Winthrop B. Reed, III, Member

Amidst an onslaught of class-action litigation under the Telephone Consumer Protection Act (TCPA), 21 businesses and organizations petitioned the Federal Communications Commission (FCC) for guidance and clarity regarding the TCPA's most ambiguous and oft-litigated provisions. On July 10, 2015, the FCC responded with a Declaratory Ruling and Order (FCC Ruling) that may be interpreted to have expanded the reach of the TCPA. Congress enacted the TCPA to address abusive telemarketing practices and to stop unwanted robocalls. The FCC Ruling, however, appears to expand the reach of the TCPA by broadening the types of devices and equipment that may be subject to the law.

Expansive Definition of Autodialer

The most significant portion of the FCC Ruling is its expansive interpretation of the definition of an autodialer. The TCPA prohibits anyone from making any non-emergency calls to a cell phone using an automatic telephone dialing system ("autodialer") without prior express consent. This prohibition has been found to apply not only to voice calls to cell phone calls, but to text messages and internet-to-text messages sent to cell phones.

The TCPA defines an autodialer as equipment that has the "capacity" to store or produce telephone numbers "using a random or sequential number generator" and to dial such numbers. There has been much litigation over whether "capacity" refers to present or potential capacity—e.g., the current capability of the equipment versus the capability of a modified version of the equipment. Many courts have adopted the view that capacity refers only to the equipment's current capability. But the FCC Ruling rejected that interpretation, holding that the definition of an autodialer includes equipment that currently lacks the ability to store or produce telephone numbers but that could be modified to have that capability in the future. In an important footnote, the FCC explained that the functional capacity of software-controlled equipment includes existing features "that can be activated or deactivated" and features "that can be added to the equipment's overall functionality through software changes or updates." It may now be argued, therefore, that the TCPA applies to software-based equipment with no coding or features merely because a developer could potentially re-code the software to function as an autodialer. Under such an interpretation of the TCPA, it may be argued that any modern communication device would fit the definition of an autodialer on the theory that such devices use software that can be modified to store or generate telephone numbers.

The FCC did caution that the definition of "autodialer" does not "extend to every piece of malleable and modifiable dialing equipment," it offered no practical example and only opined that the possibility of modifying a rotary dial phone to fit the definition of any autodialer is too attenuated. This example, based on outdated and rarely used technology, provides little guidance to businesses seeking to assess their compliance with the TCPA. Instead, as the FCC noted in its Ruling, each piece of equipment will have to be evaluated on a case-by-case basis.

The potential significance of the FCC Ruling on this issue cannot be understated as courts typically look to the FCC for guidance in interpreting the TCPA. The FCC, however, might not have the last word as two organizations have challenged the FCC's interpretation of capacity by filing petitions for review in the Seventh Circuit and the Court of Appeals for the District of Columbia. It remains to be seen whether the FCC's broad interpretation of capacity will stand.

Other Issues Addressed

The FCC's guidance on other issues related to the TCPA was a mixed bag. Although business interests encouraged the FCC to adopt an interpretation of the statute that would exclude liability when the person reached was not the person intended, the FCC determined that the "called party" under the statute means the current cell phone subscriber or customary user of the telephone number. This may make it more difficult for business to avoid TCPA liability based on wrong or reassigned telephone numbers. The FCC also filled in the TCPA's statutory hole regarding revocation of consent to be contacted, ruling that consumers may revoke consent using any reasonable method, either oral or in writing. This ruling raises issues regarding what is considered "reasonable"—issues that will likely be litigated in future TCPA cases.

On the plus side for businesses, the FCC clarified that a one-time text sent in response to a customer's request for information—such as a text-initiated coupon—does not violate the TCPA. For those businesses that provide call-blocking technology, the FCC determined that such technology may be implemented at a consumer's request. Finally, the FCC provided some leeway to financial institutions and healthcare providers, ruling that certain communications regarding fraud or identity theft, security breached, money transfers, and healthcare treatment would not violate the TCPA so long as they meet listed requirements. Click here to see a more detailed explanation of the FCC's Ruling on this issue.

Conclusion

In sum, the FCC has increased the potential that any business could be hit with a TCPA class action. In light of the FCC's Ruling, it would be prudent for all businesses that communicate with their customers or others using modern communications devices to consult a professional to determine whether or not they are compliant with the TCPA.