Wrong Number:

Hot Topics In TCPA Compliance

& Litigation

Yaron Dori

Covington & Burling LLP

Nancy Thomas

Morrison & Foerster LLP

Julie O’Neill

Morrison & Foerster LLP

International Association of Privacy Professionals

Privacy Academy 2013

2

What will we cover?

• Overview of the law and why we care

• New FCC regulations – (1) new “prior express written consent”

requirement for “telemarketing” calls (voice and text) to mobile

phones, and (2) elimination of “established business relationship”

exception for prerecorded telemarketing calls to residential phones

• Recent trends in TCPA and texting litigation

• Tips on avoiding regulatory scrutiny and litigation on TCPA issues

3

What is the TCPA?

• The Telephone Consumer Protection Act (TCPA) – 47 USC § 227

• Federal Communications Commission’s (FCC) Implementing Rule – 47

C.F.R. § 64.1200 • Not to be confused with (1) the Telephone Consumer Fraud and Abuse Prevention Act,

15 USC § 6101, and FTC implementing regulations, 16 CFR § 310, and (2) Section 14 of

the CAN-SPAM Act, 14 USC § 7712

• The TCPA regulates the use of an autodialer to call a cell phone, as well as

the delivery of prerecorded messages to both cell phones and landlines

• Imposes consent obligations with respect to both telemarketing and non-

telemarketing calls to cell phones

• A “call” includes a text message

• The FCC recently revised its TCPA Rule

• Revised rule takes effect on October 16, 2013

• Consents previously obtained under lesser standard no longer valid

4

Why do we care?

• Private right of action

• Very actively enforced

• Not unusual to see settlements in the tens of millions of dollars

• Regulatory enforcement by the FCC

• TCPA remedies include

• Injunctive relief

• Actual damages or up to $500 per violating text or call ($1,500 for willful

or knowing violations)

• Regulatory fines of up to $16,000 per violating text or call

5

The rule for non-telemarketing calls

• “Prior express consent” is required to use an autodialer or

prerecorded voice to deliver a non-telemarketing call (including a text

message) to a cell phone

• “Prior express consent” is not defined

• Clear indication that the individual agrees to be called at a

designated number (e.g., via web form or text message)

• Keep records of consent for at least four years

• The FCC’s revised TCPA rule does not change this

• Don’t forget the Mobile Marketing Association and Wireless

Association (CTIA) rules applicable to text message campaigns

6

What is an autodialer?

• What is an “autodialer”?

• Equipment with the capacity to produce or store, and dial, random or

sequential numbers

• Why don’t we just avoid using an autodialer?

• It is the “capacity” to generate and call numbers that matters

• Courts and the FCC have construed the term “capacity” broadly

• Is it anything besides completely manual dialing?

• Court challenges to calls and text messages placed to cell phones have

typically survived a motion to dismiss asserting that no autodialer was

used on the basis of the term “capacity” in the definition

• Whether or not particular equipment is an “autodialer” becomes a

question of fact at trial

7

What is “telemarketing”?

• What is “telemarketing”?

• Includes or introduces an advertisement: “any material

advertising the commercial availability or quality of any property,

goods or services”

• Or constitutes telemarketing: “encourag[es] the purchase or

rental of, or investment in, property, goods or services”

• FCC: a call is an advertisement if, notwithstanding its free offer or

other information, it is “intended to offer property, goods or services

for sale either during the call or in the future”

• So “dual purpose” text messages or calls are telemarketing

8

What is “telemarketing”? (cont’d)

Chesbro v. Best Buy Stores, 697 F. 3d 1230 (9th Cir. 2012)

• Two separate prerecorded calls:

• Reminded customers enrolled in a rewards program to use their points or

risk their expiration; and

• Notified enrollees of changes to the program

• Held: “Neither the statute nor the regulations require an explicit mention of a

good, product or service where the implication is clear from the context”

• Both messages impliedly urged customers to make purchases by:

• Encouraging redemption of rewards points;

• Directing them to a website to engage with the reward program;

• Thanking them for shopping at Best Buy

9

What is “telemarketing”? (cont’d)

The determination is fact-specific. For example:

• A text message advertising daily deals?

• Yes

• A text message promoting a movie playing in theaters?

• Yes

• A weather or traffic update or other purely informational text message?

• No, as long as no marketing or advertising material is included

• A survey?

• No, unless intended to promote a downstream purchase, rental or investment (e.g., “sponsored by CompanyCo -- go to CompanyCo.com for great prices on everyday purchases”)

10

The rule for telemarketing calls

• Today: “prior express consent” is required to use an autodialer to

deliver a telemarketing call or text message to a cell phone

• Same as for the delivery of non-telemarketing messages

• As of October 16, 2013: “prior express written consent” will be

required to use an autodialer to deliver a telemarketing text message

or call to a cell phone

• The caller cannot rely on consent obtained before the revised

rule’s effective date, unless it meets this new standard

• Keep records of consent for at least four years

• Don’t forget the Mobile Marketing Association and Wireless

Association (CTIA) rules applicable to text message campaigns

11

What is “prior express written consent”?

• An agreement, in writing, that

• Bears the signature of the person to be called,

• Clearly authorizes the delivery of marketing text messages

or telemarketing calls to that person using an autodialer or

prerecorded voice,

• Includes the phone number to which the person authorizes

such delivery, and

• Clearly and conspicuously discloses that the person is not

required to sign the agreement as a condition of a purchase

•This disclosure is required even if no purchase is

involved

12

The signature requirement

• “Signature” includes an electronic or digital signature, to the extent that it is

recognized as valid under applicable law

• The E-SIGN Act: “a signature … relating to [a transaction in or affecting

interstate commerce] may not be denied legal effect, validity, or enforceability

solely because it is in electronic form”

• Electronic signature

• “electronic signature” = “an electronic sound, symbol, or process,

attached to or logically associated with a contract or other record and

executed or adopted by a person with the intent to sign the record”

• “record” = “information that is inscribed on a tangible medium or that is

stored in an electronic or other medium and is retrievable in perceivable

form”

13

The signature requirement (cont’d)

• The FCC’s examples of e-signatures:

• Website form

• Email

• Text message

• Telephone key press

• Voice recording

• Remember that the signature must be attached to or logically associated with

a contract or other record, and a “record” means “information that is inscribed

on a tangible medium or that is stored in an electronic or other medium and

is retrievable in perceivable form”

• How can we meet this requirement with respect to a text call-to-action?

• May need a double opt-in, with message sent to request the second opt-

in containing the rule’s required disclosures

14

Consent Examples

The following are examples of how consent may be obtained. They do

not replace the disclosure requirements for the call-to-action for a text

campaign

• Consent by web form

• [ ] I agree to receive autodialed marketing text messages from or

on behalf of [the relevant entity] at the phone number provided

above. I understand that consent is not a condition of any

purchase.

• Use an unchecked check box, radio button other indicator of

affirmative consent

• Ensure that a record of the consent can be produced, if needed

15

Consent Examples (cont’d)

• Consent by email

• Send required disclosures by email, and request agreement by

return email

•By replying to this email with your phone number, you agree to

receive autodialed marketing text messages from or on behalf

of [the relevant entity] at the number you provide. Your

consent to receive messages is not a condition of any

purchase.

• Ensure that a record of the consent can be produced, if needed

• Must receive a response: failure to respond does not constitute

consent

16

Consent Examples (cont’d)

• Consent by text message, such as in response to a print, web-based

or on-air call to action

• After the person has texted his/her consent, send a confirmation

message that contains the required disclosures and asks him/her

to confirm consent with a reply:

•Reply YES to agree to receive autodialed marketing text

messages from or on behalf of [the relevant entity] at this

number. Consent to receive messages is not a condition of

purchase.

• Ensure that a record of the consent can be produced, if needed

• Must receive a response: failure to respond does not constitute

consent

17

Reminder re: Previously Obtained Consents

Because consents previously obtained under the lesser standard no longer are valid for “telemarketing” calls/tests to mobile phones, one or more of the earlier-described methods must be used to “re-opt-in” those who are already signed up to telemarketing campaigns, if you wish to continue marketing to them

• If you do not receive the new consent from a subscriber, you may not deliver telemarketing calls or messages to his or her cell phone, as of October 16, 2013

For example, include the following in a message that the person has already agreed to receive: Reply YES to continue receiving autodialed marketing messages from [the relevant entity] at this number. Your consent is not a condition of purchase.

• There is risk with sending this as a standalone message (i.e., not in a message the person has already agreed to receive), as the company may not have the requisite consent to send it

18

Additional E-SIGN disclosures and consent?

• Recall: the written agreement shall include a clear and conspicuous disclosure

that:

• By signing, he/she authorizes the delivery of autodialed telemarketing calls

• He/she is not required to sign as a condition of a purchase

• E-SIGN § 101(c)

• If a law “requires that information relating to a transaction . . . be provided or

made available to a consumer in writing,” the information can be provided by

means of an electronic record, but only if the consumer receives certain

disclosures regarding such electronic provision and specifically consents to

them

• May not provide verbal disclosures of information required to be given in

writing

• Does the revised TCPA rule require that the above disclosures be “in writing”?

19

TCPA Litigation: Prior Express Consent

• Cases generally follow FCC guidelines on consent

• Providing cell number or initiating communications with

text message constitutes consent

•Lakers text message

•Pacer account

• BUT: other cases have required either written or oral

consent

• Expect “gotcha” suits when new FCC rules take effect

Affirmative Defense

20

TCPA Litigation: Prior Express Consent

• TCPA language vs. common sense

• Opt-out confirmation text message does not violate

TCPA

• FCC 12-143 [SoundBite Communications]

• Presumed to fall within prior express consent if

sent within 5 minutes of receipt of request

• Limited to one message w/o any marketing

Revoking Consent

21

TCPA Litigation: Class Certification

Commonality/Predominance Arguments

• Critical inquiry: can defendant show significant

percentage of class members consent?

• If so, some courts have held individual issues of

consent predominate over common questions such

that plaintiff can’t prove claim with class-wide proof

22

TCPA Litigation: Class Certification

• Standing issues

• Consent provided by the “called party”

• Intended recipient or current subscriber?

Adequacy of Class Representative

Ascertainability

• Plaintiff must propose way to identify class members

• How to identify who consented?

• Current subscriber vs. subscriber at time of the call

23

TCPA Litigation: Vicarious Liability

• FCC declaratory ruling FCC 13-54 [Dish Network]

• On behalf of: do-not-call vs. prerecorded call

• Seller can be vicariously liable under common law

agency principles

• Agency principles

• Did defendant control manner and means by which

communication was created and distributed?

• Apparent authority/ratification?

Acts of Third-Party Telemarketers

24

Questions?