What Is The TCPA?
In 1991, the United States Congress passed the TCPA or Telephone Communication Protection Act, which was then signed by the President of the time, George W Bush. The purpose of the TCPA was to replace the outdated Communications Act of 1934, which did not cater to today’s modern marketing practices. The TCPA is legislation that places restrictions on the communication methods used by companies for telemarketing purposes. Some examples of communication methods covered by the TCPA include phone calls, SMS(Opens in a new browser tab) messages, and fax messaging.
The Main Purpose Of The TCPA
The primary purpose of the TCPA rules is to limit what a telemarketer can do with an automatic dialing telephone system, pre-recorded and artificial telephone and SMS messages, and automated faxes as part of their marketing campaigns. Without the implemented restrictions, companies can use computer systems to solicit consumers every hour of the day, all with the press of a button. However, the TCPA does not just limit a company’s use of such machines, but also the machines themselves. Fax machines, auto-dialers, and similar devices must all meet a particular specification outline by the TCPA. Though many associate the TCPA with marketing calls, it does extend to debt collection calls as well.
The World Before The TCPA
Before the TCPA, there was the Communications Act of 1934, which was brought in by President Franklin D. Roosevelt. With this Act came the creation of the Federal Communications Commission. The Communication Act got built upon the Radio Act of 1927. The Act was put in place to regulate wired and wireless communications both on a national and worldwide level. It also got used to expand affordable access to communication services. However, the Communication Act did not adequately cover rising technology, which is where the TCPA came in. The three main points that drove the TCPA into service are:
- Auto-dialing machines that used sequential dialing became popular, which led to a significant increase in calls. Businesses began to complain that their outgoing lines were occupied continuously by a call from these machines, effectively leading to them losing business.
- Those same calls made using sequential dialing also went to residential properties. Calls would come at breakfast or dinner, to elderly or sick people. There was no discrimination, and if an auto-dialing machine produced a number, it did not matter who was on the other end. Many homeowners thought of these calls as harassment and invasion of their privacy.
- Many of the companies that placed these robocalls or sent unsolicited faxes did so because it was affordable. At the time, fax machines were expensive to run, and many mobile phone plans charged for incoming calls. The cost of advertising got handed to the consumer.
The TCPA has done an excellent job of combatting the above. However, as the way companies contacted customers changed, so did the TCPA, with more on that below.
How Does The TCPA Protect Consumers?
Consumer rights dictate that a company must gather prior express consent for them to contact them for telemarketing purposes. Though that is the basic idea behind the TCPA, the rules do go more in-depth, with some specific rules for the different devices a potential consumer may own.
Calls To Mobile Phones
A consumer’s mobile phone is the most protected device under the TCPA. All automated calls, pre-recorded messages, and text messages are not allowed to get made to a wireless device unless the person getting contacted has given their consent. And consent can be removed at any time. The consent terms still apply if the call gets made to a different device and then routed to a mobile phone.
Calls To A Residential Landline
The rules outlined by the TCPA for calls to residential landlines are slightly laxer than those connected to mobile devices. Pre-recorded messages cannot get left for a consumer unless the potential consumer has expressed interest in the business. What counts as a customer showing interest gets described in the TCPA as a customer who has done business with the company in the last eighteen months or inquired about the offered services in the previous three months.
The Actual Rules Of The TCPA
The above are brief outlines of the rules that make TCPA, relating to the two most popular devices used by consumers. However, for a company to maintain TCPA compliance, they should have a complete understanding of the Act. The Act has seen numerous clarifications. Although, the below list should not get taken as an exact list, it can help a company start to understand what it needs to do to remain compliant:
- Businesses are not allowed to solicit business by calling before 8 am and after 9 pm.
- Companies must maintain a DNC or Do Not Call List. Consumers who ask not to get contacted must get added to this list and have their request honored for five years.
- Companies must stay up to date and abide by the National Do Not Call Registry.
- When contacting a customer, the company must state their name or the name of the singular person making the call. A telephone number or address must also be provided so the customer can contact the company after if necessary.
- Any calls made to a residential consumer must use an actual person as the (Opens in a new browser tab)voice(Opens in a new brand not an automated or pre-recorded voice.
- Calls made using an automatic telephone dialing system should not get made to emergency numbers, a hospital or similar health service, a mobile device, or if the call will incur fees for the consumer.
Exceptions To The TCPA
The TCPA aims to protect consumers from robocalls, though some automatically dialed calls are exempt from the Act. If these calls even slightly fall into marketing, then the law comes right back into action with the appropriate consequences, which are detailed below. But the types of calls exempt from the TCPA are:
- Messages and calls made manually. If a person from a company picks up the phone, dials the number, and either makes a call or sends a message, they are exempt from the TCPA.
- Messages and calls made during and for an emergency. If there is an emergency, such as a natural disaster, people need to be made aware. Robocalls are a great way to spread information quickly, so they are exempt when used for this purpose.
- Calls and messages for providing a utility service update. If there are planned power works or waterworks to take place that will interrupt residents, automated messages can get used to inform the area.
- Calls and messages for providing updates from educational institutions. A variety of updates relating to school or college can get delivered via an automated message.
It is common to hear that non-profit organizations do not have to abide by the TCPA, and this may come from the confusion of the fact they do not need to check the National Do Not Call Registry. A not-for-profit company does have to keep the TCPA in mind when making calls, though, how they gather consumer consent is not as regulated as other types of companies. If the consumer gives them their number, that is classed as consent to get contacted.
The National Do Not Call Registry
If a number gets listed on the National Do Not Call Registry, it should not be contacted. This list should not be confused with a company’s own Do Not Call List. When the Telephone Consumer Protection Act initially passed through Congress, enforcement of the Act got handed over to the FCC or Federal Communications Commission. The FCC first decided that companies should create and monitor their own Do Not Call lists. However, policing those lists proved difficult, ineffective, and time-consuming. The solution came about in 2003 with the conception of the National Do Not Call Registry by the FTC or Federal Trade Commission. A consumer can add their number to this list free of charge and then a company must halt all calls to that number within 31 days of it getting added to the list. Once a number gets added to the list, it is there for good. If someone does not want to receive solicitation calls, then applying to the National Do Not Call Registry is the best way to go about it.
However, though a number of features on the list, it will not be exempt from receiving all types of calls. The following types of calls to not have to consider the National Do Not Call Registry:
- Calls from Political Organizations.
- Calls from Non-Profit Organizations.
- Calls made to conduct a survey.
- Calls made from debt collectors. However, these calls have their own rules to follow, as detailed under the Fair Debt Collection Practices Act.
It is worth noting that some companies have no interest in following the law will not abide by the no-call list. If a consumer receives a robocall that is not from or for one of the above, the company making the call should get reported to FTC.
The Penalty For Failing To Comply With The TCPA
It is up to a consumer to report a company that has breached the Telephone Consumer Protection Act. If that happens, the company can face a lawsuit unless they decide to settle out of court. This lawsuit can lead to fines, and if it becomes class action, those fines can be in the millions. If the penalties weren’t enough, the offending company also has to deal with the bad publicity that comes with a lawsuit. The penalties are issued on a per-person basis and are as follows:
- Up to $500 for each time the Do Not Call Registry gets violated.
- Up to $500, or statutory damages, whichever is higher, for each phone call or message made that is in breach of the TCPA.
These fines get handed out, no matter whether the company breaching the TCPA did so on purpose or by accident. An additional amount of up to $1500 can get levied against the company. For this to happen, the receiver of the calls must prove that the company intentionally breached the TCPA. $500 may not sound like a lot, but TCPA cases often transcend small-claims courts and are the second most popular federal court cases.
How Can A Company Stay Compliant With The TCPA?
The best way a company can avoid a lawsuit brought on by breaching the TCPA is to ensure the way they operate is in compliance with the rules outlined in the Act. There have been cases where a consumer has attempted to claim against a company without them breaching the TCPA. It then becomes the responsibility of the company to prove its innocence. Below is a selection of best practices a companies can do to stay compliant with the TCPA.
Gathering Consumer Consent
The first stage of maintaining compliance is to gain consumer consent correctly. How consent needs to get collected depends on the type of calls a company makes. For marketing calls made using an automated telephone dialing system, a consumer must provide prior express written consent. That means the consumer must sign a written agreement that lists their contact number and states they are happy to be contacted. A company cannot request consent to get approved as a condition of purchasing from them. Consent must be entirely voluntary.
If calls to the customer get made for reasons not related to marketing, the rules behind how consent gets given are not as strict. In terms of the TCPA, if a customer provides their number, written consent, or not, they agree to receive calls of a non-marketing nature. However, that non-marketing call must relate to either the product/service they purchased or related to the reason given for requesting their number.
Managing Consumer Consent
A company should always abide by the National Do Not Call Registry, and as stated above, they must have their own do not call list. A good practice to have, to avoid TCPA violations, is to keep a record of consumers who have consented to receive a solicitation, and in what form they prefer that solicitation, whether telephone solicitation or by another means. There should be a clear internal protocol that makes this list accessible to everyone who needs it. That way, there is no excuse for being non-compliant.
Another non-optional requirement of the TCPA is that customers must get given a clear opt-out feature at all times, with some minor differences depending on the type of communication. A company should go to the effort to make sure this opt-out prompt is visible and that the above list of previous consent gets updated as and when necessary, such as each time a consumer rescinds their consent.
Communication With Potential Consumers
Once a company has a clear list of who they can and can’t call and have gathered the consent of those they can in the correct manner, the TCPA compliant marketing can begin. However, just because a company has got the above right, they should not throw caution to the wind. One of the main reasons TCPA litigation gets brought against a company is because the consumer keeps receiving multiple calls a day. A company should avoid making numerous calls a day and avoid leaving messages for each time the call doesn’t get answered. Deciding on the number of calls comes down to common sense. Would the person making the calls like to receive numerous calls a day? Probably not.
Additionally, as stated above, any calls made should be between the hours of 8 am and 9 pm, local time. The Telephone Consumer Protection Act clearly states this, so there is no excuse for not complying.
In short, a consumer can express their consent to receive marketing calls, but the company should still treat them with respect. That is the best way to remain compliant and ultimately avoid a TCPA lawsuit.
Learning From Past Mistakes
One of the best ways of learning how to stay compliant with the TCPA is by learning from the mistakes of others. Analyzing the below lawsuits that become class action TCPA suits can help a company understand what they can and cannot do. These cases fall under the designation of putative class action. The definition of a putative class action case is where a single or multiple named plaintiffs bring a case forward on behalf of other unnamed individuals who may have suffered similar wrongdoing. It’s for this reason why the payouts detailed below reach into the millions instead of up to $500.
Wells Fargo received an accusation of using an automatic dialing system to call their debtors while performing debt collection. Of course, there is nothing wrong with chasing outstanding debts, if done correctly. Unfortunately, robocalls got used for the chasing of payments and the debtors had not given consent to receive such calls. Wells Fargo Bank denied the claims of the company being in breach of TCPA law, though, with a reputation of a reputable bank to uphold, they decided to settle the lawsuit, instead of letting it become a TCPA class action. In the end, Wells Fargo paid out a settlement of more than $16.3 million. As detailed above, a company cannot use robocalls without consent, no matter the reasoning. An exception of note to this rule is government institutions. This clause is known as the government-debt exception, though it is something that is getting looked at and possibly reconsidered.
This State Farm case came about due to how their marketing campaign got carried out. State Farm entrusted a third-party, Variable Marketing, to carry out their marketing. Variable Marketing offered insurance products on behalf of State Farm with the assistance of an auto-dialing service, without consumer consent, which is the very definition of unsolicited advertisement. Variable Marketing did counter that once a potential consumer answered a call, they got transferred to a live agent. A company is responsible for its marketing, no matter if they entrusted a third party or not. However, in this instance, State Farm was found to be directly involved by deciding the timing and frequency of the marketing. State Farm, through vicarious liability, opted to settle the TCPA class action lawsuit, with an amount of $7 million.
Many TCPA claims come about due to calls made for debt collection purposes. Such is also the case for Capital One and three contracted debt collectors. Litigation got brought against Capital in 2012. The allegations brought against the company stated that they were using automatic dialing and pre-recorded messages to connect with their debtors. The calls got made to collect outstanding credit card debt, though consent was never given by the consumers to receive such calls. Like the above two examples, Capital One never admitted to the alleged violation though did agree to settle the TCPA case, with the largest settlement for a TCPA case at the time of writing. Overall, $75.5 million was paid out.
The class action lawsuit brought against Sprint is slightly more complicated than straight marketing or debt collection calls. Sprint Solutions Inc had purchased U.S. Cellular and then contacted the customers who had contracts with U.S. Cellular to inform them that their service would stop, though Sprint could provide an alternative service. Consumers got contacted by Sprint, who were marketing their services, though they had to inform them that their previous service was ending. However, Sprint allegedly made further marketing calls without consumer consent after consumers had changed contracts to another provider. Ultimately, the case got resolved by the Seventh Circuit Appeals Court, the federal court that deals with appeals from multiple district courts in Illinois, who ordered the plaintiffs to resolve their claims with Sprint via arbitration.
Hilton Grand Vacations
The Hilton Grand Vacations case is the most recent on this list. Two plaintiffs brought the litigation against them on the allegation that both had received multiple unsolicited phone calls with some chasing debt and others offering vacation properties. The case got brought against Hilton Grand Vacations as the plaintiffs alleged the company had used an ATDS or automatic telephone dialing system. However, Hilton Grand Vacations countered that though the telephone system they used was sophisticated, it still required human input, so the Act did not cover it. The conclusion was that a non-ATDS got used for the case of one of the plaintiffs. However, the case for the other plaintiff was successful. The court ruled an auto-dialer got used for at least some of the calls. Hilton Grand Vacations won against the on the claim because of the actual definition of an ATDS. The Act states that a device should both store or produce numbers, either by random or sequential number generation and dial those numbers automatically. However, if this case had happened many years ago, the results may not have been the same. For the first 12 years of the TCPA, ATDS only had to store or produce numbers to fall under the TCPA.
How Can The TCPA Be Changed?
As stated above, the Hilton Grand Vacations company beat one case because of a change to the Telephone Consumer Protection Act. The original TCPA got approved in 1991, which was a different time, so the rules of then might not apply to the now. Think back between 1991 and 2020:
- In 1991, only 3% of people in the United States owned a mobile phone. That number is now 95%.
- Back in 1991, landlines were the primary method of telecommunication, though they have now nearly got entirely replaced by mobiles.
- The TCPA aimed to stop the abuse of auto-dialers. However, the technology was somewhat new and less refined then it is now. They would effectively dial random numbers in an area, no matter business or residential.
- Fax machines were more prevalent in 1991, though fax paper was expensive. It angered business owners who received marketing through their fax machine, wasting paper that they would then have to buy more of.
- The internet had around 1 million users in 1991, so companies had to deliver their marketing via other means.
There are countless more changes to how communication gets made between a company to a consumer since 1991. It is for this reason that the TCPA has gone through multiple changes.
TCPA Rulings And Orders
Changes to the Telephone Consumer Protection Act are the responsibility of the FCC. An entity can petition the FCC for clarification on the rules outlined within the TCPA if they feel a specific rule is not clear. After a period of seeking additional comments from the public on the rule or rules in question, the FCC can issue a report and order, which will clarify the TCPA. There have been several occasions where rulings and orders have gone into effect, which are usually brought about by a case of the time. Some examples of rulings and orders that have taken place include the below items.
2012 Report And Order
The Report and Order of 2012 looked at the rules relating allowing abandoned calls and the exemptions the TCPA permits for pre-recorded calls made to a residential line from a healthcare-related entity. The 2012 Report and Order brought in the prior express written consent terms. Before then, there was no exact definition of what defined consent for a consumer to receive calls from an automatic telephone dialing system used to place a marketing call.
The Report and Order also addressed when consent was not necessary. Determining the nature of a call gets done on a case-by-case basis. Generally, if a call has no marketing behind it, such as debt collection calls, wireless usage notifications, bank account alerts, or a similar reason, consent is not needed if made to a landline. Consent is necessary for wireless phones, though it does not need to come in written form.
Another point of the 2012 Report and Order was the removal of the exemption allowed for an established business relationship. If the call receiver had a previous relationship with a business, then that business could make telemarketing calls. Since 2012, even if there is an established relationship, a company must gather consent from the consumer if they wish to make telemarketing calls. The removal of the exemption was not liked by businesses, as they used their existing customer base for targeted marketing.
The above are not the only changes made to the Telephone Consumer Protection Act, though another note that was a specific item the FCC wished to address was the changes made to the rate of abandon calls. An auto-dialer connects to a potential customer, and on some occasions, a live telemarketing agent will take the call from there. If the call does not get answered by a live agent within 2 seconds of the automated greeting, the consumer is likely to hang up. The 2012 Report and Order stated that a company should not have a missed call rate of more than 3% of calls that get answered, over a 30-day marketing campaign, per service offered.
2015 Omnibus Declaratory Ruling And Order
The Declaratory Ruling and Order of 2015 brought further clarification to the TCPA. Twenty-one separate petitions were sent for the FCC to consider. The order aimed to address the meaning of terms in the TCPA, which would close any loopholes.
One of the biggest things the 2015 Declaratory Ruling and Order did was confirming once more the definition of an ATDS or Automatic Telephone Dialing System. The Eleventh Circuit’s final definition of an ATDS is a system that can both store or produce and dial random or sequential numbers, even if the owner of the device is not using that function. Both predictive dialing and internet to text messaging services fall under the ATDS classification.
The FCC also wanted to address how reassigned mobile numbers get treated under the TCPA. Each year, millions of mobile numbers get reassigned by mobile service providers. However, companies have gained consent to call that number from the previous owner, but the new owner hasn’t given permission, but the company doesn’t know the ownership of the number has changed. The FCC understands this is a problem though a solution is challenging to implement. They address the issue in two ways:
- A one-call safe harbor – A company is allowed to make one call to a reassigned number by mistake if they have not had notice of the reassignment. The one-call safe harbor does not apply to misdialed numbers, as there was no consent in the first place.
- The FCC also clarified the definition of what a called party is, so there is no misunderstanding. A called party is the recipient of the call, whether they are the intended recipient or not.
2020 Declaratory Ruling
The most recent change to the TCPA regulation came in March 2020, which clarifies the robocalls for an emergency purpose exception. The date is not a coincidence, as this ruling served to eliminate any confusion during the Coronavirus pandemic. The original emergency purpose exception outlined in the TCPA stated that any calls made to inform the receiver on a situation that may affect their health and safety. However, there was no clarification of what constitutes an emergency. The 2020 Declaratory Ruling expressively states that the current pandemic does fit the classification of a national emergency.
The FCC advises consumers to confirm the call is related to Covid-19. There are two ways a consumer can do this. First, the caller needs to identify themselves. The origin of the call can be from one of the following:
- A hospital, doctor’s office, or similar health care provider.
- A national, state, local, or other type of government health care official.
- A person who is calling on behalf of one of the above.
Once the caller has identified themselves, the purpose of the call needs to get clarified. For the call to fall under the emergency purpose exception, it must consist of purely informational content.
The FCC did provide some examples of such calls in their ruling. However, the below are not exclusive, but they do help towards eliminating any uncertainty.
- A call from a hospital that provides vital information to help citizens to combat the spread of Covid-19 would fall under the emergency purpose exception.
- A call from a health care provider forwarding information updating call receivers on the measures in place to combat the pandemic.
- A government official can place a call to inform residents of the current stay-at-home requirements, quarantine updates, and other local information on school and business closures.
As well as what calls can get made, the FCC regulations also clarify what calls do not fit the exception. Even if a call gets placed concerning Covid-19, that does not warrant an instant exception. Calls offering grocery delivery, selling home testing kits, health insurance, or cleaning services are not exempt, even if they can be helpful to the call receiver. Debt collection calls related to the medical expense of treatment for Covid-19 also don’t fall under the exception.
The Problem With The TCPA
The aim of the TCPA is, as stated, to protect consumers from overzealous advertising with the use of robocalls. However, the fact that TCPA class certification claims are one of the most popular types of lawsuits in federal courts means businesses are suffering from how TCPA enforcement gets carried out and the emphasis on consumer privacy. It is for this reason that the terms of TCPA go under many re-evaluations. What is an ATDS? How can a consumer give and rescind consent? What types of calls are exempt? As technology advances, the TCPA will likely go under yet another revision. The best way to avoid a TCPA lawsuit is for companies to remain compliant, though that is not always easy when the outlined rules of the Act are open to the FCC’s interpretation.