Today's Trends in Credit Regulation

A Primer on New TCPA Rule Amendments
By Michael A. Goodman

Earlier this year, I wrote two Basis Points articles on Telephone Consumer Protection Act developments that readers need to know about if they contact consumers by phone or text message. Today's article covers the most important change in TCPA compliance in 2013. On October 16, 2013, a new consent standard took effect for anyone who calls a cell phone using an autodialer or a prerecorded message, who sends a text message using technology that can automate that process, or who sends a prerecorded message to a residential line, provided that the contact has a sales purpose.

Overall, the TCPA rules and court opinions tend to tilt in consumers' favor. The Federal Communications Commission and the courts typically justify that approach by noting the TCPA's consumer protection and privacy preservation purposes. Callers received an important respite from that trend in 2008 when the FCC issued a declaratory ruling establishing a relaxed interpretation of the TCPA's "prior express consent" standard. Specifically, the FCC established that a caller obtains valid consent whenever a consumer volunteers his or her cell phone number to the caller, even in the absence of any disclosure to the consumer about how the caller intends to use the number. At the time, the FCC referenced its 1992 statement that "persons who knowingly release their phone numbers have in effect given their invitation or permission to be called at the number which they have given, absent instructions to the contrary."

In 2012, however, the FCC renounced that standard as applied to sales contacts and imposed a strict new "prior express written consent" standard, which just took effect. This consent standard applies to any call that includes or introduces an advertisement or constitutes telemarketing using an automatic telephone dialing system or an artificial or prerecorded voice to, among other destinations, a cell phone. It is irrelevant whether the consumer is charged for the incoming communication. Additionally, the FCC has taken the position that a text message is a "call" subject to TCPA regulation. If it is delivered to a cell phone, it is subject to this consent standard. This standard also applies to all artificial or prerecorded voice telephone messages that include or introduce an advertisement or constitute telemarketing that are delivered to a residential line. Unlike the "prior express consent" standard, which is not defined, the FCC added a definition of the new "prior express written consent" standard that closely regulates what constitutes valid consent.

Specifically, the term "prior express written consent" means an agreement, in writing, bearing the signature of the person called that clearly authorizes the seller to deliver or cause to be delivered to the person called advertisements or telemarketing messages using an automatic telephone dialing system or an artificial or prerecorded voice, and the telephone number to which the signatory authorizes such advertisements or telemarketing messages to be delivered.

The written agreement must include a clear and conspicuous disclosure informing the person signing that: (A) By executing the agreement, such person authorizes the seller to deliver or cause to be delivered to the signatory telemarketing calls using an automatic telephone dialing system or an artificial or prerecorded voice; and (B) The person is not required to sign the agreement (directly or indirectly), or agree to enter into such an agreement as a condition of purchasing any property, goods, or services. As used here, the term "signature" includes an electronic or digital form of signature, to the extent that such form of signature is recognized as a valid signature under applicable federal law or state contract law.

The term "clear and conspicuous," as used here, means a notice that would be apparent to the reasonable consumer, separate and distinguishable from the advertising copy or other disclosures.

There are several features of this new consent standard that were not required in connection with the old "prior express consent" standard. First, the consent must be in the form of a writing signed by the consumer that includes the consumer's telephone number. The FCC acknowledges that callers may comply with this element of the definition in an electronic format, provided that the process complies with the federal E-SIGN Act and related state Uniform Electronic Transactions Acts.

Second, the consent must be preceded by a disclosure explaining what the consent is for: that the consumer is agreeing to sales communications delivered via an autodialer or a prerecorded message, and that callers are not allowed to condition a purchase on the consumer providing this consent.

Third, callers must not, in fact, require consumers to provide this consent in order to proceed with a purchase.

Fourth, the "clear and conspicuous" format standard means that this disclosure must be distinguishable from the content around it. This would seem to prohibit callers from including this disclosure within a boilerplate paragraph of other information.

Complying with this new TCPA consent standard is vital for all callers placing sales calls, given the fact that the TCPA comes with a private right of action, including class actions, and statutory damages of $500 per call for negligent violations and up to $1,500 per call for willful or knowing violations.

Callers who rely on third-party lead generators must pay particular attention to this new standard. The FCC has indicated that the consent is specific to a particular seller, meaning that the consent should identify the seller obtaining the consent. When a third-party lead generator obtains this TCPA consent and forwards the lead to a seller, in many cases that consent process will not identify the name of the seller receiving the lead and the consent. This is because the lead generator does not know the identity of the seller at the time the lead is submitted. It is unclear whether a consent disclosure that describes the type of party receiving the consent (i.e., "one or more sellers offering the goods and services you are interested in") rather than identify by name the party receiving the consent would be sufficient.

Given the statutory damages provision, TCPA private litigation is common and seems to be increasing all the time. Plaintiffs routinely prevail, even in cases that may appear to be close calls, because courts tend to rely on FCC guidance, which is generally friendly to consumers, and because courts tend to look for ways to effectuate the statute's consumer protection purpose. As a result, all callers placing sales calls must be aware of this new consent standard and ensure that their compliance efforts are keeping pace with ongoing evolution in the TCPA's legal requirements.

Michael A. Goodman is a partner in the Washington, D.C., office of Hudson Cook, LLP. Mike can be reached at 202-327-9704 or by email at

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