Telemarketing With Rotary-Dial Phones? You’re Probably OK

In Privacy

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Business-owners wishing to reach a large audience on their mobile phones have their work cut out for them. The Telephone Consumer Protection Act (TCPA) prohibits the use of auto dialers or automated telephone dialing system (ATDS) for calls or text messaging without prior express consent. Violations of this law carry significant statutory liability — up to $1500 per call/message. This regulation has opened the door to an avalanche of class actions, some of which have left a huge financial dent on well-known businesses while chilling the speech of many more. Capital One recently agreed to pay $75 million to settle a class action settlement for alleged debt collection calls placed with auto dialers. And publisher Simon & Schuster earlier agreed to pay $10 million to settle a class action alleging ATDS facilitated nonconsensual text messages designed to promote a Stephen King novel.

Yet, the TCPA’s autodialing restriction itself hasn’t been as troubling as the confusion caused by the definition of what constitutes an auto dialer. Section 227 of the TCPA defines auto dialers 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.” This definition has left many people scratching their heads trying to figure out what is meant by equipment “capacity” and the extent of human involvement necessary in the dialing process. Would manually dialed calls placed with equipment that could be programmed to autodial violate the TCPA? Can a smartphone be an auto dialer if it contains automated technology with the capacity to enable dialing, even if such technology is not used? Could human dialing ever be regarded as auto dialing?

A number of federal district court decisions have shed some light on this issue. Adopting a narrow interpretation of the term “capacity,” some courts have concluded that auto dialers within the meaning of the TCPA must have the present ability to generate numbers and dial them. Mere potential or future capacity to store, produce, or call randomly or sequentially generated telephone numbers, these courts said, isn’t enough to qualify as an auto dialer. See Nelson v. Santander Consumer USA, Inc.; Hunt v. 21st Mortgage Corp.; Stockwell v. Credit Management, L.P. [links to these decisions which can be found on google]

But court decisions haven’t sufficiently eliminated uncertainty or curtailed class claims.

To make matters worse, the Federal Communications Commission (FCC) this month issued a ruling in response to petitions from business owners seeking specific clarification from the agency on the scope of the term “capacity” as used in section 227 of the TCPA. This ruling, far from clarifying matters for telemarketers, seems to have muddled the legal landscape even more. For one thing, the FCC refused to apply the narrow “present, not potential capacity” determinations adopted by the federal courts. The FCC instead chose to adopt a broader view, concluding that a telephone equipment can qualify as an auto dialer based on its current configuration as well as its potential for future capacity to dial a number. Even if an equipment’s existing features lack the functional capacity to auto dial a number, the FCC said such equipment can still be regarded as an ATDS, if its existing features can be “activated or de-activated” or “added to the equipment’s overall functionality through software changes or updates.”

To broaden the gray area even further, the FCC could think of just one type of dialing equipment — rotary telephones — as being theoretically incapable of future or potential modification.

The FCC could have made things easier for business owners by adopting a “human intervention” test to recognize whether a dialer is an ATDS. Such a test would have been consistent with the current language of the TCPA and the basic aim of auto dialing technology of eliminating human intervention. But the FCC rejected adoption of this test because of its potential to undermine an equipment’s “potential ability.” This leaves features, such as speed dialing technology or dialing devices that require human intervention, vulnerable to ATDS classification if they have the future or potential capacity to become automated.

The FCC’s ruling disappoints because of its failure to provide specific guidance on legitimate concerns affecting business owners who remain exposed to large class actions for attempting to reach consumers. The ruling also is inconsistent with existing sound judicial decisions. The FCC surely won’t be the last word on this issue, as courts will eventually have to decide whether the FCC’s views are consistent with the TCPA’s plain language and legislative intent. Until then, rotary phone dialing remains a safe bet for telemarketers seeking to comply with the auto dialing restrictions of the TCPA.