JULY 2013
Legal Focus
97
party; (2) initiated for emergency purposes; or (3) the call is not made for a commercial purpose (i.e., is not a telemarketing call). Currently, there is also an “established business relationship” exemption for telemarketing calls made to residential lines, but that exemption will no longer exist as of October 16, 2013.
For mobile phones, it is unlawful to make a call or send an SMS text message using an “automated telephone dialing system” (i.e., auto-dialer) or an artificial or prerecorded voice to a wireless number unless: (1) the call is made with the “prior express consent” of the called party or (2) the call is made for emergency purposes. Importantly, there is no exception for non-commercial purposes or an exemption for “established business relationships” for mobile calls. As a result, these prohibitions apply to telemarketing calls as well as to purely informational or transactional calls such as flight updates, debt collection calls, surveys, and bank account fraud alerts. Some companies do not realize this or confuse these rules with those applicable to residential calls. This can be a very costly mistake.
What are the consequences of a TCPA violation?
The consequences can be staggering, if not catastrophic, which is why litigation readiness and compliance procedures are critical for companies to have in place before they are sued. The TCPA provides statutory penalties of $500 per unlawful call or text message and up to $1,500 per call or text message if the conduct is held to be willful. For calls or text messages made en masse, liability figures can easily reach the multi-million dollar range. As a result, many TCPA class action lawsuits settle. Some of the more notable TCPA settlements include a $46.8 million settlement for Jiffy Lube and a $24.15 million settlement for Sallie Mae. It is generally difficult to obtain early dismissal in these lawsuits, because consent tends to be the primary issue and cannot typically be resolved at the pleading stage. These suits can be costly to defend, can bring unwanted attention and publicity to businesses, and can negatively impact business relationships. Any company that communicates with consumers by tele-
phone or text should be informed about the TCPA.
What are the main legal issues under the TCPA relating to the use of telephones, mobile devices, and faxes when communicating with consumers?
There are usually three salient issues in a TCPA case. The first is the issue of consent, which tends to be the most significant and most litigated issue.
The phrase “prior express
consent” tends to be narrowly construed, so consent should be clear and unmistakable. Beginning on October 14, 2013, it must also be in writing for telemarketing calls made to both residential and mobile telephones. Misdirected calls, including calls made to reassigned telephone numbers where a company had consent from prior subscribers, are generally held to lack the requisite consent. On the other hand, many courts hold that voluntarily providing a company a telephone number constitutes the requisite consent. Responses by companies to user-initiated texts (e.g., text to win) also tend to be consensual, though the scope of the consent is often an issue. While a user may have consented to receive calls or text messages about a certain product or offer, they may not have consented to receiving additional promotional calls about unrelated goods or services or calls from third-party affiliates or partners. Several petitions are currently pending before the Federal Communications Commission
(“FCC”)
regarding whether a caller can rely on representations from a third party that they have obtained the requisite consent from the called party.
Another significant issue is the meaning of an “automated telephone dialing system” (ATDS) as applied to mobile phones. This is currently a controversial area as the law struggles to keep pace with changing technology. The TCPA was enacted in 1991, when traditional auto-dialer equipment was used to make telemarketing calls. But a technical reading of the statute could potentially encompass everyday technology such as iPads or even smartphones. This is due largely to the FCC’s expansive interpretation of an ATDS. The statute defines
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