Once upon a time, before the National Do-Not-Call regulations and the Telephone Consumer Protection Act, 47 USC 227 and 47 CFR 64.1200, business were free to “cold call” consumers to introduce them to new products and services. Those days are long past, and more importantly, cold calling landline or mobile numbers on even your old leads can create tremendous liability for you and your company. Despite these regulations, I still find myself frequently the recipient of such cold calls regarding a mortgage, and when queried, the callers often have never even heard of TCPA. It’s mind boggling! Understanding these regulations are critical for anyone in business given the rash of Federal Class action lawsuits against corporations from professional litigants looking to extort your company.
Background on the TCPA
The TCPA and its implementing rules impose limitations on calls placed to both residential and wireless telephone numbers. The TCPA prohibits telemarketing calls made using an artificial or pre-recorded voice to residential phones, without prior express consent. The TCPA also prohibits making non-emergency calls using an automated telephone dialing system or artificial or pre-recorded voice to a wireless telephone number without prior express consent. If the call to the wireless number includes an advertisement or is considered telemarketing, the express consent must be in writing. Failure to comply with these rules results in automatic penalties ranging from $500 up to $1,500 per unsolicited call placed if you disregard TCPA compliance. Unlike DNC penalties, this is not a fine for the calls you made to the specific complainant, but rather EVERY call you made to anyone’s mobile number since TCPA was updated in Oct of 2013, if the Class is certified in litigation. Even if compliant, the costs of defense are enormous and litigants often file these as a way to extort $50,000 or more from companies, as judgments can be in the hundreds of millions of dollars and take years in court. Calling under the pretext of a “survey” to generate a sales opportunity is also prohibited. TCPA includes uninvited text messages.
On July 17, 2015, the FCC issued new rules regarding TCPA in an attempt to clarify this area of law. While the new rule results in a number of changes to the TCPA, none is more significant than the broadening of the definition of an “automated telephone dialing system” (ATDS). In simplest terms, the FCC now defines an ATDS as any equipment that is actually or potentially able to dial random or sequential numbers – even if not actually used that way, and even if it must be altered in order to be capable of doing so. In essence, your iPhone can be considered an automated dialer in certain circumstances. Given the fact the US economy relies on consumer spending for 70% of total GDP, these laws are not only stifling our economy in my view, but placing undue burdens on legitimate businesses. Bottom feeding lawyers and professional litigants are clogging up the courts with these cases due to the extremely high value of potential judgments.