TCPA Rule Changes are in Effect: Is Your Marketing Campaign Ready?

Newsletter - TerraLex Connections
TCPA Rule Changes are in Effect: Is Your Marketing Campaign Ready?

by David N. Anthony, John C. Lynch, Chad R. Fuller,
Alan D. Wingfield  and Ethan G. Ostroff*

 

New regulations became effective in October that dramatically tightened legal requirements under the Telephone Consumer Protection Act (TCPA) for telemarketing calls. Under the new rules promulgated by the Federal Communication Commission (FCC), telemarketers need “prior express written consent” to send telemarketing calls or marketing texts using auto dialer technology, and the prior legal authorization to make prerecorded messages to consumers based on an “established business relationship” exception has come to an end. Moreover, it appears possible that the current rules affect all current customer relationships, meaning that plaintiffs’ lawyers might argue that compliance with the rule may be required even as to existing accounts.

 

TCPA lawsuits have climbed significantly from almost zero five years ago to more than 1,000 in 2012, with a 50 percent further increase this year. The rule changes provide aggressive plaintiffs’ lawyers with new theories and legal support for yet more class action lawsuits under the TCPA.

 

Nuts and Bolts

 

In a Report and Order approved on February 15, 2012, the FCC adopted additional protections for consumers concerning calls and text messages using automatic telephone dialing systems (ATDS) and prerecorded voice, including the use of an autodialer system to deliver a pre-recorded telemarketing message (also commonly referred to as robocalls). The call abandonment calculations and automated opt-out requirements already became effective in November 2012 and January 2013, respectively.

 

Under the new rules, any telephone call or text message that includes an advertisement or constitutes telemarketing, and is initiated using an autodialer or artificial or prerecorded voice, may only be made with the prior express written consent of the called party. In addition to traditional signatures, electronic or digital forms of signature (e.g., agreements obtained website or text message) are acceptable. The requirement for prior unambiguous written consumer consent means the consumer must receive a “clear and conspicuous disclosure” that by giving consent (1) she will receive autodialed and/or pre-recorded telemarketing calls – including text messages – on behalf of a specific seller or advertiser; and (2) she acknowledges that, having been informed about the consequences of consent, she is agreeing to receive such calls and texts to the specific mobile number she designates. Consent cannot be required as a condition to a consumer purchase.

 

The new FCC rules also removed the established business relationship exemption from prerecorded telemarketing calls to residential lines. Beginning today, telemarketers will be required to obtain the consumer’s prior express written consent in order to initiate calls to a residential line using ATDS and prerecorded communications. This requirement exists regardless of whether you have an existing business relationship with the consumer.

 

What does this mean?

 

Sellers now bear the burden to demonstrate by clear and convincing evidence that a clear and conspicuous disclosure was provided and that the consumer unambiguously consented in writing to receive telemarketing calls to the phone number she chooses to provide. Companies should already have in place systems to maintain each consumer’s express written consent for a predetermined period of time. Forecasting ahead, market participants can expect disputes concerning their method of obtaining written consent and whether it satisfies the new disclosure requirements. Addressing how and what kinds of evidence of written consent your company will obtain and store is essential, in particular given the likelihood that you will need to obtain this evidence from the Internet.

 

Further, whether a consumer may revoke her consent to be contacted with an ATDS or prerecorded voice under the TCPA is already a hot litigation issue. Companies should consider whether their method of obtaining express written consent also adequately addresses when and how consent can be revoked.

 

In the past, the existence of an established business relationship (like a previous purchase) provided a safe harbor for sellers to avoid obtaining a customer’s written consent to receive telemarketing calls. This exception no longer exists. Since the new TCPA rules do not include a provision “grand-fathering” past practices, companies now will need prior express written consent to send texts or make prerecorded calls even to existing customers. Companies should consider whether they must get new consent from their existing customers, users and subscribers. If you have not obtained express written consent with the required disclosures from your customers during the yearlong phase-in of this new FCC rule, your marketing campaign may be vulnerable to the increasing threat of regulatory investigation and private litigation.

 

*David N. Anthony is an experienced trial attorney with a concentration in litigating financial services and business disputes, including class actions. He is a partner in the Financial Services Litigation practice of Troutman Sanders LLP and can be contacted at david.anthony@troutmansanders.com or 804.697.5410. John C. Lynch is a partner in Troutman Sanders’ Financial Services Litigation practice and represents financial institutions, loan servicers, and debt buyers/collection companies in class action and individual cases. He also represents companies and executives in intellectual property and commercial cases, involving patent and trademark matters, shareholder/partner disputes, construction, commercial contracts, and real estate.  Mr. Lynch can be contacted at john.lynch@troutmansanders.com. Chad R. Fuller is a partner in the Financial Services Litigation practice of Troutman Sanders LLP, where he focuses on the defense of consumer class actions and general business litigation.  He can be contacted at chad.fuller@troutmansanders.com or 858.509.6056.  Alan D. Wingfield is a partner in the Financial Services Litigation practice of Troutman Sanders whose practice includes counseling to help businesses comply with the myriad and growing laws in the consumer law and financial services fields, with a particular emphasis on the many "alphabet soup" federal consumer protection statutes such as the Fair Credit Reporting Act (FCRA), Truth in Lending Act (TILA) and Regulation Z (Reg Z), and Equal Credit Opportunity Act (ECOA) and Regulation B (Reg B), as well as the impact of Dodd-Frank Wall Street Reform and Consumer Protection Act on the consumer protection landscape. Mr. Wingfield can be contacted at alan.wingfield@troutmansanders.com or 804.697.1350. Ethan G. Ostroff is an Associate in the firm’s Virginia Beach office and has an active practice representing defendants in federal and state consumer litigation, including claims under the Fair Credit Reporting Act, Fair Debt Collection Practices Act, Truth in Lending Act, Real Estate Settlement Procedures Act, other federal and state statutes, and common law. He can be contacted at ethan.ostroff@troutmansanders.com or 757.687.7541.

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Thursday, December 26, 2013
Administrative Law, Privacy / Use of Personal Information, Communications Law / Media Law