TCPA AND WIRELESS MARKETING AT THE FCC, THE FTC, AND IN THE

COURTS

William B. Baker

Wiley Rein LLP

September 19, 2014

San Jose

Why You Should Care

• Hundreds of lawsuits

• Hundreds of $millions in payouts

– Capital One: $75 million

– Bill Me Later: $9.9 million

– Sprint: $7.5 million

– L.A. Clippers: $5 million

• Insurance coverage uncertain

Different rules for different media

• Subject to variety of federal (and state) laws enacted over 30 years with non smartphones in mind

• Opt-in or opt-out

• Consent: oral, written or none

• Rules vary with technology

• Rules vary with format of address

• Enforcement mechanisms vary

Which laws apply depends on the technology used

• Voice • TCPA, Do Not Call,

Telemarketing Sales

Rule

• Text • TCPA, Do Not Call

• Email • CAN-SPAM (FTC &

FCC)

• Mobile App • FTC Section 5;

(TSR?)

• Browser • FTC Section 5

TCPA, 47 U.S.C. §227(b)(A)

• “Unlawful . . . to make any call . . . using any automatic telephone dialing system or an artificial or prerecorded voice-- . . .

(iii) To any telephone number assigned to a paging service, cellular telephone service . . . for which the called party is charged for the call”

FCC can exempt calls that are not charged to user.

What Is A “Call”

• Voice, text

• YouMail FCC petition (software-based menu of advanced voicemail features)

• VoAPPS FCC petition 7/31/14: service leaves message in wireless vm without calling device

What is an “ATDS”?

47 USC 227(a)(1) The term “automatic telephone dialing system” means equipment which has the capacity— •to store or produce telephone numbers to be called, using a random or sequential number generator; and •to dial such numbers.

FCC (2003 & 2007): “capacity” to store or produce numbers using a random or sequential number generator and “to dial” without “human intervention” FCC has focused on capability, not actual usage, due to predictive dialers

Many have asked FCC to Reconsider or Modify ATDS Definition

• Cargo Airline Ass’n (2014): exempted package delivery text notifications

• 22 petitions for reconsideration/clarification/exemption currently pending at FCC. 9 address “ATDS”

• Some seek to loosen: PACE, ACA, TextMe, Glide Talk: limit “capacity” to configuration when calls placed

• Or to broaden: Fried: if “combined equipment” collectively can have “capacity” to store or produce numbers and dial at random, sequentially, or from a database

Court Rulings Are Mixed

Compare Satterfield v. Simon & Schuster (9th Cir. 2009) & Sherman v. Yahoo (S.D. Cal. 2014) (potential) with Gragg v. Orange Cab (W.D. Wash 2014) (present capability required) & Hunt v. 21st Mortgage Co. (N.D. Ala. 2013) (no liability if substantial modification required to produce calls from number generator)

Sterk v. Path (N.D. Ill. 2014) (stored #s without “human intervention” –numbers provided by 3d persons); interlocutory review pending

TCPA: Prior express consent exception

• FCC (1992) (knowing release of phone number is permission)

• “absent instructions to the contrary”

• Consents do not expire

• FCC (2012) required PEC for telemarketing to be in writing as of 10/16/13 and freely given

• FCC (2012) also eliminated 20-year old EBR exception

• FCC has exempted entities subject to HIPAA

FCC Rulings on Prior Consent

GroupMe (2014): prior express consent to non-telemarketing texts can be obtained by an intermediary

SoundBite (2012) (permitting one-time text to confirm revocation of consent)

And in the Courts

• Courts have found consent in strange places

• Provided for verification purposes 10 years before the calls were made. Kolinek v. Walgreen Co. (N.D. Il.. 2014)

• Airline web form. Baird v. Sabre, Inc. (C.D. Cal. 2014)(transactional texts)

• Blood donor form. Murphy v. CDI Biologicals Orlando (M.D. Fla. 2013).

Can consent be revoked?

• Yes. Gager v. Dell (3d Cir. 2013)

• Implicitly: SoundBite (FCC 2012) (one-time text to confirm revocation of consent)

• Maybe not: Santander Consumer USA FCC petition re non-telemarketing calls and texts

FCC: Pending Petitions

• 7 out of 22 as of 9/15 address “prior written consent”

ACA: Prior express consent/debt calls

Satcom: Mobile numbers provided prior to 2012 FCC order

Coalition: PWC provided prior to 10/16/2013

DMA: Asks for forbearance for consents obtained prior to 10/16/2013

RILA: “On-Demand” text services

THE EFFECT OF NUMBER REASSIGNMENT ON CONSENT

Calls to ported or reassigned numbers (6 petitions)

– United Healthcare: seek exception/exemption for informational calls to numbers ported to wireless unbeknownst to caller

– ACA: wants “safe harbor” for autodialed non-telemarketing calls to “wrong numbers”

– Comcast: exception for any calls to reassigned numbers where caller had PEC and caller unaware of reassignment

– Stage Stores: asks exception for call to wireless number for which prior express consent existed before reassigned without notice/knowledge of caller

– Rubio’s (8/11): seeks exception where employer has PEC to “remote text messaging alerts” to employees, then number is reassigned without its knowledge.

And in the Courts:

Consent to calls to someone else’s phone

• Soppet (7th Cir. 2012): called party means called party

• Osorio (11th Cir. 2014): current subscriber (housemate’s cell number provided on credit application – agency?)

• Lamont (D.N.H. 2014) (spouse cannot consent for telemarketing to other spouse’s cell phone)

Searching for Defendants

• DISH Network (FCC 2013): sellers can be vicariously liable for actions of its telemarketers

• Extent of vicarious liability

• Lucas (FCC petition): person assisting telemarketer and “knows or consciously avoids knowing” of TCPA violations

• Smith v. State Farm (N.D. Ill. 8/11/2014)

Emails: CAN-SPAM Act

• FTC (2004): “Opt-out” for commercial emails

• FCC (2004): Opt-in for “Mobile service commercial messages”

– Addressed to wireless domains

– “express prior authorization”

– Can be oral, unlike TCPA “PEC”

• FCC: Texts are “calls” not “emails”

“Do Not Call” Mobile Devices

• FTC established registry under TCFAPA & TSR

• FCC extended scope under TCPA

– FCC already had company-specific

• Mobile numbers eligible

• “EBR” is exception to Do Not Call, but not to ATDS

• Limited safe harbor for erroneous calls to mobile devices on DNC registry

Text Marketing

• FCC: Texts are “calls”

• Accord Joffe v. Acacia Mortgage (Ariz. 2005); Satterfield (9th Cir.)

• TCPA & TSR apply: ATDS & DNC restrictions

• SoundBite (FCC 2012): confirmatory texts ok w/in 5 minutes

FTC & Mobile Apps

• Mobile Apps

– Shopping Apps (Aug. 2014)

– “Dot.com Disclosures” (Mar. 2013)

– NTIA multistakeholder process

• Is location “sensitive”

– Mobile App Privacy Disclosures (Feb. 2013)

– COPPA: yes, and specifically applies to mobile apps

Private Lawsuits

• Two private rights of action under TCPA

• ATDS/prerecorded to mobile ($500)

• Do Not Call ($500)

– Penalties per call

– Treble damages for knowing/willful

– Class actions

• FTC Act/TCFAPA enforced by agency.

• Insurance coverage?

For Further Info:

• “The Complications of Doing Mobile Marketing Legally,” Journal of Internet Law (Feb. 2014)

• “Telemarketing and Robocalls,” FCC http://www.fcc.gov/encyclopedia/telemarketing

• “Marketing Your Mobile App: Get It Right from the Start ,” FTC Staff (April 2013) http://business.ftc.gov/documents/bus81-marketing-your-mobile-app

• “Mobile Privacy Disclosures: Building Trust Through Transparency: An FTC Staff Report”, (Feb. 2013)