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FCC regulations target scam robotexts
On March 16, the FCC adopted its first regulations specifically targeting scam text messages sent to consumers. Recognizing that robotexts are generally covered under the TCPA’s limits against unwanted calls to mobile phones, the FCC stated that the new regulations will require mobile service providers to block certain robotexts that appear to be coming from phone numbers that are unlikely to transmit text messages, including invalid, unallocated, or unused numbers, as well as “numbers that the subscriber to the number has self-identified as never sending text messages, and numbers that government agencies and other well-known entities identify as not used for texting.” Mobile service providers will also be required “to establish a point of contact for text senders, or have providers require their aggregator partners or blocking contractors to establish such a point of contact, which senders can use to inquire about blocked texts.”
The FCC’s report and order also include a further notice of proposed rulemaking, which seeks to implement additional protections to further prevent illegal text messages. The proposal would “require terminating providers to block texts from a sender after they are on notice from the Commission that the sender is sending illegal texts, to extend the National Do-Not-Call Registry’s protections to text messages, and to ban the practice of marketers purporting to have written consent for numerous parties to contact a consumer, based on one consent.”
Comments are due 30 days after publication in the Federal Register.
States receive $245 million judgment against robocall operation
On March 6, the U.S. District Court for the Southern District of Texas entered stipulated orders and permanent injunctions against two individuals who, along with their companies (also named as defendants in the litigation), allegedly operated a massive robocall campaign to sell extended car warranties and health care services. (See orders here and here.) Eight states attorneys general alleged violations of the TCPA and the Telemarketing Sales Rule, as well as various state consumer protection laws, claiming that the defendants initiated millions of robocalls to individuals nationwide without their prior express consent, spoofed caller ID numbers to mislead recipients, and called people whose numbers were on the Do Not Call Registry. Under the terms of the orders, the individual defendants (who neither admitted nor denied the allegations) are permanently banned from initiating or facilitating (or causing others to initiate or facilitate) any robocalls, working in or with companies that make robocalls, or engaging in any telemarketing. The court also ordered each individual defendant to pay a $122.3 million monetary judgment; however, these payments are mostly suspended in favor of the more permanent bans due to their inability to pay. The states noted that they are continuing their cases in the same action against others who allegedly worked with the individual defendants to facilitate the robocalls.
District Court approves $1.95 million TCPA settlement
On February 7, the U.S. District Court for the Eastern District of Missouri granted final approval to a $1.95 million settlement in a class action TCPA suit concerning allegations that a defendant debt collection company placed calls to consumers’ cell phones through the use of an artificial or prerecorded voice without first obtaining consumers’ prior express consent. The plaintiff also claimed that the defendant allegedly repeatedly delivered artificial or prerecorded voice messages to wrong or reassigned cell phone numbers that did not belong to the intended recipient. According to the plaintiff, the defendant continued to place calls to his cell phone even after he informed a company representative that it had the wrong number and that he did not know the individual the defendant was attempting to reach. The plaintiff sued alleging violations of Section 227(b)(1)(A)(iii) of the TCPA. While denying all liability alleged in the lawsuit, the defendant agreed to the terms of the settlement agreement, which defines class members as “[a]ll persons in the United States who (a) received a call from [the defendant] between December 16, 2017 and July 7, 2022 on their cellular telephone, (b) with an artificial or prerecorded voice, (c) for which [the defendant’s] records contain a ‘WN’ designation and an ‘MC’ and/or ‘MD’ notation.” The defendant is required to establish a $1.95 million settlement fund, pay $650,00 in attorneys’ fees and $10,477 in costs and expenses, and pay a $10,000 incentive award to the named plaintiff.
District Court preliminarily approves $2.75 million autodialer TCPA settlement
On January 31, the U.S. District Court for the District of Maryland preliminarily approved a class action settlement in which a cloud computing technology company agreed to pay $2.75 million to resolve alleged violations of the TCPA and the Maryland Telephone Consumer Protection Act. According to the plaintiff, the defendant violated the TCPA by, among other things, placing unsolicited telemarketing calls using an automated dialing system to class members on residential and cell phone numbers. Under the terms of the proposed settlement agreement, the defendant must establish a non-reversionary fund of $2.75 million to go to class members to whom the defendant (or a third party acting on its behalf) made (i) one or more phone calls to their cell phones; (ii) two or more calls while their numbers were on the National Do Not Call Registry; or (iii) one or more calls after the recipients asked the defendant or the third party to stop calling. “Plaintiff has also shown that a class action litigation is superior to other available methods for adjudicating this controversy,” the court wrote. “Plaintiff's counsel estimate that the average settlement payment to each Class Member would be approximately $30.00 to $60.00. Given this, the individual claims of each Class Member would be too small to justify individual lawsuits.” The court also approved proposed attorneys’ fees (not to exceed a third of the total settlement fund), as well as up to $60,000 for plaintiff’s out-of-pocket expenses and a $10,000 service fee award.
FCC chair asks Congress to act on robocalls
In December, FCC Chair Jessica Rosenworcel sent a letter to twelve senators in response to their June 2022 letter inquiring about combating robocalls. In the letter, Rosenworcel highlighted the FCC’s efforts to combat robocalls by discussing the agency’s “important” proposed rules, adopted in May, 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 (covered by InfoBytes here). She also highlighted the FCC’s enforcement efforts, such as a December action where the FCC announced a nearly $300 million fine against an auto warranty scam robocall campaign for TCPA and Truth in Caller ID Act violations—“largest robocall operation the FCC has ever investigated” (covered by InfoBytes here).
Rosenworcel requested additional authority from Congress to combat robocalls and robotexts more effectively. Specifically, Rosenworcel asked the senators to “fix the definition of autodialer” – since robotexts are neither prerecorded nor artificial voice calls, the TCPA only provides consumers protection from robotexts if they are sent from autodialers. She further noted that the Supreme Court's decision in Facebook v. Duguid (covered by a Buckley Special Alert) narrowed the definition of autodialer under the TCPA, resulting in the law only covering equipment that generates numbers randomly and sequentially. She wrote that as a result, “equipment that simply uses lists to generate robotexts means that fewer robotexts may be subject to TCPA protections, and as a result, this decision may be responsible for the rise in robotexts.” Among other things, she also requested that Congress update the TCPA to permit for administrative subpoenas for all types of non-content customer records, and for Congress to grant the FCC the authority and resources to increase court enforcement of fines.
FCC proposes $300 million fine against auto warranty scam robocaller
On December 21, the FCC announced a nearly $300 million fine against an auto warranty scam robocall campaign for TCPA and Truth in Caller ID Act violations, “which is the largest robocall operation the FCC has ever investigated.” According to the announcement, the two individuals in charge of the operation ran a complex robocall sales lead generation scheme, which was designed to sell vehicle service contracts that were deceptively marketed as car warranties. This “scheme made more than 5 billion robocalls to more than half a billion phone numbers during a three-month span in 2021, using pre-recorded voice calls to press consumers to speak to a ‘warranty specialist’ about extending or reinstating their car’s warranty.” As previously covered by InfoBytes, in July, the FCC took initial action by 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. The Ohio AG filed a complaint against multiple companies for participating in an alleged unwanted car warranty call operation (covered by InfoBytes here). The complaint, filed in the U.S. District Court for the Southern District of Ohio, alleged that the 22 named defendants “participated in an unlawful robocall operation that bombarded American consumers with billions of robocalls.” In addition to the fine, among other things, the individuals who allegedly ran the operations are prohibited from making telemarketing calls pursuant to FCC actions.
FCC affirms three-call limit but permits oral consent
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.”
District Court says sellers may be vicariously liable for third-party TCPA violations
On December 5, the U.S. District Court for the Western District of Washington denied an online retail pharmacy’s (defendant) motion for summary judgment in a TCPA suit. According to the order, the defendant engaged with a third party to call potential customers and transfer leads who were interested in the defendant’s services to its inbound call center. The order further noted that the third party contracted with another company to generate leads. Like the third party, the company did not make any calls but contracted with one or more vendors to place calls. The plaintiff received two calls from a prerecorded message that introduced itself as a person with the company. After asking the plaintiff if anyone in the household used prescription medications, among other things, he was transferred to an employee of the defendant who identified the defendant company by name and tried to sell the plaintiff their services. The plaintiff sued the defendant, arguing that it was “vicariously liable” for calls he received from a telemarketer that transferred the calls to the defendant’s sales representative. The defendant argued it was not directly liable under the TCPA because it did not directly place the calls to the plaintiff. The defendant also said it was not vicariously liable for calls placed by vendors because those vendors did not have express or implied actual authority to place calls for the defendant.
According to the district court, courts may hold sellers such as the defendant vicariously liable for TCPA violations of third-party callers “where the plaintiff establishes an agency relationship, as defined by federal common law, between the defendant and the third-party caller.” The court further wrote that labeling the contracted company “an independent contractor in the agreement with [the defendant] does not foreclose a finding that an agency relationship existed.” The district court also noted that there was a “genuine issue” of material fact as to whether the defendant had an agency relationship with the contracted company’s vendor.
FCC orders companies to block student loan scam calls
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.”
FCC says consent is required for ringless voicemails
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.”
- Keisha Whitehall Wolfe to discuss “Tips for successfully engaging your state regulator” at the MBA's State and Local Workshop
- Max Bonici to discuss “Enforcement risk and trends for crypto and digital assets (Part 2)” at ABA’s 2023 Business Law Section Hybrid Spring Meeting
- Jedd R. Bellman to present “An insider’s look at handling regulatory investigations” at the Maryland State Bar Association Legal Summit