Last week, the US Court of Appeals for the DC Circuit issued a long-awaited decision on an omnibus challenge to the FCC’s interpretation of the TCPA. While the decision provides some relief for businesses, it does not eliminate the prospect of TCPA liability and leaves important TCPA interpretive questions unresolved. Businesses should continue to be vigilant regarding consent and opt-out procedures when sending automated text messages and automated or pre-recorded calls to consumers. Continue Reading
Be Careful Who You Hire To Make Those Calls! Ninth Circuit Takes Expansive View of Vicarious Liability under the TCPA
A recent ruling by the Ninth Circuit took an expansive view of vicarious liability under the Telephone Consumer Protection Act (TCPA). Reversing the district court’s grant of summary judgment, the court in Gomez v. Campbell held that a marketing consultant could be held liable for text messages sent in violation of the TCPA, even though the marketing consultant itself had not sent the texts and even though the texts were sent on behalf of the marketing consultant’s client, not the consultant itself.
Among other things, the TCPA prohibits (with certain exceptions) the use of automatic telephone dialing systems in making calls to cellphones. Both the Federal Communications Commission (FCC) and the courts have interpreted this provision to bar the use of automated systems to send unsolicited texts to cellphones. In Gomez, the Campbell-Ewald Company had been hired by the Navy to conduct a multimedia recruiting campaign. Campbell-Ewald had then outsourced the text-messaging component of the campaign to a third party, Mindmatics. Mindmatics then allegedly sent text messages to the plaintiff and others who had not given consent.
On appeal, Campbell-Ewald raised two variations of the arguments that it should not be held liable for texts that it had not itself sent. First, Campbell-Ewald argued that it did not “make” or “initiate” any calls under the TCPA because Mindmatics had sent the texts. As the statue only provides for liability for those that “make” or “initiate” prohibited calls, Campbell-Ewald argued that it could not be held liable. Second, addressing another potential avenue of liability, Campbell-Ewald noted that the FCC had interpreted the TCPA to allow for liability against those “on whose behalf” unsolicited calls are made. But, Campbell-Ewald argued, it could not be held liable on this ground either because the texts had been sent on behalf of its client, the Navy, not Campbell-Ewald.
In the end, the Ninth Circuit sidestepped both these arguments and found Campbell-Ewald potentially liable on a third basis, “ordinary tort-related vicarious liability rules.” The court noted that where a statute is silent on vicarious liability—as the court judged the TCPA to be—traditional common law standards of vicarious liability apply. Thus, the court held, Campbell-Ewald could be liable under the TCPA based on the agency relationship between Campbell-Ewald and Mindmatics. The court further noted that FCC had stated that the TCPA imposes liability “under federal common law principles of agency,” and held that the FCC’s interpretation was entitled to deference.
Finally, the court noted that it made little sense to subject both the actual sender and the ultimate client to liability, while absolving the middleman marketing consultant, noting, “a merchant presumably hires a consultant in party due to its experience in marketing norms.”
The decision reinforces the importance for companies to closely monitor anyone sending texts or placing calls on their behalf or at their direction. Following Gomez, it is clear that any company that had a role in sending unsolicited calls or texts can potentially be held liable under the TCPA; and the company with the [...]
Consumer Data Privacy Update for Marketers, Part 2: New Telemarketing/Text Message Marketing Rules Effective October 16, 2013
The Federal Communications Commission (FCC)’s Report and Order 12-21 (Order 12-21), issued in February 2012, describes revised telemarketing rules that became effective during the past 12 months.
The FCC’s telemarketing rules are issued under the Telephone Consumer Protection Act (TCPA) and apply to a telephone call to a residential landline or wireless number or a text message that is initiated for advertising or telemarketing purposes and uses an “automatic telephone dialer system” (ATDS) or an “artificial or prerecorded” voice message.
The three major changes implemented during the past year are:
(i) Abandoned calls rule effective November 16, 2012: Telemarketers must ensure that no more than three percent of calls answered by a person are “abandoned” (i.e., not answered by the telemarketer within two (2) seconds after the called person answers) during a 30-day calling campaign period;
(ii) Opt-out mechanism effective January 14, 2013: Artificial or prerecorded telemarketing messages must include an automated, interactive mechanism that enables the called person to opt out of receiving future prerecorded messages; and
(iii) Prior express written consent rule effective October 16, 2013: “Prior express written consent” (as described below) of the called person is required[i] for:
- telemarketing calls to a wireless telephone number when an artificial or prerecorded message or ATDS is used;
- telemarketing text messages sent using an ATDS; or
- telemarketing calls to a residential landline telephone number using an artificial or prerecorded message.
“Prior express written consent” means a written agreement signed by the called person that clearly authorizes delivery of advertising or telemarketing messages using an ATDS or an artificial or prerecorded voice message and clearly states that agreeing is not a condition of buying any product or service. A written agreement may be “signed” electronically using any method recognized under the federal Electronic Signatures in Global and National Commerce Act (E-SIGN Act) or applicable state contract law. The E-SIGN Act recognizes a signature as an “electronic sound, symbol or process” that is “attached or logically associated with” an agreement and “adopted by a person with the intent to sign.”
Although industry standards have required express opt-in consent for recurring text messaging programs prior to implementation of the FCC’s prior express written consent rule, consent obtained under the old regulatory framework is not sufficient under the new FCC consent rule because (among other requirements) the “agreement” to which the consumer consents (i) must include reference to use of automated technology and (ii) “must be obtained without requiring, directly or indirectly, that the agreement be executed as a condition of purchasing any good or service.”
Action Step for Marketers: Obtain New Opt-in Consent for Telemarketing and Mobile Marketing
Obtaining new opt-in consent consistent with the requirements of the new FCC consent rule is best practice because the sender bears the burden of proving that it has obtained prior express written consent that meets the FCC standards. Relatedly, implementation of a record-keeping system through which evidence of compliant consent is retained for at least three years (i.e., the statute [...]