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Key Portions of FCC’s July 2015 Order Regarding TCPA Stricken Down by D.C. Circuit Court

On March 16, 2018, the D.C. Circuit Court (“the Court”) issued its ruling on ACA International v. FCC, addressing the Telephone Consumer Protection Act (“TCPA”) and the Federal Communication Commission’s (“FCC’s”) July 2015 Declaratory Ruling and Order (the “2015 Order”). This appeal addressed four key issues raised by the 2015 Order: (1) the definition of an automatic telephone dialing system (“ATDS” or “autodialer”) subject to the TCPA’s restrictions; (2) calls made to reassigned phone numbers; (3) revocation of consent; and (4) the exemption from the consent requirement for urgent healthcare related calls.

Under the TCPA, an ATDS is defined 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” (emphasis added).  In practice, the TCPA generally makes it impermissible to call a cell phone using an ATDS, though there are certain exceptions provided by law. In the 2015 Order, the FCC had interpreted the phrase “capacity” extremely broadly, to include “potential functionalities” or “future possibility,” rather than just “present ability.”  Echoing industry criticism, the D.C. Circuit Court found this interpretation to be overly expansive and unreasonable. The Court expressed significant concern that even smartphones could be included in the definition of an autodialer under such a reading and that every uninvited communication from a smartphone would infringe on federal law. The Court determined the FCC’s justifications for what constituted an ATDS were arbitrary and capricious and did not articulate a comprehensible standard for businesses to follow. Accordingly, these justifications were unlawful. The Court also pointed to other inconsistencies and unanswered questions in the FCC's history of opinions on the matter that left businesses without clear direction about how to determine if a device is an ATDS.  In a “win” for businesses, the Court’s ruling struck down the FCC's overbroad definition of an autodialer in the 2015 Order.

Next, the Court analyzed whether a caller violated the TCPA when a wireless phone number has been reassigned and the new owner has not given consent to receiving autodialed calls. Under this scenario, the caller would not have been aware at the time of the call that the number had been reassigned to a non-consenting party. The 2015 Order provided for a one-call “safe harbor,” or exemption from TCPA liability, for the first call or message made after a wireless number for which consent has been given has been reassigned to a non-consenting party. In its ruling, the Court criticized the “safe harbor” as arbitrary as well.  Noting that a business may not have received any indication from this first call that the wireless number had been reassigned, the Court determined that the FCC’s one-call distinction lacked a reasoned relationship with the business’s ability (or inability) to rely on the prior granted consent.  As such, the Court set aside the FCC’s limitation of the safe harbor to only the first call.

The Court subsequently addressed consent, confirming that consumers who provide consent to receiving autodialed calls are entitled to revoke this consent. In this finding, the Court affirmed the 2015 FCC Order’s approach to revocation of consent, agreeing that a called party can revoke his or her consent to autodialed contact at any time “through any reasonable means” either orally or in writing.  According to the FCC, such revocation must clearly express the desire not to receive further messages or calls from the caller. In another helpful insight for businesses, however, the Court went on to highlight the FCC’s position that although calling parties (businesses) cannot unilaterally impose revocation methods of their own choosing, they would be free to contract with consumers to agree upon reasonable revocation procedures.

Finally, the Court also upheld the 2015 FCC Order’s limitations on the exemption for healthcare-related automated calls to wireless numbers. This exemption was upheld on the basis of public policy and exigent circumstances.

What now, in light of the D.C. Circuit case?  The FCC is likely to issue further rulings and orders in the coming months examining the characteristics and definition of an ATDS, and potentially also evaluating other safe harbor standards, among other considerations. Of course, any future rulings will have to be made in accordance with the ACA International case.  Financial institutions should continue to keep abreast of these legal updates as they continue to develop their automated contacts procedures.