Commentary Addressing Risks and Opportunities Through the Lifecycle of Data, Technology, Advertising and Innovation

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Effective October 16, 2013, the rules governing telephone and text marketing will significantly change. Under prior Federal Communications Commission (FCC) regulations issued under the Telephone Consumer Protection Act (TCPA) (47 U.S.C. 227), telephone and text marketers could telephone and text market to consumers' residential phones using autodialing equipment that is standard in call center operations, based either on having "express consent" from a consumer or because of a "pre-existing business relationship" with that consumer. For any autodialed call to a wireless phone, "express consent" was required, but was deemed to have been obtained, for example, if the consumer had provided his or her wireless number to the company as the desired contact number.

Companies will now need to be able to prove that they have the "express written consent" of consumers to market to their mobile phones using autodialing equipment, and, if the company utilizes a recorded or artificial voice, any autodialed marketing calls to residential lines will also require such "written" consent (47 C.F.R. 64.1200).

While there are various electronic means of obtaining the required "written" consent, it must be "unambiguous." This means that: (i) consumers must receive a "clear and conspicuous disclosure" that they will receive future calls or texts that deliver autodialed or pre-recorded telemarketing messages on behalf of a specific advertiser; (ii) consent must not be a condition of purchase; and (iii) consumers must designate a phone number at which to be reached (which should not be pre-populated by the advertiser in an online form).

If a dispute concerning consent arises, the advertiser bears the burden of proof to demonstrate that a clear and conspicuous disclosure was provided and that the consumer unambiguously consented to receive telemarketing calls to a number that he or she specifically provided. Agreements obtained in compliance with the E-SIGN Act will satisfy the requirement that the consent be "written," e.g., agreements obtained via email, text message, telephone keypress, voice recording, or a website form. Advertisers should maintain each consumer's written consent for at least four years, which is the applicable federal statute of limitations.

The risks of disregarding this rule change are severe. Consumers receiving calls in violation of the TCPA may sue for statutory damages ranging from $500.00 to $1,500.00 per unsolicited call or message. The amount of statutory damages awarded may depend on the extent to which a marketer "willfully" or "knowingly" violated the TCPA. The fact that telemarketing campaigns often involve thousands, or even millions, of calls or text messages has made the TCPA a favorite statute of plaintiff class action attorneys. The availability of statutory damages provides a basis for plaintiffs to evade "standing" defenses that often block privacy class action suits. Many class actions fail where the putative plaintiffs cannot establish an "injury" giving rise to a legal remedy.

The TCPA was enacted in 1991 in an effort to deter unsolicited telemarketing calls and faxes. "Telemarketing calls" have been interpreted under case law and regulations as virtually any calls or text messages offering or marketing products or services to consumers -- including calls that have a mixed purpose of providing information and selling products or services.

FCC regulations define an "autodialed" call as any call made from a telephone dialing system that can produce or store and call telephone numbers using a random or sequential number generator. Importantly, these regulations may treat a call as "autodialed," even when it is manually dialed, if it is made from a system that has the capacity to "autodial." If you are using call center software as part of your telemarketing operations, you may be using an autodialer within the FCC's definition.

Both the Federal Trade Commission (FTC) and the FCC are empowered to issue rules and regulations implementing the TCPA. The recent changes in the FCC regulations make it consistent with existing FTC regulations. But the FTC regulations do not apply to companies in many industries -- such as financial services, telecommunications and transportation -- and do not apply to "intrastate" commerce. The FCC regulations will therefore have a broader effect on many marketing campaigns.

If you have any questions about the material presented in this alert, please contact Gerald J. Ferguson at <a href="mailto:gferguson@bakerlaw.com">gferguson@bakerlaw.com</a> or 212.589.4238; Theodore J. Kobus III at <a href="mailto:tkobus@bakerlaw.com">tkobus@bakerlaw.com</a> or 212.271.1504; or any member of the BakerHostetler's <a href="http://www.bakerlaw.com/PrivacyDataProtection">Privacy and Data Protection</a> Team.

Are You Ready for the New Telephone and Text Marketing Rules?