What Is The TCPA?

The TCPA, or Telephone Consumer Protection Act, is legislation that places restrictions on communication used for telemarketing purposes, including a phone call, SMS messaging, and even fax messaging.

Until that point, telemarketing companies would use automated devices to solicit business via telemarketing calls and similar types of communication, though, since 1991, the TCPA restricts that type of operation. There is now a limit to what companies can do with devices that perform automatic dialing, the use of pre-recorded marketing, the use of an unsolicited text message, and unsolicited faxes. Along with limiting the use of such devices, the TCPA also moderates the machines that make such marketing possible. Fax machines, auto dialer machines, and systems that send prerecorded messages must all adhere to precise specifications. One such specification is that any communication sent from such a device must detail the origin of the message and accurate contact information for the telemarketer that has sent it. Some other provisions of the TCPA include:

• Solicitation for business must not occur before 8 am or after 9 pm.
• Any telephone solicitation to an individual that gets refused must see that individual’s details get added to a company’s no-call list. Each individual’s request on that list needs to be adhered to for five years before the no-call request becomes nullified.
• When making communication with a potential client, telemarketers must fully identify themselves. Those details need to include the name of the person who is making the call. The caller must also identify whom they are working for and a telephone number that can reach them.
• A telemarketing company must adhere to the National Do Not Call Registry.

The National Do Not Call Registry

With the conception of the TCPA, the FCC or Federal Communications Commission initially required that every company that performs any form of telemarketing must create a database of do not call numbers. However, it can be difficult to police a company working off an internal database. In 2003, the FTC, or Federal Trade Commission, created the National Do Not Call Registry. Instead of trusting a company to maintain a self-compiled list, the FTC provides a list of individuals who wish not to receive calls. Anyone can add themselves to this list by calling 1-888-382-1222.

The 2015 TCPA Omnibus Declaratory Ruling and Order

Since 1991, the TCPA was doing its job, though not as well as some people thought it could. It was for this reason that in 2015, the TCPA was amended and then defined more clearly. Any room for telemarketers to misinterpret the rules of the TCPA was removed. Some examples of the now better-defined TCPA regulations include:

• A telemarketer must not use automatic dialing or robocalls to contact a wireless telephone device and then leave a prerecorded message, without the consent of the phone’s owner.
• A potential consumer can opt-out of receiving calls or SMS marketing, even if they had previously opted in.
• Telemarketers can use automated means to deliver essential alerts without the need for consumer consent. However, the consumer must get offered a chance to opt-out of these messages at any time. 

How to Comply with the TCPA

Knowing what TCPA offers is only the first step towards ensuring your business is in compliance with the rules. The next step a business owner should take is to draft out a TCPA policy that employees, subcontractors, and any other parties who use telecommunications to market to consumers, can understand and follow. A business should be ready to update the policy if and when the law changes, as would have been the case in 2015. Following FCC regulations is a good step towards ensuring that is the case. You can find some of the rules that you should implement into a TCPA policy outlined above.

The next step a business should take is to separate the type of contact devices they have for their customers. Different types of telephone lines have different rules, so being able to differentiate between your customers’ communication devices will help ensure you stay compliant with the TCPA. There are more restrictions against wireless phones than there are landline phones. One specific rule is that a wireless phone user must give explicit consent for a business to call them with an automated marketing message. 

In truth, some form of consent, whether written or verbal, should be provided by a consumer, no matter their device. Explicit consent from a customer that they are happy to get contacted in the future is the best way to stay compliant with the TCPA. It is becoming more common for consumers to connect their landlines to their mobile devices. If a business is not aware of this and reaches out to the customer without given consent, the FCC’s interpretation of the case will not be on its side, as consumer privacy is paramount.

Finally, as touched on above, a business must maintain and adhere to a Do Not Call List. This list will coincide with the National Do Not Call list, as one consumer can appear on one list and not the other.

If a business has a concern or is unclear on the terms of TCPA, they should seek legal advice on how to avoid a TCPA claim as the above is a general guideline.

What Happens If A Telemarketing Company Fails to Comply with the TCPA?

The TCPA was put in place to protect consumers against overactive telemarketing companies, and that is still its purpose to this day. Failing to adhere to the TCPA can find a business faced with a lawsuit, and that has been the case for thousands of companies who, both knowingly and unknowingly, broke the outlined terms. A standard TCPA lawsuit in a federal court can see fines against a company for the amount of actual statutory damages or $500, whichever is greater. If the federal court deems a company was in breach of rules outlined by the TCPA knowingly, the amount can get tripled.

Exceptions to the TCPA

Though the TCPA does protect a consumer’s right to privacy, there have been rulings of exemptions for specific content. However, if these exemptions have even the slightest hint of marketing, TCPA law applies along with the consequences for breaking the law. Here is what is generally exempt from the TCPA:

• Messages sent manually. If a company employee was to pick up their phone and manually send a message, they should be exempt from the TCPA.
• Emergency messaging. If there is a natural disaster, people need to be made aware of it, so messaging alerting a population to an emergency is generally exempt.
• Utility service updates. General updates on utility services, like the scheduled shut off of power to a building for repairs, are considered exempt from the TCPA.

School updates. An educational institution can send updates on school closure or as a warning to a parent or guardian if a student has multiple unexplained absences.

There is one misconception that non-profit organizations are completely exempt from the TCPA, no matter the content of their message. That is not the case, though how a non-profit acquires a consumer’s consent is somewhat laxer than other businesses. If they get given (remove given) the phone number by the consumer, they can contact the number. Non-profit communication is not considered a solicitation, so they do not have to refer to the National Do Not Call List.

Famous TCPA Lawsuits

The best way to stay in compliance with the rules of the TCPA law is by learning from the mistakes of other companies. The below are some famous lawsuits that took place, with company names you are sure to recognize. Analyzing these lawsuits that received class certification can help a business update their TCPA policy to ensure they remain compliant. Cases brought to court based on a TCPA suit are often putative class action cases. Putative class action means, despite being brought forward by only a few, if won by the plaintiffs, it will benefit many victims, which is why the below payouts are for large amounts.

American Express

This 2016 TCPA litigation against American Express alleges that while employing a third party to handle their marketing, it made calls to wireless phones using an automatic dialer without obtaining prior express consent. As made clear above, this act breaches the terms of the Telephone Consumer Protection Act, specifically, an unsolicited advertisement. American Express’s initial response was that they should not be held responsible for the alleged violation as the actions were of a third-party marketing company. Despite that, American Express did settle the TCPA class action lawsuit. As part of the settlement, consumers who received calls from the third-party got rewarded for damages. American Express paid out $8.25 million after the fees for attorneys. The attorney fees amounted to over $3 million.

Capital One

Debt collection is a common theme when it comes to class action lawsuits for breaching the terms outlined by the TCPA. That was the case for Capital One and three debt collectors. The litigation was filed in 2012 after allegations were placed against Capital One for using automatic dialing and prerecorded messages to reach out to customers with debt collection calls. These calls were made in an attempt to recover outstanding credit card debt, though Capital One had never received prior express written consent from its consumers. Capital One never admitted to any wrongdoing, though agreed to the largest TCPA case settlement to date, with an amount of $73 million paid out. The three debt collection companies contributed $2.5 million each to the overall amount.

The TCPA and the Coronavirus Pandemic

As addressed above, the TCPA generally applies to companies performing telemarketing to stop aggressive, borderline harassing marketing strategies. However, the jurisdiction of the TCPA rules can reach to web content. That has been the case in the last couple of months as the world deals with the Covid-19 pandemic. The FTC has started to combat lead generators who were using the epidemic to generate leads for the companies that contracted them. They do this by offering PPP or Paycheck Protection Program loans from the Small Business Administration or SBA. This loan was conceived as part of the Coronavirus Aid, Relief, and Economic Security Act or CARES act to help small businesses deal with the hardships of recent events.

The issue stems from the fact that third-party lead generation companies offer a consumer the chance to apply for SBA loans, even though the site linked in the marketing material has no affiliation with the SBA. The two companies in question are IT Media and Lendio, both of whom have received formal letters from the FTC to address the misleading content of their advertising.

IT Media

The TCPA violations the FTC has laid out against both companies are very similar. There are some slight differences to be clarified. The FTC outlined the following as issues with the marketing strategy of IT Media:

• IT Media references the website, SBA.com. Visiting this website prompts a consumer to make their PPP loan application using phrases such as “Your Paycheck Protection Program Loan starts here” and “Get Started,” both of which mention a consumer is in the right place to apply for such a loan. However, SBA.com has no affiliation to sba.gov, the correct site for applying for a loan.
• Further down the webpage of SBA.com, there are also prompts for a consumer to connect to a more extensive network of approved PPP loan vendors.

These claims suggest the website has an affiliation with the government scheme and that it can help a consumer apply for their loan. On the other hand, the FTC feels that this site is soliciting business with false advertisement, which in turn is misleading consumers.

Lendio

Lendio and its associated lead generators have faced similar accusations from the FTC with regards to their business practices, for which Lendio holds vicarious liability, though there is an additional severe claim against them. Their website, Manfunding.com, claims to be an authorized SBA loan provider, who, for the fee of $495, can help a business secure financial relief with a PPP loan.

Of course, this claim suggests an affiliation with the SBA, which prompts a consumer to apply for a PPP loan. Additionally, the SBA prohibits the charging of a fee to PPP loan applicants.

Consumers are giving their consent under false pretenses, which is why the above are both in breach of TCPA. The FTC has asked both companies to amend their respective web pages before small businesses suffer the damage of such statements, who would then be in a position to file a claim.

What Does the Future Have in Store For TCPA?

Despite the clarity that the 2015 TCPA Omnibus Declaratory Ruling and Order brought to companies, some have deemed it not enough. The Supreme Court recently got petitioned to reassess the constitutionality of the Telephone Consumer Protection Act. Specifically, the Supreme Court addressed whether the automated calls restrictions placed by the TCPA are in breach of the first amendment, which protects the right to freedom of speech, freedom of religion, freedom of assembly, freedom of the press, and right to petition. The Court of Appeals for the Fourth Circuit, the federal court that handles appeals from the district court of Maryland and other district courts in the area, decided that the government-debt exception was to be removed from the TCPA guidelines as it was unconstitutional. However, the general restrictions placed on calls made using automatic dialing devices were left as they are. The Supreme Court is yet to offer its ruling, so it is not clear whether the government-debt exception will get removed or if the entire TCPA will be considered unconstitutional.

The TCPA Is Not Tailored to the Current Generation

The issue with the current TCPA guidelines stems from the fact that the act was introduced in 1991, where landlines were the norm. The United States Congress could not begin to imagine what innovations would come with mobile phones, so the term robocall has no clear meaning. Within the TCPA, automatic dialing devices define equipment that can both store telephone numbers that get produced using a random number generator and can dial such numbers. Some believe that if a device can store random numbers and make automatic calls, then it falls under the definition, even if it can’t create those random numbers. Others believe the device must do both to fall under the definition of an automatic telephone dialing system.

2020, The Year TCPA Is Clarified

The future of the Telephone Consumer Protection Act is unclear. There are signs, as outlined with the above coronavirus scams that it does the job, but telemarketers still require additional clarity. There is hope that 2020 will be the year that clarity gets brought to the TCPA. The ruling of 2015 aimed to do that, though some telemarketers feel that it brought even more confusion. Change is coming, as the Eleventh Circuit Court of Appeals ruled in January 2020, that for a device to be an automatic telephone dialing system or ATDA, it should both generate random numbers and be able to make calls. Even without clarity, businesses should always aim to adhere to the current rules to ensure TCPA compliance.

-Michael Smith