Podcast (video): Play in new window | Download

Subscribe: Email | RSS

Verna Law, P.C. focuses on advertising law. Call us at 914-908-6757 or send an e-mail to anthony@vernalaw.com for any questions you may have.

2024 Update:

Understanding the Telephone Consumer Protection Act: What Business Owners Need to Know

Introduction to the TCPA

The Telephone Consumer Protection Act (TCPA) is a critical piece of federal legislation enacted in 1991 to regulate telemarketing practices and protect consumer privacy. Initially designed to curb the growing number of unsolicited phone calls, the TCPA has evolved significantly, becoming one of the most impactful laws governing communication in the United States. For business owners, especially those engaged in telemarketing, customer outreach, or any form of direct communication, understanding the TCPA is essential. Non-compliance can lead to substantial penalties, including statutory damages, class action lawsuits, and damage to a company’s reputation.

Key Provisions of the TCPA

Regulations on Telemarketing Calls

The TCPA imposes strict regulations on telemarketing calls, including specific time restrictions. Businesses can only place telemarketing calls between 8 a.m. and 9 p.m. local time for the recipient. Additionally, telemarketers must provide their name, the name of the entity on whose behalf the call is being made, and a contact telephone number or address. These requirements ensure transparency and give consumers the ability to opt out of future calls.

Use of Automatic Dialing Systems

One of the most significant aspects of the TCPA is its regulation of automatic telephone dialing systems (ATDS), commonly known as robocalls. The Act prohibits businesses from using an ATDS to call or send text messages to a consumer’s wireless number without prior express consent. The definition of an ATDS has been the subject of extensive legal debate, with recent Supreme Court rulings narrowing its scope. However, businesses must still exercise caution and ensure they have clear, documented consent before using automated systems to contact consumers.

Consent Requirements

Consent is a cornerstone of TCPA compliance. For telemarketing calls, businesses must obtain prior express written consent from the consumer. This consent must be unambiguous and clearly authorize the business to make calls or send text messages using an ATDS. For non-telemarketing calls, such as those for informational purposes, prior express consent is required, though it need not be in writing. It is crucial for businesses to maintain accurate records of all consents to defend against potential claims of TCPA violations.

National Do-Not-Call Registry

The TCPA also established the National Do-Not-Call Registry, managed by the Federal Trade Commission (FTC). Consumers can add their telephone numbers to this registry to prevent unsolicited telemarketing calls. Businesses must regularly consult the registry and avoid contacting any numbers listed, unless they have an established business relationship with the consumer or have obtained prior express consent. Violating the do-not-call rules can result in significant penalties, including fines of up to $43,792 per violation.

Fax Machines and Unsolicited Faxes

While much of the TCPA’s focus is on voice calls and text messages, it also applies to unsolicited faxes. The Act prohibits businesses from sending unsolicited advertisements to fax machines without the recipient’s prior express invitation or permission. This provision aims to protect consumers and businesses from the cost and inconvenience of unwanted faxes. Additionally, the FCC’s rules require that all faxes, even those sent with consent, include a clear opt-out notice, allowing recipients to stop future transmissions.

Recent Developments and Court Rulings

Supreme Court Rulings

The TCPA has been the subject of numerous legal challenges, leading to significant rulings from the Supreme Court. One of the most notable recent cases is Facebook, Inc. v. Duguid (2021), where the Court narrowed the definition of an ATDS. The ruling clarified that an ATDS must have the capacity to generate random or sequential numbers and dial them without human intervention. This decision was a win for businesses, as it limited the scope of what qualifies as an ATDS, potentially reducing the number of TCPA lawsuits related to automated calls and text messages.

FCC Declaratory Rulings

The Federal Communications Commission (FCC) continues to play a vital role in interpreting and enforcing the TCPA. Recent declaratory rulings have provided further clarity on issues such as what constitutes prior express consent and the responsibilities of lead generators in obtaining consent. In 2020, the FCC issued a ruling emphasizing that businesses must ensure any third parties they work with, such as lead generators, comply with the TCPA’s consent requirements. This ruling has significant implications for businesses relying on third-party marketing services.

Notable TCPA Class Actions

TCPA class action lawsuits remain a significant risk for businesses. Recent years have seen several high-profile settlements, including a $75.5 million settlement by Wells Fargo in 2021 for alleged TCPA violations related to debt collection calls made to consumers without their consent. These cases highlight the substantial financial risks associated with non-compliance and the importance of robust TCPA compliance programs.

Compliance and Risks for Businesses

TCPA Compliance Best Practices

To mitigate the risks of TCPA violations, businesses must implement comprehensive compliance programs. Best practices include maintaining up-to-date records of consumer consent, regularly consulting the National Do-Not-Call Registry, and ensuring that any automated systems used for calling or messaging meet the current legal definitions and requirements. Businesses should also provide clear opt-out mechanisms in all communications and promptly honor any opt-out requests.

Potential Penalties and Statutory Damages

The penalties for TCPA violations can be severe. Statutory damages range from $500 to $1,500 per violation, depending on whether the violation was willful. Given the volume of calls or messages a business may send, these penalties can quickly add up, especially in the context of class action lawsuits. In addition to statutory damages, businesses may also face reputational harm and loss of consumer trust.

Role of the Federal Communications Commission (FCC) and Federal Trade Commission (FTC)

The FCC and FTC are the primary federal agencies responsible for enforcing the TCPA. The FCC issues rules and regulations under the Act, while the FTC manages the National Do-Not-Call Registry and takes enforcement actions against violators. Businesses must stay informed of any updates to TCPA regulations and rulings from these agencies to ensure ongoing compliance.

Case Studies

Case Study 1: Small Business Violation

A small business in the hospitality industry faced a TCPA lawsuit after using an automatic dialing system to send promotional text messages to potential customers without obtaining prior express consent. The court found the business in violation of the TCPA and awarded statutory damages to the plaintiffs. This case underscores the importance of obtaining and documenting consumer consent, even for small-scale marketing efforts.

Case Study 2: Large Corporation Settlement

In a notable case, a large telecommunications company settled a TCPA class action lawsuit for $100 million. The lawsuit alleged that the company made unsolicited telemarketing calls to consumers on the National Do-Not-Call Registry. The settlement included not only monetary compensation but also a commitment from the company to enhance its TCPA compliance program. This case illustrates the significant financial and reputational risks for large corporations that fail to adhere to TCPA regulations.

Case Study 3: Recent Court Decision

In a recent federal court decision, a financial institution was found liable for TCPA violations after using an ATDS to contact consumers regarding overdue accounts. The court ruled that the institution failed to obtain prior express consent from the consumers, resulting in a substantial monetary judgment. This case highlights the ongoing legal risks associated with debt collection practices under the TCPA.

Impact on Different Sectors

Telemarketing and Call Centers

Telemarketing companies and call centers face unique challenges under the TCPA, particularly regarding the use of automated dialing systems and the need to comply with do-not-call regulations. These businesses must invest in technology and training to ensure compliance, as the risk of class action lawsuits is particularly high in this sector.

Financial Institutions

Financial institutions, such as banks and credit card companies, are frequently involved in TCPA litigation due to their use of automated systems for debt collection. These businesses must ensure they have obtained proper consent and must be vigilant in maintaining accurate records to defend against potential lawsuits.

Small Businesses

For small businesses, the cost of TCPA compliance can be significant, but the risks of non-compliance are even greater. Small businesses must carefully evaluate their communication practices and consider consulting with legal experts to develop robust compliance strategies that minimize the risk of TCPA violations.

Future of TCPA and Ongoing Debates

Technological Advances and the TCPA

As communication technologies evolve, so too does the TCPA. Advances in artificial intelligence and automated messaging systems present new challenges for businesses seeking to comply with the Act. The ongoing debate over what constitutes an ATDS is likely to continue as new technologies emerge. Businesses must stay informed about these developments to avoid inadvertently violating the TCPA.

Ongoing Legal and Regulatory Debates

There is ongoing debate among legal experts, businesses, and consumer advocates about whether the TCPA needs to be reformed or modernized to keep pace with technological changes. Some argue for more stringent regulations to protect consumer privacy, while others advocate for more clarity and flexibility to accommodate new communication methods. These debates will likely shape the future of TCPA enforcement and compliance.

Conclusion

The TCPA is a complex and evolving area of federal law that poses significant risks for businesses. From telemarketing calls to the use of automatic dialing systems, businesses must navigate a myriad of regulations to avoid costly penalties and legal disputes. By staying informed about recent developments, implementing robust compliance practices, and understanding the risks associated with TCPA violations, business owners can protect their companies while maintaining effective communication with consumers.

If you’re unsure about your current TCPA compliance or need assistance in navigating this complex legal landscape, it’s essential to consult with legal professionals who specialize in this area. Ensuring compliance now can prevent costly litigation and protect your business’s reputation in the long run.

Video Transcript:

The Telephone Consumer Protection Act of 1991 (TCPA) was passed by the United States Congress in 1991 and signed into law by President George H. W. Bush as Public Law 102-243. It amended the Communications Act of 1934. The TCPA is codified as 47 U.S.C. § 227. The TCPA restricts telephone solicitations (i.e., telemarketing) and the use of automated telephone equipment. The TCPA limits the use of automatic dialing systems, artificial or prerecorded voice messages, SMS text messages, and fax machines. It also specifies several technical requirements for fax machines, autodialers, and voice messaging systems—principally with provisions requiring identification and contact information of the entity using the device to be contained in the message.

Consumer consent is an essential defense under the TCPA and should be a primary focus of any business that communicates with consumers and customers directly via telephony.

You should consult with your legal counsel to ensure that your opt-out process is compliant with applicable law and consistent with industry standards.

Verna Law, P.C. focuses on advertising law. Call us at 914-908-6757 or send an e-mail to anthony@vernalaw.com for any questions you may have.

Here is a lightly-edited transcript of the video blog:

In the video blogs, we’ve covered all sorts of intellectual property topics.

One topic we haven’t really covered: Advertising law.

It’s a lot of alphabet soup: States, federal regulations.

Let’s talk a little bit about the Telephone Consumer Protection Act. The TCPA – see, alphabet soup  – of 1991 has been amended many times since Congress passed it. It’s all about telemarketing.

The TCPA does not qualify if somebody by hand dials your phone. For all of you out there that are doing telemarketing, the TCPA applies if a computer is dialing, which of course 99.9% of telemarketing is done by computers today.

The TCPA also sets hours and it’s the time zone of, of course, the person receiving the phone call, 8:00 AM to 6:00 PM are absolutely legal marketing time, not before and not after that. Also, if you’re calling the cell phone, guess what, you can’t call a cell phone for marketing.

I know we all get, telemarketing calls on our cell phones. That’s also not allowed under the TCPA.

I recently had a client who was doing telemarketing called some people on the West coast outside of the hours and now is being sued for violations of the Telephone Consumer Protection Act. It’s, a frustrating and long process to deal with litigation when only a couple phone calls are outside of those legal ranges.

But from a compliance standpoint, it’s really not a difficult compliance to follow.

Make sure that your telemarketing company is dialing within the hours. Make sure that none of those calls are cell phones and make sure that, that, that your telemarketing company is following all of these procedures and make sure that if there’s a problem, they’re the ones with the problem under the contract with your telemarketing company.

The TCPA has violations for $500 per phone call that is outside of any of these ranges.

Again, the Do Not Call List is a part of that as well. So set that up properly.

Don’t be a defendant in a TCPA violation lawsuit. Don’t wind up in regulatory issues. Follow these completely.

Verna Law, P.C. focuses on advertising law. Call us at 914-908-6757 or send an e-mail to anthony@vernalaw.com for any questions you may have.

Cases:

Case Summary: Cacho v. McCarthy & Kelly LLP

• Court: United States District Court, Southern District of New York
• Date: July 3, 2024
• Citation: 2024 WL 3293628 (Slip Copy)

Overview:

This case involved allegations under the Telephone Consumer Protection Act (TCPA) by the plaintiff, Cacho, against the defendant, McCarthy & Kelly LLP. The plaintiff claimed that the defendant unlawfully contacted him using automated telephone equipment, violating the TCPA.

Factual Background:

Cacho alleged that McCarthy & Kelly LLP, a debt collector, made several unsolicited calls to his cellular phone using an automatic telephone dialing system (ATDS) without his prior express consent. These calls were related to debt collection services, and Cacho claimed they were harassing in nature. He argued that the calls caused him harm, including invasion of privacy and emotional distress.

Legal Issues:

The primary legal issue was whether McCarthy & Kelly LLP’s actions constituted a violation of the TCPA. The TCPA prohibits the use of ATDS or prerecorded voice messages to make unsolicited calls to cellular phones without the recipient’s prior express consent.

Court’s Analysis:

The court analyzed whether the system used by McCarthy & Kelly LLP qualified as an ATDS under the TCPA. The court also considered whether the plaintiff had provided prior express consent to receive such calls. Additionally, the court examined the nature of the alleged harm and whether Cacho had standing to sue under the TCPA.

• Use of ATDS: The court reviewed the technical aspects of the system used by the defendant to determine if it fell under the TCPA’s definition of an ATDS. The court found that the system had the capacity to store or produce telephone numbers to be called, using a random or sequential number generator, and to dial such numbers automatically.
• Consent: McCarthy & Kelly LLP argued that Cacho had given his prior express consent to be contacted. However, the court found insufficient evidence that Cacho had consented to the specific type of calls at issue.
• Standing: The court confirmed that the plaintiff had standing to sue, as the TCPA provides a private right of action for individuals who receive calls that violate the statute. The court acknowledged that the harm alleged by Cacho—such as invasion of privacy—was sufficient to confer standing.

Conclusion:

The court denied McCarthy & Kelly LLP’s motion to dismiss the case, allowing Cacho’s claims under the TCPA to proceed. The court held that there was a plausible claim that the defendant used an ATDS without obtaining the necessary consent from Cacho, potentially violating the TCPA.

Significance:

This case highlights the ongoing legal challenges surrounding the interpretation of the TCPA, particularly concerning what constitutes an ATDS and the requirements for obtaining prior express consent. It underscores the importance for businesses, especially in the debt collection industry, to ensure compliance with the TCPA to avoid litigation.

Case Summary: Rotberg v. Jos. A. Bank Clothiers, Inc.

• Court: United States District Court, Southern District of New York
• Date: November 5, 2018
• Citation: 345 F. Supp. 3d 466

Overview:

In this case, the plaintiff, Edward Rotberg, brought a class action lawsuit against Jos. A. Bank Clothiers, Inc., alleging violations of the Telephone Consumer Protection Act (TCPA). The plaintiff claimed that the defendant sent unsolicited text messages to his cellular phone without his consent, in violation of the TCPA.

Factual Background:

Rotberg received multiple text messages from Jos. A. Bank Clothiers, Inc. These messages were promotional in nature, advertising sales and discounts. Rotberg alleged that he had not provided his consent to receive such messages. He argued that the messages were sent using an automatic telephone dialing system (ATDS), as defined by the TCPA, which prohibits such unsolicited communications.

Legal Issues:

The central legal issue was whether the text messages sent by Jos. A. Bank Clothiers, Inc. violated the TCPA. Specifically, the court needed to determine:

• Whether the defendant used an ATDS to send the text messages.
• Whether Rotberg had provided prior express consent to receive these messages.
• The applicability of the TCPA to the promotional text messages.

Court’s Analysis:

The court examined the following key issues:

• Definition of ATDS: The court analyzed whether the system used by Jos. A. Bank Clothiers, Inc. qualified as an ATDS under the TCPA. The court looked into whether the system had the capacity to store or produce telephone numbers using a random or sequential number generator and to dial such numbers automatically. The court found that the system used by the defendant could be considered an ATDS, as it had the capacity to send mass text messages automatically without human intervention.
• Prior Express Consent: The court assessed whether Rotberg had provided prior express consent to receive the promotional text messages. The defendant argued that Rotberg had consented by providing his phone number during a previous transaction. However, the court found that there was no clear evidence that Rotberg had consented to receive marketing messages, as required under the TCPA. Simply providing a phone number during a transaction was not sufficient to imply consent for promotional communications.
• TCPA Violations: The court considered whether the unsolicited text messages constituted a violation of the TCPA. The TCPA explicitly prohibits sending unsolicited text messages to a consumer’s mobile phone using an ATDS without prior express consent. The court concluded that Jos. A. Bank Clothiers, Inc.’s actions likely violated the TCPA because the promotional messages were sent without the necessary consent.

Conclusion:

The court denied Jos. A. Bank Clothiers, Inc.’s motion to dismiss the case, allowing Rotberg’s TCPA claims to proceed. The court found that there was sufficient evidence to support the claim that the defendant used an ATDS to send unsolicited text messages without obtaining proper consent, which could constitute a violation of the TCPA.

Significance:

This case underscores the importance of obtaining clear and explicit consent before sending promotional messages via automated systems. It highlights the strict liability nature of the TCPA, which requires businesses to ensure they have appropriate consent to avoid potential litigation. The ruling serves as a reminder for companies to review and comply with TCPA regulations when conducting marketing campaigns using text messaging or similar automated communication tools.

Case Summary: Jackson v. Caribbean Cruise Line, Inc.

• Court: United States District Court, Eastern District of New York
• Date: February 17, 2015
• Citation: 88 F. Supp. 3d 129

Overview:

In this case, the plaintiff, Latoya Jackson, filed a lawsuit against Caribbean Cruise Line, Inc., alleging violations of the Telephone Consumer Protection Act (TCPA). The plaintiff claimed that the defendant had made unsolicited, automated telemarketing calls to her cellular phone without her prior express consent.

Factual Background:

Jackson alleged that she received numerous prerecorded telemarketing calls from Caribbean Cruise Line, Inc. These calls promoted free cruise offers as part of a marketing campaign. Jackson asserted that she never consented to receive these calls and that the calls were made using an automatic telephone dialing system (ATDS) and prerecorded voice messages, both of which are regulated under the TCPA.

Legal Issues:

The primary legal issue in this case was whether Caribbean Cruise Line, Inc. violated the TCPA by making unsolicited telemarketing calls using an ATDS and prerecorded voice messages without obtaining Jackson’s prior express consent. The case also involved questions regarding the nature of consent under the TCPA and the application of statutory damages.

Court’s Analysis:

The court evaluated several critical aspects of the case:

• Use of ATDS and Prerecorded Messages: The court examined whether the telemarketing calls made by Caribbean Cruise Line, Inc. utilized an ATDS and prerecorded voice messages. It was determined that the defendant used such technology to make the calls, which falls under the TCPA’s purview.
• Prior Express Consent: The court scrutinized whether Jackson had provided prior express consent to receive these calls. Caribbean Cruise Line, Inc. argued that Jackson had consented to receive the calls by participating in an online survey, where she allegedly provided her contact information. However, the court found that merely providing a phone number in the context of a survey does not necessarily equate to consent for telemarketing calls. The court emphasized that under the TCPA, express consent must be clearly and unmistakably given for the specific purpose of receiving such calls.
• Standing and Harm: The court also addressed the issue of standing, determining that Jackson had suffered a concrete injury sufficient to confer standing under the TCPA. The receipt of unsolicited telemarketing calls constituted an invasion of privacy and a nuisance, which are harms recognized by the TCPA.

Conclusion:

The court denied Caribbean Cruise Line, Inc.’s motion to dismiss the case, allowing Jackson’s TCPA claims to move forward. The court found that there were sufficient allegations that the defendant used an ATDS and prerecorded voice messages without obtaining the necessary prior express consent, potentially violating the TCPA.

Significance:

This case is significant in the context of TCPA litigation as it reinforces the stringent requirements for obtaining prior express consent before making telemarketing calls using automated systems and prerecorded messages. The decision underscores the importance of businesses ensuring they have explicit consent from individuals before engaging in telemarketing practices, as violations can lead to substantial liability under the TCPA. The case also highlights how courts may interpret “express consent” narrowly, requiring clear evidence that consent was knowingly and voluntarily given for specific types of communications.

Case Summary: Campbell-Ewald Co. v. Gomez

• Court: Supreme Court of the United States
• Date: January 20, 2016
• Citation: 577 U.S. 153, 136 S. Ct. 663, 193 L. Ed. 2d 571

Overview:

This Supreme Court case addressed key issues under the Telephone Consumer Protection Act (TCPA), focusing on whether a defendant’s offer of complete relief to a plaintiff renders a case moot, and therefore, whether the case should be dismissed. The plaintiff, Jose Gomez, brought a class action lawsuit against Campbell-Ewald Co., alleging that the company sent unsolicited text messages in violation of the TCPA.

Factual Background:

Jose Gomez received unsolicited text messages from Campbell-Ewald Co., a marketing company hired by the U.S. Navy to assist in recruitment efforts. Gomez claimed that the messages were sent without his prior express consent, violating the TCPA. Gomez sought statutory damages for himself and others similarly situated in a class action.

Before Gomez could move for class certification, Campbell-Ewald Co. made an offer of judgment under Federal Rule of Civil Procedure 68, offering to pay Gomez the full amount of statutory damages he was entitled to under the TCPA, along with court costs. Gomez rejected the offer. Campbell-Ewald then argued that the offer of complete relief mooted Gomez’s individual claim and the entire lawsuit, including the class claims.

Legal Issues:

The primary legal issues before the Supreme Court were:

1. Mootness: Whether an unaccepted offer of complete relief to the plaintiff renders the plaintiff’s individual claim, and the potential class action, moot under Article III of the Constitution.
2. TCPA Violations: Whether Campbell-Ewald Co.’s actions in sending unsolicited text messages constituted a violation of the TCPA.

Court’s Analysis:

The Supreme Court focused on the issue of mootness rather than directly on the TCPA violation itself, but the TCPA context was critical to the analysis:

• Mootness and Unaccepted Offer: The Court held that an unaccepted settlement offer or offer of judgment does not moot a plaintiff’s case. The Court reasoned that once an offer is rejected, it has no force; the parties remain in the same legal position as if the offer had never been made. Therefore, Gomez’s rejection of the offer did not strip the court of its jurisdiction over the case, and his claims, including the class action, remained active. The Court emphasized that a live controversy continued to exist because the relief offered had not been accepted, meaning the plaintiff retained a personal stake in the outcome of the case.
• Impact on Class Actions: The decision underscored that defendants could not unilaterally moot a class action by offering complete relief to the named plaintiff before the class is certified. The Court left open the question of whether the result would be different if the defendant had actually deposited the offered funds with the court or if the defendant had otherwise made good on its offer.
• TCPA Context: While the Court did not deeply analyze the specifics of the TCPA violation, the decision was significant for TCPA cases, as it preserved the ability of plaintiffs to bring class action suits under the TCPA, even when individual offers of relief are made by defendants.

Conclusion:

The Supreme Court ruled in favor of Gomez, holding that the unaccepted offer of complete relief did not moot his TCPA claims or the class action. The case was remanded for further proceedings.

Significance:

The Campbell-Ewald Co. v. Gomez decision has significant implications for TCPA litigation and class actions more broadly. It prevents defendants from circumventing class action litigation by offering full relief to named plaintiffs before they can seek class certification. This ruling ensures that plaintiffs can continue to pursue collective redress under the TCPA, reinforcing the TCPA’s role as a powerful tool for protecting consumers from unsolicited communications.