We’ve been closely watching the evolution of telemarketing laws since the Supreme Court’s 2021 decision in Facebook v. Duguid, which held that most modern dialing systems are not autodialers—or “automated telephone dialing systems” under the Telephone Consumer Protection Act (TCPA). The Facebook decision led to a flurry of legislative activity at both the state and federal levels. Florida and Oklahoma enacted state-level statutes that have been interpreted to cover modern dialing systems, and Georgia, Washington, Michigan and other states have considered similar legislation. At the federal level, a new bill was proposed in July 2022 that would have amended the TCPA to cover 21st century dialing technologies—not just those using a random or sequential number generator. The federal bill has not made any meaningful progress, but a recent request from FCC Chairwoman Jessica Rosenworcel may prompt the legislature to act.
The TCPA, State Analogues, and the Future of Telemarketing Litigation
It has been eight months since the Supreme Court of the United States decided, in Facebook v. Duguid, that the federal Telephone Consumer Protection Act’s (TCPA) outdated definition of an automated telephone dialing system (ATDS or autodialer) did not cover devices—like most modern phones—which can store numbers that are not randomized. This decision resolved a long-standing circuit split over how to interpret the TCPA, but it has not led to the clarity that many companies desired.
While courts have started applying the narrowed ATDS definition under Duguid, companies engaged in telemarketing are not yet in the clear as many had initially thought in the immediate aftermath of Duguid. A number of trends have emerged that give new teeth to TCPA-like claims, including a spike in cases at the state level, novel legal theories, and a focus on other aspects of the TCPA. Moving into 2022, we expect a continued evolution in complaints brought under state telemarketing laws, and we might also see legislation or FCC guidance intended to update the TCPA so that it applies to modern dialing technologies.…
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Supreme Court Narrows Potential Scope of the Telephone Consumer Protection Act
Thursday, in a unanimous decision, the Supreme Court narrowed the potential scope of the Telephone Consumer Protection Act (“TCPA”), which has been fertile ground for plaintiffs’ attorneys seeking class-wide damages. Justice Sotomayor wrote the opinion in Facebook v. Duguid, which held that for telephone dialing equipment to constitute an “automatic telephone dialing system” (“ATDS”) under the TCPA, “a device must have the capacity either to store a telephone number using a random or sequential generator or to produce a telephone number using a random or sequential number generator.” The upshot of this distinction is that computer systems that simply store phone numbers, not generated randomly or sequentially, for later dialing are not an ATDS.
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Supreme Court Reviews Definition of Auto-Dialer Under TCPA To Clarify Circuit Split
On December 8, 2020, the Supreme Court heard oral argument to consider the TCPA’s definition of an “automatic telephone dialer system” (ATDS) in Facebook, Inc. v. Duguid, Noah et al., Dkt. 19-511. The Supreme Court is tasked with interpreting the scope of liability under the TCPA, and its resolution may bring much needed clarity to companies struggling with the meaning of that definition, particularly in light of a current split among circuits on the question and the D.C. Circuit’s 2018 decision, ACA International v. Federal Trade Commission striking down the FCC’s own interpretation. Because the TCPA imposes significant statutory penalties for calling or sending text messages using an ATDS to cellphones in violation of the act, clarification of the meaning of an ATDS may help companies mitigate their risks and curtail potential TCPA class action lawsuits.
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$925M TCPA Robocall Award Upheld
A federal judge in Oregon, Hon. Michael H. Simon, has recently upheld a $925 million statutory damages award against health supplement maker ViSalus for its violation of the Telephone Consumer Protection Act (“TCPA”)—making this the largest TCPA damages award to date.
The underlying class action against ViSalus alleged the company placed nearly 2 million unsolicited robocalls nationwide to advertise its weight-loss and dietary products. The class argued that the robocalls constituted unlawful telemarketing practices and violated the TCPA, and after a three-day trial in April of 2019, a jury agreed.
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Supreme Court Upholds Constitutionality of the TCPA But Severs the Government Debt Carve-Out on First Amendment Grounds
The Supreme Court generally upheld the constitutionality of the Telephone Consumer Protection Act (TCPA) in Barr v. American Association of Political Consultants, Dkt. No. 19-631, issued on July 6, 2020. Multiple stakeholders have been pressing on constitutionality of the TCPA, including advocates against “nuisance” robocalls, service providers weary of uncertain class action liability, and free speech advocates wanting less regulation. The Supreme Court determined that only an exception to the TCPA permitting automated government debt collector calls was an unconstitutional restriction on free speech. To remedy this violation, the Court rejected requests to find the entirety of the TCPA statute unconstitutional and instead affirmed the Fourth Circuit’s approach of severing of the offending exception from the statute.
The Supreme Court’s concerns about the governmental debt exception, however, could point to a vulnerability in other privacy statutes, such as the California Consumer Privacy Act, which exempts non-profits. Going forward, privacy advocates will need to be particularly mindful of free speech concerns as privacy legislation grows.
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Companies Newly Engaged in Telemarketing Should Be Aware of Substantial Body of Federal and State Telemarketing Laws
Even with states easing COVID-19 related restrictions, suggestions that social distancing could last through the summer (or even longer) have led many companies that traditionally rely on in-person promotional visits to consider other options. One obvious alternative is telephone or text marketing, but companies that are new to the practice should be aware of the numerous federal and state laws and regulations governing telemarketing, which impose significant fines or statutory damages for violations. In one notable example, Dish Network was assessed $280 million in penalties in an action brought by the FTC and state attorneys general for alleged violations of the Telemarketing Sales Rule (TSR) and related state laws, and in a separate class action, plaintiffs were awarded $61 million in statutory damages.
Both the federal government and all 50 states plus the District of Columbia have laws applicable to the use of telephones for marketing purposes. Some of the restrictions may also apply to non-marketing communications. This post provides a high-level overview of the rules applicable to the space; but before engaging in telemarketing activities, companies should be sure to review both federal and state laws to ensure their practices are fully compliant.…
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