TCPA”)2prohibits calls to a wireless telephone number using an automatic telephone dialing system (“ATDS”) or an artificial or prerecorded voice without the prior express consent of the called party. It also charges the Federal Communications Commission (“FCC”) with rulemaking authority. In the present case, the Court of Appeals unanimously set aside the FCC’s position as to the type of equipment that qualifies as an ATDS, as well as it’s approach to when a call made to the wireless telephone number of a consenting party that has been reassigned to a non-consenting party violates the TCPA.
In this case, the petitioners challenged four aspects of the FCC’s 2015 Declaratory Ruling and Order,3which interpreted certain provisions of the TCPA:
(i) The type of ATDS subject to the restrictions;
(ii) Whether a call made to wireless number for which consent was given by the subscriber violates the act if the number was subsequently assigned to a different subscriber who has not given consent;
(iii) How consent may be revoked;
(iv) Whether the consent exemption for certain healthcare-related calls was too narrow.
The Court of Appeals set aside the FCC’s interpretations as to the first two items, but affirmed the remaining two. Because the above provision regarding healthcare-related calls does not pertain to credit unions, we will only look closer at the first three.
Definition of ATDS
The TCPA defines an ATDS as “equipment which has the capacity—(A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers.” (47 U.S.C. §227(a)) The FCC has attempted to clarify the types of equipment that would qualify as an ATDS, such as predictive dialers. In doing so, it has refused to limit the definition to equipment with the “present capacity” to perform these functions, and instead looks at whether the equipment that could potentially have such capacity with software or other modifications. Under the FCC’s analysis, any smartphone could be deemed an ATDS by virtue of the ability to download an app or other software that would carry out the requisite functions. Finding this interpretation to be unreasonably expansive, the Court stated, “The TCPA cannot reasonably be read to render every smartphone an ATDS subject to the Act’s restrictions, such that every smartphone user violates federal law whenever she makes a call or sends a text message without advance consent.” The Court also found that, even if the FCC order were not construed to apply to all smartphones, it failed to articulate a comprehensible standard for determining what constitutes an ATDS and would fail on that basis.
The Court also looked at the functionality required of an ATDS. While the FCC order notes the difference between the ability to call from a list of numbers and the ability to create and dial a random or arbitrary list of numbers, it appears to take inconsistent positions as to what functionality would be required of an ATDS.
Reassigned Wireless Telephone Numbers
The Court also set aside the FCC’s position with regard to the treatment of calls made to the wireless telephone number previously assigned to a person who had given prior express consent but subsequently reassigned to another person who had not. According to the FCC order, such calls would violate the TCPA regardless of whether the caller had any knowledge of the reassignment. It did allow, however, for a single call safe harbor where the first call to a reassigned a number would not be considered a violation.
The Court found this one-call safe harbor to be arbitrary and capricious, as a single call or text to a reassigned number would not necessarily reveal to the caller that the number has been reassigned, such as when the initial communication receives no response. Exercising the same reasonable reliance on the consent of a prior subscriber, a caller could just as easily call or text multiple times, risking significant exposure.
Revocation of Consent Remains Unchanged
An exception to the TCPA prohibitions is when the caller has obtained the prior express consent of the subscriber. There is no dispute as to the fact that, once consent is given, the subscriber must have the right to revoke that consent. The FCC specifically refused to allow callers to designate the exclusive means to revoke consent, stating instead that that revocation may occur “at any time and through any reasonable means,” either orally or in writing, in a way that “clearly expresses a desire not to receive further messages.”
In this case, the Court affirmed the FCC’s interpretation, finding that callers would have an incentive to “avoid TCPA liability by making available clearly-defined and easy-to-use opt-out procedures.” If a consumer ignores the reasonable opt-out procedures established by the caller, he or she runs a greater risk of a determination that his or her own method is unreasonable. Moreover, the FCC order prohibits the unilateral imposition of opt-out methods. However, the Court noted that the FCC order does not restrict the ability of contracting parties to agree to a particular method of opting out.
What This Means for Credit Unions
While this decision is likely to reduce litigation by limiting what might be construed as an ATDS, it is also likely that the FCC will soon seek to address the areas of concern noted by the Court. For now, the TCPA remains a complex law subject to extensive regulatory and legislative interpretation and credit unions are encouraged to work with the legal counsel in determining when and how to obtain any prior express consent that may be required.
1ACA International, et al., v. Federal Communications Commission, et al., No. 15-1211 (D.C. Cir., Mar. 16, 2018).
2Telephone Consumer Protection Act of 1991, Public Law 102-243, Dec. 20, 1991 (S. 1462; 102nd Congress 1990-1991); see also 47 U.S.C. §227; 47 C.F.R. §64.1200.
3FCC Declaratory Ruling and Order, No. 15-72 (Adopted June 18, 2015).