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Top Ten Telemarketing Compliance Stories of 2021

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Posted by Chris Alarie on Mon, 01/03/2022 - 12:01

2021 was an eventful year in the world of telemarketing regulations. Here are the most important events and stories from the past year.

1. SCOTUS Rules on ATDS Definition in Facebook v. Duguid

On April Fool’s Day, the Supreme Court announced their ruling in Facebook v. Duguid, finally addressing the longstanding question of how to interpret the Telephone Consumer Protection Act’s (TCPA) definition of an automatic telephone dialing system (ATDS). The court seemingly adopted a more restrictive definition, with Justice Sonia Sotomayor writing in the unanimous opinion, “We hold that a necessary feature of an autodialer under [the TCPA] is the capacity to use a random or sequential number generator to either store or produce phone numbers to be called.”

However, in the months since that decision, TCPA plaintiffs have found ways to peel back that decision and continue to bring TCPA litigation. Some post-Facebook TCPA trends include making Do Not Call (DNC) list claims rather than ATDS claims, making ostensibly doomed ATDS claims in hopes that the cost of the case reaching the pleadings stage is enough to force a settlement, and making ATDS claims based on esoteric-seeming readings of footnotes 6 and 7 of the ruling. The Facebook decision has drastically shifted the TCPA landscape but its ultimate legacy remains in flux.

2. Florida’s Mini-TCPA

While the Supreme Court restricted the definition of what constitutes an autodialer for TCPA purposes, Florida passed state-level telemarketing legislation that greatly expanded the scope of ATDS regulations within the state. When Governor Ron DeSantis signed CS/SB 1120 into law on June 30, he enacted reforms to the state’s existing telemarketing laws that created something like a mini-TCPA. The law includes notable provisions modeled on the TCPA including  private right of action that allows individuals to file lawsuits and class actions, TCPA-style penalties of $500-per-violation and $1,500-per-willful violation, and consent-related restrictions on the use of automated systems. What makes the mini-TCPA particularly dangerous is the fact that “automated system” is not defined in the law.

When the bill was first passed, analysts predicted that the lack of an ATDS definition would allow the law to be applied to a wide variety of dialing technology that is not barred by the TCPA. These predictions have proven to be true as numerous lawsuits have been filed under the new law, mostly in cases involving text messaging systems. This has created an unusual situation in which texting is the safest marketing channel nationally following the Facebook decision but the riskiest channel in Florida under the mini-TCPA.

3. Reassigned Number Database (RND) Implementation

In 2018, the Federal Communications Commission (FCC) announced plans to create an official database of reassigned phone numbers that could be accessed by callers for compliance purposes. More importantly, regularly scrubbing this database would allow callers to claim a safe harbor defense, replacing the old “one call” safe harbor that was vacated by the D.C. Circuit in 2015’s ACA International v. FCC decision. However, the actual implementation of that database was delayed numerous times, regularly blowing past the FCC’s deadlines. Those delays finally ended this year, with a beta test over the summer and full implementation of the RND on November 1.

4. New York Telemarketing Regulations

Two different governors put three different pieces of telemarketing legislation into effect in New York this year. In July, Governor Andrew Cuomo signed a law that explicitly extended the state’s DNC list restrictions to cover text messages in addition to voice calls. In November, his successor, Governor Kathy Hochul signed two laws that required telecom providers to block robocalls from certain numbers and implement STIR/SHAKEN call authentication protocols. But the most notable state-level telemarketing regulation in New York was signed into law back in 2019.

When we first covered the passage of the Nuisance Call Act in December 2019, it seemed to be a mostly minor bill designed to close loopholes in the state’s existing telemarketing regulations. However, it included the following provision: 

“It shall be unlawful for any telemarketer doing business in this state to knowingly make an unsolicited telemarketing sales call to any person in a county, city, town or village under a declared state of emergency as described in sections twenty-four or twenty-eight of the executive law.”

This state-of-emergency-triggered telemarketing band first gained notice when Governor Cuomo declared a state of emergency because of COVID-19 in the Spring of 2020. As the pandemic continued, the governor continued to extend the state of emergency and, by extension, the ban on unsolicited telemarketing. The full extent of the consequences of the Nuisance Call Act’s disaster emergency provisions became clear this summer. In June, Governor Cuomo finally allowed the COVID-19 disaster emergency to expire, ending the statewide telemarketing restrictions. Two weeks later, he declared another statewide disaster emergency due to the nebulous problem of gun violence, once again triggering the telemarketing ban. Both Governors Cuomo and Hochul have extended this disaster emergency and declared others. As result, in the 21 months since the COVID-19 disaster emergency was declared, unsolicited telemarketing has been banned in New York for all but 2 weeks.

5. Appeals Court Rules That TCPA Was Constitutional Between 2015 and 2020

Had we put together a top ten list for 2020, the top entry would have been the Supreme Court’s ruling in Barr v. American Association of Political Consultants. This decision declared that the TCPA’s exemption on calls to collect on government-backed debt was an unconstitutional restriction on speech. However, rather than declaring the entire TCPA to be unconstitutional, SCOTUS opted to sever the invalid exemption.

In the cases following this decision, District Courts addressed the question of whether this retroactively rendered the TCPA to be unconstitutional—and thus unenforceable—during the years in which the debt exemption was in effect (2015 through 2020) or if the severance of the debt exemption can be applied retroactively. In the first such case, Creasy v. Charter, the Eastern District of Louisiana did in fact find that the Barr decision effectively made the TCPA unenforceable between 2015 and 2020. However, not every court that addressed this argument came to that conclusion. In September of this year, a Circuit Court of Appeals finally ruled on the issue. In Lindebaum v. Realgy, Inc., the Sixth Circuit found that the severance could be applied retroactively and potential TCPA claims from 2015 through 2020 remain enforceable. Other Circuits may rule differently on the issue but, for now, a precedent is set within the Sixth Circuit.

6. The President Finally Nominates a FCC Chair and Fifth Commissioner

Shortly after his inauguration, President Joe Biden elevated FCC Commissioner Jessica Rosenworcel to the position of Acting Chair. But he did not nominate her to that position permanently and did not nominate a fifth Commissioner to break a 2-2 partisan deadlock and give his party the control of the FCC that is standard. This state of affairs dragged on for months, significantly longer than in any other president’s tenure. It lasted long enough that it provoked angry letters from advocacy groups and noticeably affected how the FCC functioned in the first year of the Biden administration. It also carried the possibility of the Republican members of the Commission achieving an unprecedented majority under a Democratic President due to the fact that Rosenworcel’s tenure as a Commissioner was set to expire in January 2022. Biden finally put an end to this state of affairs in late October, officially naming Rosenworcel as Chair on a permanent basis, renominating Rosenworcel for another full term on the Commission, and nominating Gigi Sohn for the vacant fifth Commissioner slot. Rosenworcel was confirmed by the Senate by a 68 to 31 vote. As of this writing, Sohn has yet to receive a vote before the full Senate.

7. STIR/SHAKEN Implementation

The patchwork process of various federal and state-level mandates relating to STIR/SHAKEN call authentication protocols hit a major milestone this summer with the FCC deadline for major telecommunications to implement STIR/SHAKEN. Major carriers were required to adopt the protocols by June 30, 2021. Additionally, the FCC moved up the deadline for small carriers to implement STIR/SHAKEN from June 30, 2023 to June 30, 2022.

8. Supreme Court Affirms the Need for Actual Injury for Article III Standing in TransUnion v. Ramirez

For marketers, the second most important Supreme Court ruling in 2021 was not a TCPA case but rather a case relating to the Fair Credit Reporting Act (FCRA). In TransUnion v. Ramirez, the Supreme Court considered a case in which a class of 8,185 individuals sued TransUnion for producing credit reports that erroneously identified them as being on the Treasury Department’s list of suspected terrorists, drug traffickers, and major criminals. However, SCOTUS ruled that only 1,853 members of the class had standing to bring suit as those were the only class members whose reports were sent to third parties.

This decision is relevant to TCPA litigation because it addressed the question of what constitutes harm for the purposes of Article III standing. In the ruling, the Supreme Court held that “[o]nly plaintiffs concretely harmed by a defendant’s statutory violation have Article III standing to seek damages against that private defendant in federal court.” SCOTUS succinctly explained that “[a]n injury in law is not an injury in fact.” This is a stronger, more direct opinion than the Court’s landmark opinion in Spokeo v. Robins and will undoubtedly prove to be an important precedent in determining who has standing to file lawsuits under the TCPA.

9. Court Rules Against Caller for Not Producing Written DNC Policy

The TCPA requires callers to have a written DNC policy. But until recently, it was not considered a violation worthy of monetary penalty if the caller could not produce that policy if a call recipient demanded it. A case before the District Court in Massachusetts changed that. The case—Perrong v. All Star Chimney Solutions, Inc.—involves infamous serial plaintiff Andrew Perrong. The plaintiff alleged that he received four calls from the defendant despite his number appearing on the National Do Not Call (DNC) Registry. He also alleged that the defendant “did not have a written policy, available on demand, pertaining to do-not-call requests." The court ruled in his favor, albeit only for $500, not the $2,000 that Perrong had sought. The court found that the failure to have a written policy was only a single TCPA violation, not one that would be penalized on a per-call basis.

10. Ohio Passes Anti-Spoofing Law

Ohio Governor Mike DeWine signed a bill into law that criminalizes the use of phone number spoofing to make the recipient believe that a call is coming from a trusted source. Violations of this law may be prosecuted as fifth-degree felonies, or fourth-degree felonies if they target certain categories of vulnerable individuals, including the elderly, disabled people, and veterans and their spouses.