Overview
Those who know me know that one of my Thanksgiving "must haves" is canned cranberry sauce. You know, that stuff that comes out in a jiggling and wobbling 4.25-inch tower of sugary goodness complete with the scallops from the can still intact. I don’t try to hide my delight as I heap three or four slices onto my plate. Whereas I own the things that (maybe) upset the perfect Turkey Day banquet that my wife has concocted, just a day before carving the turkey this year, the Federal Communications Commission (FCC) quietly released a Second Report and Order, which creates new rules under the Telephone Consumer Protection Act (TCPA) and might have telemarketers reaching for the post-Thanksgiving Maalox.
More specifically, on November 22, 2023, the FCC issued its Second TCPA Report and Order, available here, seeking public comment on a series of new rules. While the Second Report and Order contains several requirements targeting mobile wireless providers, telemarketers and sellers should pay close attention to the Report and Order’s other portions, namely, (1) codification that the National Do Not Call Registry’s (NDNC) protections specifically extend to text messages, and (2) the closure of the so-called "lead generation loophole" by requiring that a consumer provide prior express written consent to a single seller at a time. The former simply statutorily codifies what, in practice, most companies and practitioners have long considered to be the law—that the TCPA’s NDNC provisions apply equally to telemarketing calls and marketing text messages. But, the latter likely will change the way that the lead generation industry operates. Sellers that rely on lead generators must pay close attention too and consider ways to minimize their own TCPA exposure. After all, an ounce of compliance now can prevent a pound of TCPA liability later.
The "lead generator loophole," according to the FCC, is a means by which a lead generator collects consent from a consumer through a single online lead form that allows multiple sellers to telemarket to that consumer. Most often, these types of lead forms appear on comparison shopping websites. These websites provide many consumer benefits. Even the FCC acknowledges such benefits, noting that they "enable[e consumers] to quickly compare goods and services and discover new sellers." (The Federal Trade Commission (FTC), the federal agency tasked with enforcing the analogous Telemarketing Sales Rule, has similarly noted the pro-consumer role that comparison shopping websites play and, since 2006, has taken the public position that it would exercise its discretion to not pursue Rule violations against a seller that obtains a lead through such site so long as disclosures of certain material facts are made and a consumer understands the consequences of submitting a multi-party lead form.) But, the FCC believes that multi-party lead forms abuse the TCPA’s consent requirements. This despite the FTC reporting last month that it has seen a 33% decrease in robocall and unwanted live-call complaints from 2022 to a new five-year low.
In any event, the Second Report and Order will require "one-to-one," clear and conspicuous consent between consumer and seller. Consent no longer may be obtained on behalf of a hyper-linked list of sellers or marketing partners (or even multiple sellers or partners specifically identified in the body of the consent disclosure itself). In other words, according to the FCC, "[w]e require consent to one seller at a time[.] . . . [I]f the web page seeks to obtain prior express written consent from multiple sellers, the webpage must obtain express consent separately for each seller." The Commission contemplates, among other things, a series of check boxes that allow the consumer to choose those specific sellers from which he or she wishes to hear as being sufficient. But, the Second Report and Order is silent on, for example, whether the check boxes may be pre-marked—a consent issue that has resolved favorably for industry under the TCPA as to individual seller website lead forms—or whether a consumer can click one button to select all check boxes in one fell swoop.
In addition, the consent that a consumer provides through a comparison shopping website "must be logically and topically related to that website." Although the FCC provides as an example consent given through a car loan comparison shopping website not extending to telemarketing calls or marketing text messages about loan consolidation generally, the agency does not provide a definition of, or otherwise explain the contours of what constitutes "logically and topically related." Rather, it takes the view that telemarketers are capable of implementing that standard and, when in doubt, err on the side of caution. But, even when erring on the side of caution, the class action plaintiffs’ bar will almost certainly view whatever telemarketers do in the absence of clear agency guidance to be insufficient, and challenge calls and text messages as not being logically and topically related to the consent obtained. These are incredibly high-stakes given the prospect of uncapped, aggregated statutory damages in a TCPA class action.
Once the Second Report and Order is published in the Federal Register, commenters will have thirty days to submit affirmative comments and, then, fifteen more days to file reply comments. As a reminder, Steptoe can assist with drafting and filing comments. The FCC’s new rules will go into effect six months after following the Federal Register publication of the final report and order.
Finally, and separately, don’t forget the Maryland’s forthcoming Stop the Spam Calls Act of 2023, a summary of which is available here, goes into effect on January 1, 2024. There are many serial litigants resident in the state and it is expected that Maryland will see a wave of class action filings once the new year begins, similar to what happened in Florida two years ago when that state’s "mini-TPCA" went into effect. And, now that Thanksgiving is behind us and the December holidays are approaching, all I can say is "bah humbug."
