Telephone Consumer Protection Act (TCPA) Overview
The statute restricts the use of automatic dialing technology and pre-recorded voice messages from telemarketers and debt collectors. The TCPA applies to both residential landlines and cellular phones, and also includes protections against automated text messaging and unsolicited faxes. (Click here for more information on the TCPA and its provisions.)
The Federal Communications Commission (FCC) regulates TCPA compliance and enforcement. Aside from a company’s requirement to maintain their own DNC lists, both the FCC and the Federal Trade Commission (FTC) enforce the National Do Not Call Registry. The FCC also established rules regarding what forms of consent companies were required to obtain in order to make automated calls, along with a private right of action for consumers affected by TCPA violations. This opened the floodgates for individual and class action lawsuits brought by consumers against violators.
Violating the TCPA isn’t difficult, there are many different ways it can happen. The greatest danger companies face is that the person on the receiving end of a violation turns out to be a highly litigious individual who exercises their private right of action to sue you—or worse, kick off a class action suit.
TCPA Litigation
There are three primary ways in which businesses may be impacted by litigation based on TCPA violations.
First, there are individuals—serial litigators—who are waiting and watching for any kind of TCPA violation and threatening to file a claim as soon as it happens to them. It looks like blackmail, it quacks like blackmail…legally speaking, it’s not blackmail, but it sure feels like it from the business owner’s perspective. These people prefer settlements to formal hearings; they will always approach the business before filing suit to try to convince them to settle out of court. They aren’t looking for justice under the law, they just want businesses to give them money to go away. They often even target small businesses that don’t have the resources to fight a protracted legal battle.
Next, there are the professional litigators who actually file lawsuits. Their usual targets are often mid-size to enterprise-level companies. These litigants aren’t interested in haggling over a settlement, they’re trying to win formal awards of compensatory fines for TCPA violations. Dealing with these claims can eat up a lot of a company’s time, money, and other resources.
Finally, the most disastrous possible consequence of violating the TCPA is a class action lawsuit. Hundreds of millions of dollars can be on the line in these cases, because the law firms that file them are pursuing damages for every consumer that might have been affected by the defendant’s TCPA violations. Of course, each consumer will only get a tiny fraction of the payout—the lawyers are the ones making real money off of this. Class action lawsuits often target enterprise-level companies that have large cash reserves, but sometimes smaller brands as well.
One notorious TCPA settlement took place in August 2014, when Capital One agreed to pay $75.5 million to settle a class action suit brought about when they were caught using an auto dialer to call their customers’ cellphones. Believe it or not, that’s only the third highest TCPA settlement on the books. Dish Network’s 2017 settlement cost them $280 million, and Caribbean Cruise Line, US Coachways, and Wells Fargo have also ponied up tens of millions of dollars to settle similar cases. You don’t want your company to end up a member of this rarefied club.
Wireless and VoIP Numbers
When cellphones first hit the mass market, users were charged according to a pay-per-minute structure, even for incoming calls. Unlimited calling and texting plans may be ubiquitous these days, but TCPA legislation hasn’t exactly changed with the times and still retains the same prohibitions against automatically dialing or texting wireless numbers. You have to have express written consent to use an automated telephone dialing system to call these numbers for marketing purposes, and express consent for non-marketing.
It used to be the case that a phone number’s prefix would indicate whether it belonged to a wireless or landline phone, which made it easy to tell them apart. Unfortunately, nowadays numbers are transferred so frequently that this method is no longer reliable.
While it’s rare for VoIP numbers to incur pay-per-minute charges, the TCPA treats certain VoIP numbers exactly the same as cellular numbers, with the same restrictions and consent requirements. Many households have VoIP numbers for their residential “landline” now, because they’re often packaged with cable and wireless internet plans. Direct marketers should scrub for VoIP numbers as well, except when they have appropriate consent.
Types of Consent
The TCPA accounts for the fact that not all forms of consumer consent are alike, and some consumers may be more or less amenable to different categories of communications. Companies don’t necessarily need to obtain consent for certain types of information calls, but opt-out requests must always be honored.
These are the two types of consent recognized under the TCPA:
Prior Express Consent
While not explicitly defined in the statute, prior express consent should consist of a written or oral agreement clearly stating the consumer’s consent to receive calls at a particular number. Express consent for non-marketing calls is implied if a consumer knowingly provides a phone number to a company in the normal course of doing business, as long as the content of the calls aligns with the reason for which the number was originally provided.Prior Express Written Consent
The FCC defines this as a written agreement between the caller and the call recipient that clearly authorizes the caller to deliver “advertisements or telemarketing message using an automatic telephone dialing system or an artificial prerecorded voice.” The agreement must specify the phone number and disclose that consent is not a condition of purchase. Finally, the agreement must be signed, physically or electronically, by the recipient.
Any time you use a prerecorded marketing message in a call to any number, wireless or landline, you must obtain prior express written consent. This type of consent is also required in order to use auto dialers to call wireless numbers, with the exception of non-marketing calls such as debt collection calls and informational calls (like delivery alerts or public utility notifications). These only require express consent.
Express written consent is also required to call any number on the National DNC Registry for marketing purposes, so landlines must also always be scrubbed against DNC lists. Non-marketing calls are of course not subject to the DNC list.
Reassigned Numbers
Never forget that consent attaches to individuals, not phone numbers. If you have obtained consent to call a particular number, that consent is no longer valid if that number is ever transferred to a different owner.
Until the D.C. Circuit Court struck down an important FCC order, you were allowed one erroneous call to a reassigned number. Now, however, with that interpretation invalidated, plaintiffs have resumed suing companies over even one reassigned call. Therefore, companies need to scrub against a list of reassigned numbers.
Do Not Call (DNC) Act Overview
The law was intended to set limits on who telemarketers could call, and when and how often they were permitted to call them. Consumers were given the right to add themselves to the National DNC Registry, which would, in theory, put them out of telemarketers’ reach.
The DNC act required companies who engage in telemarketing to obtain a Subscription Account Number (SAN) which licenses them to access the DNC database. Companies must download a new copy of the DNC database file every day to replace the previous day’s version, as new names are constantly being added. As of this writing, the database contains upwards of 240 million phone numbers.
Complying with the DNC act may seem easy enough at first blush, but in actual practice it can be quite challenging to avoid inadvertent violations. Much of the work of staying complaint falls on IT departments, who are often put in charge of maintaining and validating the data required to accurately scrub against the Federal, State, and Internal DNC lists and handle exemptions such as Established Business Relationships (EBR).
National & State Do Not Call
We’ve already covered the National DNC Registry, but twelve states have their own separate DNC lists that must be uploaded and scrubbed against if your company places calls to residents within those states. These states have regulations and holidays that vary from those on the National DNC Registry, and they deliver their lists in different formats and media.
The state lists may be smaller and easier to handle on their own, but issues can crop up when IT has to merge state lists with the larger national list, where there may be compatibility problems. You also have to contend with any licensing requirements the states have for their databases, and bear in mind that state legislation can change on a much quicker timeframe than Federal law does.
Regardless of the logistical challenges, you must ensure that your company is adhering to every set of rules and regulations that apply to you. You can’t get a TCPA violation excused by pointing fingers at your IT staff.
Internal Do Not Call
Not only do companies have to deal with the Federal and State DNC lists, the legislation also requires them to maintain internal lists of customers who have asked them to cease contact. Whenever a company receives such a request, they should immediately enter the customer’s information into their internal DNC list and send it out to every department that might try to initiate communications with them. After 30 days, calling one of these customers will count as a violation. Keep in mind that a consent revocation must be honored immediately.
Established Business Relationships
Established Business Relationships (EBR) are given an exemption under DNC legislation. Companies and their existing customers have an implicit business relationship that supersedes the national DNC list, allowing companies to contact these customers for a wide range of reasons within the context of that relationship (late payment or policy change notifications, for example). EBR exists for 18 months after a purchase or financial transaction, or for 3 months following the consumer’s product or service inquiry. Some states have shorter or no EBR exemptions, be aware.
How to Minimize Risk Exposure & Maximize Opportunities
You can mitigate the impact this has on your contact opportunities by taking advantage of exemptions like EBRs whenever possible.
The best way to avoid litigators and professional plaintiffs is to identify the ones already hiding in your customer database. Put together a list of names and phone numbers belonging to individuals associated with TCPA complaints and lawsuits, update it frequently, and scrub your call list against it on a regular basis.
Other priorities should include identifying wireless numbers, VoIP numbers, and numbers that have been reassigned. This can be difficult but failing to remove these numbers is a sure bet you’ll run afoul of the TCPA sooner or later.
Lastly, make sure that your process for obtaining consent is well-documented and that the language used on consent forms is clear and understandable. You should include a legally-vetted arbitration clause stating that if any dispute arises about the services provided under your terms and conditions, the customer agrees to go into arbitration and is not allowed to enter into a class action. This is one of the most important steps you can take to protect yourself—these clauses really do prevent class action lawsuits from getting off the ground.
The Right Experts With The Right System
At Contact Center Compliance, we utilize an advanced DNC scrubbing tool called DNC Scrub® that includes Litigator Scrub®, an award-winning, cloud-based defense against serial TCPA litigators and professional plaintiffs. This solution encompasses all of the legislative compliance requirements we discussed above, helping our clients eliminate exposure to both TCPA and DNC risk.
Our DNC Scrub® solution includes the right ecosystem and IT resources to fully manage your Federal, State, and Internal DNC scrubs and all TCPA provision requirements in a single job. We offer simple, flexible processes that allow our customers to come to our website and manually upload a list of phone numbers, schedule nightly SFTP jobs, or set up real-time API connectivity. Additionally, you can get real-time updates and increased efficiency from our enterprise-level integrations with platforms you’re already using, such as Salesforce, Five9, Genesys, ActiveProspect, VICIDial and Mitel.
With over 70 billion scrubs (and counting) performed and 0 violations, fines, or lawsuits incurred by our clients, you can market with confidence.
If you'd like to learn more about how we can help your business minimize exposure to DNC and TCPA compliance risk and threats, request a consultation with one of our experts today.
