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Financial Services Law Insights and Observations


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  • Supreme Court keeps TCPA, severs government-debt exception as unconstitutional


    On July 6, the U.S. Supreme Court held in Barr v. American Association of Political Consultants Inc. that the TCPA’s government-debt exception is an unconstitutional content-based speech restriction and severed the provision from the remainder of the statute. As previously covered by InfoBytes, several political consultant groups (plaintiffs) argued that the TCPA’s statutory exemption enacted by Congress as a means of allowing automated calls to be placed to individuals’ cell phones “that relate to the collection of debts owed to or guaranteed by the federal government” is “facially unconstitutional under the Free Speech Clause” of the First Amendment. The plaintiffs argued that the debt-collection exemption to the automated call ban contravenes their free speech rights. Moreover, the plaintiffs claimed that “the free speech infirmity of the debt-collection exemption is not severable from the automated call ban and renders the entire ban unconstitutional.” The FCC, however, argued that the applicability of the exemption depended on the relationship between the government and the debtor and not on the content. The district court awarded summary judgment in favor of the FCC, which the U.S. Court of Appeals for the Fourth Circuit vacated, concluding the exemption violated the First Amendment’s Free Speech Clause.

    In a plurality opinion, the Supreme Court agreed with the 4th Circuit. The Court noted that “a law is content-based if ‘a regulation of speech ‘on its face’ draws distinctions based on the message a speaker conveys’”; and a law that allows for robocalls asking for payment of government debt but does not allow robocalls for political donations, “is about as content-based as it gets.” The Court agreed with the government that the content-based restriction failed to satisfy strict scrutiny, as the government could not sufficiently justify the difference “between government-debt collection speech and other categories of robocall speech.” As for remedy, the Court applied “traditional severability principles,” with seven Justices concluding that the entire TCPA should not be invalidated but that the government-debt exception should be severed from the statute. The Court noted that its cases have “developed a strong presumption of severability,” and its “power and preference to partially invalidate a statute in that fashion has been firmly established since Marbury v. Madison.” Moreover, because the government-debt exception is “relatively narrow exception” to the TCPA’s broad robocall restriction, the Court concluded that severing the exception would “not raise any other constitutional problems.”

    Courts U.S. Supreme Court TCPA Autodialer Debt Collection FCC Appellate Fourth Circuit First Amendment

  • FCC narrows “autodialer” definition

    Agency Rule-Making & Guidance

    On June 25, the FCC narrowed the Commission’s definition of an “autodialer,” providing that “if a calling platform is not capable of originating a call or sending a text without a person actively and affirmatively manually dialing each one, that platform is not an autodialer and calls or texts made using it are not subject to the TCPA’s restrictions on calls and texts to wireless phones.” The FCC reiterated that only sequential number generators or other systems that can store or produce numbers to be called or texted at random are the only technologies considered to be autodialers. The FCC further noted that whether a system can make a large number of calls in a short period of time does not factor into whether the system is considered an autodialer, and that message senders may avoid TCPA liability by obtaining prior express consent from recipients. The FCC issued the ruling in response to an alliance’s 2018 petition, which asked the FCC to clarify whether the definition of an autodialer applied to peer-to-peer messaging (P2P) platforms that, among other things, allow organizations to text a large number of individuals and require a person to manually send each text message one at a time. The FCC declined to rule on whether any particular P2P text platform is an autodialer due to the lack of sufficient factual basis.

    The FCC issued a separate declaratory ruling the same day reiterating that the TCPA requires autodialer or robocall senders to obtain prior express consent before making any texts or robocalls, stressing that the “mere existence of a caller-consumer relationship does not satisfy the prior-express-consent requirement for calls to wireless numbers, nor does it create an exception to this requirement.” The ruling was issued in response to a health benefit company’s 2015 petition, which asked the FCC to exempt health plans and providers, as well as certain non-emergency, urgent health care-related calls, from the prior consent requirement as long as the company permitted consumers to opt out after the fact.

    As previously covered by InfoBytes, several appellate courts have issued conflicting decisions with respect to the definition of an autodialer.

    Agency Rule-Making & Guidance FCC Autodialer TCPA

  • State AGs emphasize the importance of robocall traceback work

    State Issues

    On June 4, 52 state attorneys general, through the National Association of Attorneys General, submitted reply comments to the FCC in support of an April final rule, which amends and adopts its rules in accordance with Section 13(d) of the Pallone–Thune Telephone Robocall Abuse Criminal Enforcement and Deterrence Act (TRACED Act) to create a single registered consortium that serves as a neutral third party to manage the private-led efforts to trace back the origin of unlawful robocalls. In the letter, the attorneys general emphasized the importance of traceback efforts to assist law enforcement in identifying and investigating illegal robocallers more efficiently. Moreover, the attorneys general note that traceback investigations help “shed light” on other actors in the “telecommunication ecosystem” that may support robocall scammers. Similarly, in May, the attorneys general, also through the National Association of Attorneys General, published a letter to industry groups asserting their intention to intensify enforcement efforts against illegal robocallers, and urged the US Telecom and the Industry Traceback Group to expand capabilities related to tracebacks in anticipation of growth in the need for data analysis and the number of civil investigative demands and subpoenas that will be issued directly to the Industry Traceback Group (covered by InfoBytes here).

    State Issues State Attorney General Robocalls FCC TRACED Act Enforcement

  • FTC, FCC warn VoIP service providers about Covid-19 robocalls

    Federal Issues

    On May 20, the FTC and the FCC sent letters to three more Voice over Internet Protocol (VoIP) service providers, warning the companies to stop routing and transmitting robocall campaigns promoting Covid-19 related scams. According to the FTC, two of the companies are routing coronavirus-related fraud robocalls originating overseas. In April, the agencies sent an initial round of letters to three VoIP service providers for similar issues (covered by InfoBytes here). As in April, the letters warn the companies that they have been identified as “routing and transmitting illegal robocalls, including Coronavirus-related scam calls” and must cease the behavior or they will be subject to enforcement action. Additionally, the agencies sent a separate letter to a telecommunications trade association thanking the group for its assistance in identifying the campaigns and relaying a warning that the FCC will authorize U.S. providers to begin blocking calls from the three companies if they do not comply with the agencies’ request within 48 hours after the release of the letter.

    Federal Issues FTC FCC Robocalls Enforcement Covid-19

  • FCC changes TCPA enforcement under TRACED Act

    Agency Rule-Making & Guidance

    On May 1, the FCC issued an order announcing the Commission will no longer send entities outside its jurisdiction warnings prior to commencing an enforcement action related to TCPA robocall violations. Specifically, the order, as mandated under Section 3 of the TRACED Act (covered by InfoBytes here), (i) removes provisions that previously required the FCC to issue a warning prior to imposing penalties for making robocalls; (ii) increases the maximum fine that the FCC can assess for robocall violations to $10,000 per intentional unlawful call, in addition to a forfeiture penalty amount; and (iii) extends the statute of limitations to four years for the FCC to investigate and take enforcement action against an entity that violates the TCPA. The order takes effect 30 days after publication in the Federal Register.

    Agency Rule-Making & Guidance FCC TRACED Act Enforcement Robocalls TCPA Privacy/Cyber Risk & Data Security

  • CFPB asks FCC to allow financial institutions to make certain Covid-19-related calls

    Federal Issues

    On April 27, the CFPB sent a letter to the FCC in support of a petition filed at the end of March by several financial trade associations, which seeks an expedited ruling to allow financial institutions to make certain automated calls concerning Covid-19 relief options without violating the TCPA. The CFPB specifically encouraged the FCC to allow a limited number of automated Covid-19-related calls from financial institutions that would alert customers of offers of forbearance, payment deferrals, fee waivers, extensions or relaxations of repayment terms, loan modifications, and other resources related to loans secured by homes or vehicles. “Allowing financial institutions to make automated calls is one more way to maximize the outreach to ensure consumers receive important and timely information,” CFPB Director Kathy Kraninger noted, cautioning, however, that financial institutions must still comply with other legal requirements with respect to their communications with customers, including the Bureau’s mortgage servicing rules and Dodd-Frank’s prohibition on unfair, deceptive, or abusive acts or practices.

    Federal Issues CFPB FCC TCPA Covid-19

  • 2nd Circuit joins 9th Circuit in broadening the definition of an autodialer under TCPA


    On April 7, the U.S. Court of Appeals for the Second Circuit vacated a district court’s order granting summary judgment in favor of a defendant in a TCPA action. The decision results from a lawsuit filed by a plaintiff who claimed to have received more than 300 unsolicited text messages from the defendant through the use of an autodialer after the plaintiff texted a code to receive free admission to a party. The defendant countered that the programs used to send the text messages were not autodialers because they “required too much human intervention when dialing,” and therefore did not fall under the TCPA. The district court granted the defendant’s motion for summary judgment, agreeing that the defendant’s programs were not autodialers because a human being determined when the text messages are sent.

    On appeal, the 2nd Circuit concluded that while human beings do play some role in the defendant’s systems, “[c]licking ‘send’ does not require enough human intervention to turn an automatic dialing system into an non-automatic one.” According to the appellate court, “[a]s the FCC additionally clarified in 2012, the statutory definition of an [autodialer] ‘covers any equipment that has the specified capacity to generate numbers and dial them without human intervention regardless of whether the numbers called are randomly or sequentially generated or come from calling lists.’” (Emphasis in the original.) “The FCC’s interpretation of the statute is consistent with our own, for only an interpretation that permits an [autodialer] to store numbers—no matter how produced—will also allow for the [autodialer] to dial from non-random, non-sequential ‘calling lists.’ . . . What matters is that the system can store those numbers and make calls using them.”

    The 2nd Circuit’s opinion is consistent with the 9th Circuit’s holding in Marks v. Crunch San Diego, LLC (covered by InfoBytes here). However, these two opinions conflict with holdings by the 3rd, 7th, and 11th Circuits, which have held that autodialers require the use of randomly or sequentially generated phone numbers, consistent with the D.C. Circuit’s holding that struck down the FCC’s definition of an autodialer in ACA International v. FCC (covered by a Buckley Special Alert).

    Courts Appellate Second Circuit TCPA Autodialer FCC ACA International

  • FTC and FCC warn VoIP service providers about illegal Covid-19 robocalls

    Federal Issues

    On April 3, the FTC and the FCC sent letters to three Voice over Internet Protocol (VoIP) service providers, warning the companies to stop sending spam robocall campaigns promoting Covid-19 related scams. According to the agencies, “routing and transmitting illegal robocalls, including Coronavirus-related scam calls, is illegal and may lead to federal law enforcement.” The agencies sent a separate letter to a telecommunications trade association thanking the group for its assistance in identifying the campaigns and relaying a warning that the FCC will authorize U.S. providers to begin blocking calls from the three companies if they do not comply with the agencies’ request within 48 hours after the release of the letter.

    Federal Issues FTC FCC Covid-19 Robocalls Privacy/Cyber Risk & Data Security Enforcement

  • FCC orders phone companies to deploy STIR/SHAKEN framework

    Privacy, Cyber Risk & Data Security

    On March 31, the FCC adopted new rules that will require phone companies in the U.S. to deploy STIR/SHAKEN caller ID authentication framework by June 30, 2021. As previously covered by InfoBytes, the STIR/SHAKEN framework addresses “unlawful spoofing by confirming that a call actually comes from the number indicated in the Caller ID, or at least that the call entered the US network through a particular voice service provider or gateway.” FCC Chairman Ajit Pai endorsed the value of widespread implementation, stating the framework will “reduce the effectiveness of illegal spoofing, allow law enforcement to identify bad actors more easily, and help phone companies identify—and even block—calls with illegal spoofed caller ID information before those calls reach their subscribers.” The new rules also contain a further notice of proposed rulemaking, which seeks comments on additional efforts to promote caller ID authentication and implement certain sections of the TRACED Act. Among other things, the TRACED Act—signed into law last December (covered by InfoBytes here)—mandated compliance with STIR/SHAKEN for all voice service providers.

    Privacy/Cyber Risk & Data Security FCC Robocalls Agency Rule-Making & Guidance

  • FCC ruling provides TCPA exception for emergency Covid-19 communications

    Federal Issues

    On March 20, the FCC issued a declaratory ruling which “confirm[s] that the [Covid-19] pandemic constitutes an ‘emergency’ under the…[(TCPA)].” Accordingly, “hospitals, health care providers, state and local health officials, and other government officials may lawfully communicate information about [Covid-19] as well as mitigation measures without violating federal law.” The “emergency purposes” exception to the TCPA means that these callers “may lawfully make automated calls and send automated text messages to wireless telephone numbers” in order to effectively communicate with the public regarding the “imminent health risk” caused by Covid-19. The content of the communications “must be solely informational, made necessary because of the [Covid-19] outbreak, and directly related to the imminent health or safety risk arising” from the pandemic. Excluded from this emergency exception to the TCPA are debt collection calls, advertising calls, and automated telemarketing calls, which continue to require the prior express consent of the called party.

    Federal Issues Robocalls FCC TCPA Covid-19 Consumer Protection