Skip to main content
Menu Icon Menu Icon
Close

InfoBytes Blog

Financial Services Law Insights and Observations

Filter

Subscribe to our InfoBytes Blog weekly newsletter and other publications for news affecting the financial services industry.

  • FCC affirms three-call limit but permits oral consent

    Federal Issues

    On December 21, the FCC issued an order on reconsideration and declaratory ruling under the TCPA, affirming a three-call limit and opt-out requirements for exempted residential calls. According to the FCC, the ruling is in response to requests from industry trade groups related to a 2020 order implementing portions of the Pallone-Thune Telephone Robocall Abuse Criminal Enforcement and Deterrence Act (TRACED Act). The ruling upheld the three-call-limit for exempt calls made using automated telephone dialing systems to residential lines but revised the 2020 order’s requirement for “prior express written consent” to allow callers to obtain consent orally or in writing if they wish to make more calls than allowed. The FCC also granted a request to confirm that “prior express consent” for calls made by utility companies to wireless phones applies equally to residential landlines. The FCC noted that “limiting the number of calls that can be made to a particular residential line to three artificial or prerecorded voice calls within any consecutive thirty-day period strikes the appropriate balance between these callers reaching consumers with valuable information and reducing the number of unexpected and unwanted calls consumers currently receive.”

    Federal Issues Agency Rule-Making & Guidance FCC TCPA TRACED Act Robocalls Autodialer

  • FCC orders companies to block student loan scam calls

    Federal Issues

    On December 8, the FCC’s Enforcement Bureau ordered voice service providers to cease carrying robocalls related to known student loan scams and specifically designated a service believed to account for more than 40 percent of student loan robocalls in October. The FCC’s order provides written notice to all voice service providers regarding suspected illegal robocalls that have been made in violation of the TCPA, the Truth In Caller ID Act of 2009, or the TRACED Act. Specifically, the order “directs all U.S.-based voice service providers to take immediate steps to mitigate suspected illegal student loan-related robocall traffic.” The order further noted that if a provider fails to “take all necessary steps” to avoid carrying suspected illegal robocall traffic, the provider may be “deemed to have knowingly and willfully engaged in transmitting unlawful robocalls.” According to FCC Chairwoman Jessica Rosenworcel, the Commission is “cutting these scammers off so they can't use efforts to provide student loan debt relief as cover for fraud.”

    Federal Issues FCC Enforcement Student Lending Robocalls TCPA Truth in Caller ID Act TRACED Act Consumer Finance

  • FCC says consent is required for ringless voicemails

    Agency Rule-Making & Guidance

    On November 21, the FCC issued a declaratory ruling that entities using ringless voicemail products must first obtain a consumer's consent prior to using the product to leave voicemails. According to the FCC, it receives “dozens of consumer complaints annually related to ringless voicemail.” The unanimous ruling establishes that ringless voicemails are “calls” that require consumers’ prior express consent, and further clarifies that a ringless voicemail is a form of a robocall, and therefore subject to the TCPA robocall prohibition, which prohibits making any non-emergency call with an automatic telephone dialing system or an artificial or prerecorded voice to a wireless telephone number without the prior express consent of the called party.

    The FCC’s declaratory ruling denied a 2017 petition filed by a company that distributes technology that permits voicemail messages to be delivered directly to consumers’ voicemail services. The petitioner argued that ringless messages, and the process by which the ringless voicemail is deposited on a carrier’s platform, is neither a call made to a mobile telephone number nor a call for which a consumer is charged and, therefore, is a service that is not regulated. The FCC rejected the petitioner’s argument that ringless voicemail is not a TCPA call because it does not pass through a consumer’s phone line and that the TCPA protects only calls made directly to a wireless handset, and does not result in a charge to the consumer for the delivery of the voicemail message. The ruling noted that “consumers cannot block these messages and consumers experience an intrusion on their time and their privacy by being forced to spend time reviewing unwanted messages in order to delete them.” The ruling also noted that a “consumer’s phone may signal that there is a voicemail message and may ring once before the message is delivered, which is another means of intrusion. Consumers must also contend with their voicemail box filling with unwanted messages, which may prevent other callers from leaving important wanted messages.” According to a statement by FCC Chairwoman Jessica Rosenworcel, the rule makes it “crystal clear" that ringless voicemails are subject to the TCPA and that the Commission's rules "prohibit[] callers from sending this kind of junk without consumers first giving their permission to be contacted this way.”

    Agency Rule-Making & Guidance Federal Issues FCC Robocalls TCPA

  • 9th Circuit says district court must reassess statutory damages in TCPA class action

    Courts

    On October 20, the U.S. Court of Appeals for the Ninth Circuit ordered a district court to reassess the constitutionality of a statutory damages award in a TCPA class action. Class members alleged the defendant (a multi-level marketing company) made more than 1.8 million unsolicited automated telemarketing calls featuring artificial or prerecorded voices without receiving prior express consent. The district court certified a class of consumers who received such a call made by or on behalf of the defendant, and agreed with the jury’s verdict that the defendant was responsible for the prerecorded calls at the statutorily mandated damages of $500 per call, resulting in total damages of more than $925 million. Two months later, the FCC granted the defendant a retroactive waiver of the heightened written consent and disclosure requirements, and the defendant filed post-trial motions with the district court seeking to “decertify the class, grant judgment as a matter of law, or grant a new trial on the ground that the FCC’s waiver necessarily meant [defendant] had consent for the calls made.” In the alternative, the defendant challenged the damages award as being “unconstitutionally excessive” under the Due Process Clause of the Fifth Amendment.

    On appeal, the 9th Circuit affirmed most of the district court’s ruling, including upholding its decision to certify the class. Among other things, the appellate court determined that the district court correctly held that the defendant waived its express consent defense based on the retroactive FCC waiver because “no intervening change in law excused this waiver of an affirmative defense.” The appellate court found that the defendant “made no effort to assert the defense, develop a record on consent, or seek a stay pending the FCC’s decision,” even though it knew the FCC was likely to grant its petition for a waiver. While the 9th Circuit did not take issue with the $500 congressionally-mandated per call damages figure, and did not disagree with the total number of calls, it stressed that the “due process test applies to aggregated statutory damages awards even where the prescribed per-violation award is constitutionally sound.” Recognizing that Congress “set a floor of statutory damages at $500 for each violation of the TCPA but no ceiling for cumulative damages, in a class action or otherwise,” the appellate court explained that such damages “are subject to constitutional limitation in extreme situations,” and “in the mass communications class action context, vast cumulative damages can be easily incurred, because modern technology permits hundreds of thousands of automated calls and triggers minimum statutory damages with the push of a button.” Accordingly, the 9th Circuit ordered the district court to reassess the damages in light of these concerns.

    Courts Appellate Ninth Circuit TCPA Constitution Class Action FCC

  • 9th Circuit says telemarketing texts sent to mixed-use cells phones fall under TCPA

    Courts

    On October 12, a split U.S. Court of Appeals for the Ninth Circuit reversed a district court’s dismissal of a TCPA complaint, disagreeing with the argument that the statute does not cover unwanted text messages sent to businesses. Plaintiffs (who are home improvement contractors) alleged that the defendants used an autodialer to send text messages to sell client leads to plaintiffs' cell phones, including numbers registered on the national do-not-call (DNC) registry. The plaintiffs contented they never provided their numbers to the defendants, nor did they consent to receiving text messages. The defendants countered that the plaintiffs lacked Article III and statutory standing because the TCPA only protects individuals from unwanted calls. The district court agreed, ruling that the plaintiffs lacked statutory standing and dismissed the complaint with prejudice.

    On appeal, the majority disagreed, stating that the plaintiffs did not expressly consent to receiving texts messages from the defendants and that their alleged injuries are particularized. In determining that the plaintiffs had statutory standing under sections 227(b) and (c) of the TCPA, the majority rejected the defendants’ argument that the TCPA only protects individuals from unwanted calls. While the defendants claimed that by operating as home improvement contractors the plaintiffs fall outside of the TCPA’s reach, the majority determined that all of the plaintiffs had standing to sue under § 227(b), “[b]ecause the statutory text includes not only ‘person[s]’ but also ‘entit[ies].’” With respect to the § 227(c) claims, which only apply to “residential” telephone subscribers, the appellate court reviewed whether a cell phone that is used for both business and personal reasons can qualify as a “residential” phone. Relying on the FCC’s view that “a subscriber’s use of a residential phone (including a presumptively residential cell phone) in connection with a homebased business does not necessarily take an otherwise residential subscriber outside the protection of § 227(c),” and “in the absence of FCC guidance on this precise point,” the majority concluded that a mixed-use phone is “presumptively ‘residential’ within the meaning of § 227(c).”

    Writing in a partial dissent, one judge warned that the majority’s opinion “usurps the role of the FCC and creates its own regulatory framework for determining when a cell phone is actually a ‘residential telephone,’ instead of deferring to the FCC’s narrower and more careful test.” The judge added that rather than “deferring to the 2003 TCPA Order which extended the protections of the national DNC registry to wireless telephones only to the extent they were similar to residential telephones, a reasonable interpretation of the TCPA, the majority has leaped over the FCC’s limitations to provide its own, much laxer, regulatory framework and procedures that broadly allow anybody who owns a cell phone to sue telemarketers under the TCPA.” 

    Courts Appellate Ninth Circuit Autodialer TCPA FCC Telemarketing

  • FCC proposes rulemaking to combat unlawful text messages

    Agency Rule-Making & Guidance

    On September 27, the FCC announced a notice of proposed rulemaking (NPRM) to target and eliminate unlawful text messages. According to the FCC, the number of consumer complaints received related to unwanted text messages has increased by 146 percent between 2019 and 2020, and continues to grow in 2022. The Commission warns that these text messages present harms beyond that of unwanted phone calls, as text messages can include phishing and malware links. More than $86 million was stolen in 2020 through spam texting fraud schemes, the FCC reports. The NPRM seeks feedback on several topics, including whether providers should follow the STIR/SHAKEN authentication protocols for text messages as they do for phone calls, whether providers should block texts from invalid phone numbers, and how it can ensure that emergency text messages or other appropriate texts are not erroneously blocked. The NPRM also proposes requiring providers to block texts that appear to originate from phone numbers that are invalid, unallocated, or unused as well as numbers on the “Do-Not-Originate” list.

    The Commission is also seeking input on the extent to which spoofing is a problem in texting, and if caller ID authentication standards should be applied to texting. Spoofing is when a sender deliberately disguises their number to trick a recipient into thinking the message is trustworthy. A working group of the Internet Engineering Task Force is currently considering a draft standard that would apply parts of the STIR/SHAKEN framework to text messages, the FCC stated, adding that it is asking stakeholders for suggestions on an ideal timeline and feedback on whether the current framework’s governance system would be able to accommodate authentication for text messages or if the framework would require more comprehensive technology network upgrades.

    Comments on the NPRM are due 30 days after publication in the Federal Register.

    Agency Rule-Making & Guidance Privacy, Cyber Risk & Data Security FCC Text Messages

  • FCC signs robocall enforcement MOU with Canada

    Agency Rule-Making & Guidance

    Recently, the FCC announced that it entered into a memorandum of understanding (MOU) with the Canadian Radio-television and Telecommunications Commission (CRTC) to develop a global and coordinated approach for addressing unlawful automated telephone calls. According to the MOU, the FCC and CRTC understand that it is in their common public interest to, among other things: (i) “cooperate with respect to the enforcement against Covered Violations, including sharing complaints and other relevant information and providing investigative assistance”; (ii) “facilitate research and education related to unlawful robocalls and caller ID spoofing”; (iii) “facilitate mutual exchange of knowledge and expertise through training programs and staff exchanges”: (iv) encourage awareness of economic and legal conditions and theories related to the enforcement of applicable laws as identified in Annex 1 to the MOU; and (v) update each other regarding developments related to the MOU in their respective countries in a timely manner. In a related statement, FCC acting Chairwoman Rosenworcel noted that robocall scamming is an “international problem,” and that it is “critical that we work closely with partners like our colleagues in Canada who share our commitment to fighting robocall scams and unmasking the bad actors behind them.”

    Agency Rule-Making & Guidance MOUs Canada Robocalls FCC Federal Issues

  • FCC orders phone companies to block car warranty scammers

    Federal Issues

    On July 21, the FCC announced it is ordering phone companies to stop carrying traffic regarding a known robocall scam marketing auto warranties. The FCC noted that the operation is also the target of an ongoing investigation by the FCC’s Enforcement Bureau and a lawsuit by the Ohio Attorney General. As previously covered by InfoBytes, the Ohio AG filed a complaint against multiple companies for participating in an alleged unwanted car warranty call operation. The complaint, filed in the U.S. District Court for Southern District of Ohio, alleged that the 22 named defendants “participated in an unlawful robocall operation that bombarded American consumers with billions of robocalls.” The FCC’s order follows its announcement of actions taken to decrease robocalls, including sending cease and desist letters to several carriers in an attempt “to cut off a flood of possibly illegal robocalls marketing auto warranties targeting billions of consumers.” The announcement also noted that the FCC has authorized “all U.S.-based voice service providers to cease carrying any traffic originating from the [named] operation consistent with FCC regulations,” as detailed in the notice.

    Federal Issues FCC Robocalls State Attorney General Enforcement State Issues

  • States vow to enter information agreements with FCC against robocalls

    State Issues

    On May 31, a coalition of 41 state attorneys generals, on behalf of the National Association of Attorneys General, sent a letter to the FCC commending the agency for its efforts in combating robocalls. Specifically, the AGs praised the FCC’s “leadership in encouraging states to enter into information sharing agreements to facilitate fast, effective information sharing during the course of robocall investigations.” The AGs stated that they “believe these information sharing agreements represent an important continuation of the progress made to date in combatting robocalls,” and entering the agreements “honor our country’s tradition of federalism and evidences a mutual commitment to working towards addressing complex issues collaboratively.” Not all the signatories had entered information sharing agreements with the FCC at the time the letter was sent, but the letter affirmed “their commitment to making a good faith attempt to sign the agreements,” and encouraged the FCC to reach out to the included point of contact for each state to move forward with the agreements.

    State Issues State Attorney General FCC Robocalls

  • FCC acts to stop international robocalls

    Agency Rule-Making & Guidance

    On May 19, the FCC unanimously adopted proposed rules to ensure gateway providers that channel international call traffic comply with STIR/SHAKEN caller ID authentication protocols and validate the identity of the providers whose traffic they are routing to help weed out robocalls. As part of the agency’s robocall mitigation efforts, the proposed rules would require gateway providers to (i) “develop and submit traffic mitigation plans to the Robocall Mitigation Database”; (ii) “apply STIR/SHAKEN caller ID authentication to all unauthenticated foreign-originated Session Initiation Protocol (SIP) calls with U.S. North American Numbering Plan (NANP) numbers”; and (iii) “respond to traceback requests in 24 hours, block calls where it is clear they are conduits for illegal traffic, and implement ‘know your upstream provider’ obligations.”

    “Gateway providers serve as a critical choke-point for reducing the number of illegal robocalls received by American consumers,” the FCC stated in its announcement. “The new rules require gateway providers to participate in robocall mitigation, including blocking efforts, take responsibility for illegal robocall campaigns on their networks, cooperate with FCC enforcement efforts, and quickly respond to efforts to trace illegal robocalls to their source.” Non-compliance may cause a gateway provider to lose its ability to operate. The FCC also announced it is requesting further comments on a proposal to expand robocall mitigation requirements to intermediate providers in the U.S. and not just gateway providers. The agency will also decide whether anti-robocall and spoofing rules should also apply to these intermediate providers, as they are currently not required to certify with the Robocall Mitigation Database.

    Requiring domestic entry points to use STIR/SHAKEN, register in the Robocall Mitigation Database, and comply with traceback requests from the FCC and law enforcement will help the agency “figure out where these junk calls are originating from overseas,” FCC Chairwoman Jessica Rosenworcel said in a statement. “These measures will help us tackle the growing number of international robocalls. Because we can’t have these scam artists multiplying abroad and hiding from our regulatory reach. We also can’t have them hiding from our state counterparts.” To aid efforts, the FCC announced that to date 36 states have signed memoranda of understanding with the agency to share resources and information to reduce robocalls.

    Agency Rule-Making & Guidance FCC Robocalls STIR/SHAKEN State Issues State Attorney General

Pages

Upcoming Events