ACA International v. FCC (2015 TCPA Order Litigation)
The Telephone Consumer Protection Act, or TCPA, bars telemarketers and robocallers from contacting consumers by phone or fax without prior express consent. In 2015, the Federal Communications Commission (FCC) issued an order and declaratory ruling, interpreting the TCPA in a way that provided greater privacy protections to consumers. In particular, the 2015 Order: (1) defined autodialers to include any equipment that has the capacity to autodial numbers; (2) recognized that the TCPA grants consumers the right to revoke their consent via any reasonable means; (3) determined that the TCPA bars calls without the consent of the current subscriber, not the intended recipient, and held that telemarketers have a one-call safe harbor to call reassigned numbers without accruing liability; and (4) allowed HIPAA-protected calls to cell phones to be made without consent only when the call has exigency and a healthcare treatment purpose. A number of companies and organizations interested in telemarketing and robocalling consumers have challenged the FCC's 2015 Order in the U.S. Court of Appeals for the District of Columbia, arguing that it is unlawful.
- DC Appeals Court Hears Arguments in Telemarketing Privacy Case: The federal appeals court in Washington, D.C. heard oral arguments Wednesday in a case with major implications for telephone privacy. The suit, ACA International v. FCC, was brought against the Federal Communications Commission by telemarketing companies and others challenging rules adopted under the Telephone Consumer Protection Act that prohibit automated calls made to cell phones without their consent. EPIC and six consumer privacy groups filed an amicus brief in the case, stressing the importance of privacy protections for cell phone users. EPIC also challenged a claim made by the telemarketers that "37 million" numbers were reassigned each year, making it difficult, the companies claimed, to comply with the privacy law. During the argument, one of the judges pressed the telemarketers' attorney on the point (audio), citing research in the EPIC amicus brief. EPIC frequently participates as amicus curiae in cases that raises novel privacy issues. (Oct. 20, 2016)
- EPIC, Consumer Coalition Tells FCC to Limit Health Care Robocalls: EPIC and a coalition of consumer privacy advocates have urged the Federal Communications Commission to reject a request by health insurance companies to make unlimited health-related robocalls to consumers under the Telephone Consumer Protection Act. The insurance companies asked the FCC to amend the TCPA so that once a consumer provides her phone number to her doctor, she has "consented" to receiving telemarketing calls from other health care providers on anything medically related. The coalition comments, led by the National Consumer Law Center, urge the FCC to limit the scope of consumers' consent to medical robocalls by exclude telemarketing calls and allowing only calls related to the original reason the consumer provided her phone number. EPIC supports robust telephone privacy protections and filed an amicus brief in support of the FCC's 2015 order that strengthened consumer protections under the TCPA. (Oct. 19, 2016) More top news »
Petitioners and Interveners challenge four key holdings in the 2015 Order:
- An automatic telephone dialing system (“ATDS” or “autodialer”) includes equipment that “has the capacity to store or produce, and dial remand or sequential numbers . . . even if it is not presently used for that purpose.” Predictive dialers also qualify as autodialers.
- The TCPA requires the consent of “the current subscriber (or non-subscriber customary user of the phone)”, not the consent of the “intended recipient.” A caller who believes he has consent and doesn’t discover that the number has been reassigned has a one-call safe harbor. The caller “may reasonably be considered to have constructive knowledge—if not actual knowledge—of the revocation of consent provided by the original subscriber to the number when the caller makes the first call without reaching that original subscriber.”
- Consumers “may revoke consent through any reasonable means,” and “callers may not control consumers’ ability to revoke consent.”
- HIPAA-protected wireless calls require prior express consent (though not written consent) unless “there is exigency” and “have a healthcare treatment purpose.” (HIPAA-protected residential calls do not require consent.)
The Telephone Consumer Protection Act
In simple terms, the Telephone Consumer Protection Act of 1991 and its progeny bar most autodialed or prerecorded calls, texts, or faxes unless made with prior express consent. For telephonic communications, the TCPA and the FCC’s implementing regulations distinguish between calls to residential numbers and calls and texts to wireless numbers. The FCC’s implementing regulations have also narrowed the categories of communications subject to TCPA liability.
The TCPA grants consumers a private right of action to enforce the Act against telemarketers and robocallers. Callers can face a penalty of up to $500 or the actual monetary loss in damages per violation, whichever is greater, and treble damages for each willful or knowing violation.
The TCPA bars all non-emergency calls using an artificial or prerecorded voice without prior express consent of the called party, unless the call is made solely to collect a debt owed to or guaranteed by the United States. The TCPA also allows the FCC at its discretion to exempt certain calls pursuant to its authority under 47 U.S.C. § 227(b)(2). Section 227(b)(2)(B) empowers the FCC to issue rules exempting calls to residential numbers that are not made for commercial purposes or that are made for commercial purposes but do not adversely affect privacy rights and do not include unsolicited advertisements.
The FCC’s regulations further require that the prior express consent must be written. Under the FCC’s regulations, no consent if any kind is required if the call:
- Is made for emergency purposes;
- Is not made for commercial purposes;
- Is made for commercial purposes but does not include or introduce an advertisement or constitute telemarking;
- Is made by or on behalf of a tax-exempt nonprofit; or
- Delivers a health care message as defined under HIPAA.
The TCPA bars all non-emergency communications using an ATDS/autodialer or an artificial or prerecorded voice without prior express consent, unless the call is made solely to collect a debt owed to or guaranteed by the United States. The TCPA also allows the FCC at its discretion to exempt certain calls pursuant to its authority under 47 U.S.C. § 227(b)(2). Section 227(b)(2)(C) empowers the FCC to issue rules exempting calls to wireless numbers that “are not charged to the called party, subject to such conditions as the Commission may prescribe as necessary in the interest of the privacy rights this section is intended to protect.”
Under the FCC's regulations, the form of consent depends on the content of the communication:
- Prior express written consent of the called party if the call introduces an advertisement or constitutes telemarketing;
- Prior express written or oral consent of the called party if the call:
- Does not include or introduces an advertisement or constitutes telemarketing;
- Introduces an advertisement or constitutes telemarketing made by or on behalf of a tax-exempt nonprofit; or
- Delivers a health care message as defined under HIPAA.
On June 18, 2015, the FCC issued a Declaratory Ruling and Order addressing 21 petitions for review, clarification, or rulemaking. The 2015 Order issued a number of decisions related to the TCPA, four of which have been challenged by the Petitioners in this case.Interpretation of ATDS
The TCPA defines an ATDS as “equipment which has the capacity—(A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers.” The FCC defines the basic functions of an autodialer as the ability to “dial numbers without human intervention” and “dial thousands of numbers in a short period of time.”
Building on its prior statements, the TCPA declared that an ATDS is defined not by its current configuration but by its potential functionalities. In particular, an ATDS is any “dialing equipment [that] generally has the capacity to store or produce, and dial random or sequential numbers” even if “it is not presently used for that purpose, including when the caller is calling a set list of consumers.” There must be “more than a theoretical potential that the equipment could be modified to satisfy the ‘autodialer’ definition,” but equipment can still qualify as ATDS even if it lacks the “necessary software.”
As a limiting principle, the FCC noted that a rotary-dial phone would not be considered to have the capacity of autodialing. The FCC also rejected petitioner concerns that such a broad definition could sweep in smartphones, noting that “there is no evidence in the record that individual consumers have been sued based on typical use of smartphone technology,” nor is there evidence that the called parties of smartphone communications find the calls unwanted and bring legal action.
The TCPA also reaffirmed its recognition that predictive dialers qualify as ATDS. A predictive dialer is “equipment that dials numbers and, when certain computer software is attached, also assists telemarketers in predicting when a sales agent will be available to take calls. The hardware, when paired with certain software, has the capacity to store or produce numbers and dial those numbers at random, in sequential order, or from a database of numbers.”
Finally, the FCC held that “that parties cannot circumvent the TCPA by dividing ownership of dialing equipment.”Revocation of Consent
Neither the TCPA nor the FCC’s prior orders expressly recognize that consumers have a right to revoke consent. In the 2015 Order, therefore, the FCC construed the TCPA to grant consumers the right to revoke consent “if they decide they no longer wish to receive voice calls or texts.”
The FCC further construed the TCPA to find that “consumers may revoke consent through any reasonable means,” including orally or in writing. In other words, callers are not allowed to “control consumers’ ability to revoke consent.” To allow callers to dictate how the consumer could exercise her right to revoke consent would “materially impair that right” and would “place a significant burden on the called party who no longer wishes to receive such calls, which is inconsistent with the TCPA.”“Called Party,” Reassigned Numbers, and the One Call Safe Harbor
The TCPA bars most telephonic communications absent express prior consent of the “called party,” but neither the TCPA nor the FCC’s prior orders define the word “called party.” In the 2015 order, the FCC interpreted the phrase “called party” to mean the “current subscriber” and not the “intended recipient.” The FCC also included in its definition of “called party” those “individuals who might not be the subscriber, but who, due to their relationship to the subscriber, are the number’s customary user and can provide prior express consent for the call.” The FCC based its decision on the facts that the TCPA does not indicate that caller intent is relevant, that the intended beneficiary is too subjective a standard to allow for effective enforcement, that consent of one party cannot be binding on another, and that consumers who inherit wireless numbers neither expect nor desire these calls.
The FCC next determined the applicability of the TCPA to reassigned numbers. The Commission determined that “where a caller believes he has consent to make a call and does not discover that a wireless number had been reassigned prior to making or initiating a call to that number for the first time after reassignment, liability should not attach for that first call, but the caller is liable for any calls thereafter.” In other words, telemarketers and robocallers have a one call safe harbor in which they can contact a consenting called party who has changed numbers. But where the new subscriber has not consented to the calls, the FCC determined that the caller “may reasonably be considered to have constructive knowledge—if not actual knowledge—of the revocation of consent” when the caller does not reach the original subscriber during the first call.
Finally, the FCC declined to add a bad-faith defense to void liability if the called party waits to notify the telemarketer if the changed number in order to accrue liability. Instead, the FCC observed that “uninvolved new users of reassigned numbers are not obligated under the TCPA or our rules to answer every call, nor are they required to contact each caller to opt out in order to stop further calls.”HIPAA-Protected Communications
As discussed above, the TCPA and the FCC distinguish between residential numbers and wireless numbers when addressing healthcare calls protected by the Health Insurance Portability and Accountability Act of 1996, or HIPAA. Prior to the 2015 Order, HIPAA-protected calls to residential numbers required no consent, but those same calls to wireless numbers required express prior consent (oral or written).
In the 2015 Order, the FCC chose to exempt only some HIPAA-protected calls to wireless numbers from the prior express consent requirement. Only those calls “for which there is exigency and that have a healthcare treatment purpose”—such as appointment reminders, wellness checkups, pre-operative instructions, lab results, and prescription notifications—can be made to wireless numbers without prior express consent. All other HIPAA-protected calls to wireless numbers, such as those regarding account communications or payment notifications, still require prior express consent.Procedural History
Petition 15-1211 was originally brought by ACA International on July 10, 2015, the date the FCC order was released to the public. Eight other petitions were also filed and subsequently consolidated.
The nine petitioners are:
- ACA International (credit and collections)
- Sirius XM Radio (satellite radio)
- Professional Association for Customer Engagement (call center association)
- salesforce.com & ExactTarget, Inc. (digital marketing)
- Customer Bankers Association (retail banking)
- Chamber of Commerce of the United States (business)
- Vibes Media, LLC (mobile marketing)
- Rite Aid Headquarters Corporation (pharmacy)
- Portfolio Recovery Associates (debt buyer)
Nine other parties have intervened in support of Petitioners:
- MRS BPO, LLC (debt collector)
- Cavalry Portfolio Services, LLC (debt collector)
- Diversified Consultants, Inc. (debt collector)
- Mercantile Adjustment Bureau, LLC (debt collector)
- Council of American Survey Research Organizations (research organization)
- Marketing Research Association (research organization)
- National Association of Federal Credit Unions (credit union association)
- Conifer Revenue Cycle Solutions, LLC (healthcare performance improvement services)
- Gerzhom, Inc. (mobile marketing)
Nine parties or groups of parties have filed notice of intent to participate as amici:
- Communication Innovators (communications association)
- American Gas Association, Edison Electric Institute, National Association of Water Companies, National Rural Electric Cooperative Association (electric and water utilities)
- American Bankers Association, Credit Union National Association, Independent Community Bankers (banks)
- American Financial Services Association, Consumer Mortgage Coalition, Mortgage Bankers Association (banks)
- Internet Association (internet companies association)
- CTIA—The Wireless Association (wireless communications industry)
- National Association of Chain Drug Stores (chain pharmacy association)
- Retail Litigation Center, Inc., National Retail Federation, National Restaurant Association (retail)
- Charles R. Messer (pro se lawyer)
The Petitioners and Interveners bring various legal challenges to the above four sections of the 2015 Order, arguing that the FCC’s determinations are arbitrary and capricious in violation of the Administrative Procedures Act, are contrary to the text of the TCPA, and violate the constitutional guarantees of due process and the free speech.
EPIC contributed to the development of the TCPA, and has advised Congress about emerging challenges to the consumer protection law. In 2004, EPIC testified before US Senate Committee on Commerce, Science, and Transportation about the privacy issues raised by a proposed wireless directory for customers of wireless telephone services. EPIC stood up for a consumer friendly standard for enrollment, which requires an opt-in system that ensures adequate notice and requires affirmative consent. EPIC also opposed junk faxes, which are faxes sent without consent and which effectively shift the cost of marketing to the consumer (who must pay for ink and paper).
EPIC has also submitted numerous comments to the FCC and the Federal Trade Commission concerning the implementation of the TCPA. In April 2002, EPIC addressed an FCC telemarking rulemaking in joint comments submitted with other consumer organizations. EPIC stated that “telemarketing is one of the negative consequences of a lack of information privacy law in America.” EPIC’s comments focused on the privacy issues surrounding personal information transfer and practical suggestions for providing individuals with substantive approaches to ending telemarketing calls.
In December 2002, EPIC and other consumer organizations submitted comments to the FCC regarding Rules and Regulations Implementing the TCPA. EPIC argued that “telemarketing is regularly identified as an obnoxious and unwanted intrusion into the privacy of the home.” Detailed consumer databases raise a number of privacy risks because they include health information, religious affiliation, book reading preferences, financial information, and product ownership. EPIC emphasized that an opt-in approach to telemarketing would more effectively protect individuals’ rights and ensure that only those who wish to be called receive solicitations.
In July 2005 comments, EPIC urged the FCC not to preempt strong state anti-telemarketing laws, warning this would lead to a massive increase of unwanted sales calls. In January 2006 comments, EPIC again warned against preempting state anti-telemarketing laws, this time urging protection of California’s heightened protections against junk faxes.
In January 2006, EPIC submitted comments to the FCC recommending protections to shield individuals against junk faxes. These comments were submitted following the passage of the Junk Fax Prevention Act, which requires senders of unsolicited commercial fax messages to broadcast privacy notices and instructions on how to opt out. And in May 2006, EPIC urged the FCC to reject a petition by ACA International that would allow use of auto dialers by debt collectors. EPIC told the agency that Congress clearly demonstrated an intent to bar auto dialers when it passed the TCPA, supporting FCC's rules promulgated on this issue.
In a 2004 case, Carnett's Inc. v. Michelle Hammond, the Georgia Supreme Court considered whether certain individuals could bring class action suits under the TCPA, and whether an "established business relationship" exemption existed that would have permitted the sending of unwanted faxes. EPIC filed an amicus brief, arguing that “[j]unk faxing is simply electronic trespass as a means to committing advertising by theft-the electronic equivalent of junk mail sent postage due.” EPIC's brief defended the class action mechanism as necessary to meaningfully enforce federal consumer protection laws. EPIC also argued that there was no "established business relationship" exemption to the TCPA. The Georgia Supreme Court reversed the intermediate court and held that trial court did not err in denying class certification.
U.S. Court of Appeals for the District of Columbia (No. 15-1211)
- Joint Petitioners' Brief (filed by ACA International; Sirius XM Radio; Professional Association for Customer Engagement; salesforce.com & ExactTarget, Inc.; Customer Bankers Association; Chamber of Commerce of the United States; Vibes Media, LLC; Portfolio Recovery Associates)
- Petitioner Rite Aid's Brief
- Joint Interveners' Brief (filed by MRS BPO, LLC; Cavalry Portfolio Services, LLC; Diversified Consultants, Inc.; Mercantile Adjustment Bureau, LLC; Council of American Survey Research Organizations; Marketing Research Association; National Association of Federal Credit Unions; Conifer Revenue Cycle Solutions, LLC; Gerzhom, Inc.)
- Amici in support of Petitioners and Interveners:
- Brief of Amici American Bankers Association, Credit Union National Association, Independent Community Bankers
- Brief of Amici American Financial Services Association, Consumer Mortgage Coalition, Mortgage Bankers Association
- Brief of Amici American Gas Association, Edison Electric Institute, National Association of Water Companies, National Rural Electric Cooperative Association
- Brief of Amicus Communications Innovators
- Brief of Amicus CTIA - The Wireless Association
- Brief of Amicus Internet Association
- Brief of Amicus National Association of Chain Drug Stores
- Brief of Amici Retail Litigation Center, Inc., National Retail Federation, National Restaurant Association
- Brief of Amicus Charles R. Messer
- Respondent FCC's Brief
- Amici in support of Respondents:
- Brief of EPIC and Six Consumer Privacy Groups
- Brief of National Consumer Law Center, National Association Of Consumer Advocates, Consumers Union, AARP, Consumer Federation Of America, & MFY Legal Services
- Joint Petitioners' Reply Brief (filed by ACA International; Sirius XM Radio; Professional Association for Customer Engagement; salesforce.com & ExactTarget, Inc.; Customer Bankers Association; Chamber of Commerce of the United States; Vibes Media, LLC; Portfolio Recovery Associates)
- Petitioner Rite Aid's Reply Brief
- Joint Interveners' Reply Brief (filed by MRS BPO, LLC; Cavalry Portfolio Services, LLC; Diversified Consultants, Inc.; Mercantile Adjustment Bureau, LLC; Council of American Survey Research Organizations; Marketing Research Association; National Association of Federal Credit Unions; Conifer Revenue Cycle Solutions, LLC; Gerzhom, Inc.)
- C. Ryan Barber, Broad Array of Companies, Groups Fight FCC's 'Autodialer' Rules, National Law Journal (Dec. 7, 2015)
- John S. Yi & Michael P. Daly, Rite Aid Files Opening Brief in Consolidated Appeal of FCC’s TCPA Order, TCPA Blog (Dec. 3, 2015).
- John S. Yi & Michael P. Daly, Joint Petitioners File Initial Brief in Consolidated Appeal of FCC’s TCPA Order, TCPA Blog (Nov. 28, 2015).
- Michael P. Daly & John S. Yi, Parties Seek Twenty Minutes Of Oral Argument In The Consolidated Appeal From The FCC’s July 2015 Declaratory Ruling and Order, TCPA Blog (Sep. 14, 2016)
- Steven A. Augustino et al., D.C. Circuit Court Announces Oral Argument Date for TCPA Omnibus Order Appeal, Lexology (Aug. 10, 2016)
- Chris Bruce, D.C. Circuit Sets October Argument in Robocall Challenge, Bloomberg BNA (Jul. 27, 2016)
- Michael J. Stortz, Takeaways From FCC’s Briefing Defending TCPA Ruling, Law360 (May 3, 2016)
- Reach Jessica Karmasek, Groups argue FCC’s order interpreting TCPA goes too far, Legal NewsLine (Mar. 15, 2016)
- Michael Macagnone, FCC Telemarketing Rule To Stem Flood Of Calls, DC Circ. Told, Law360 (Jan. 25, 2016)
- FCC 2015 Declaratory Ruling and Order In the Matter of Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991
- National Do-Not-Call Registry
- EPIC: Telemarketing and the Telephone Consumer Protection Act (TCPA)
- EPIC: Do-Not-Call Registry (archived)
- EPIC: Illegal Sale of Phone Records
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by Ryan Calo, A. Michael Froomkin,