I recently had the privilege of speaking at the Professional Association for Customer Engagement annual convention in Orlando. As in prior years, the convention's primary focus was Telephone Consumer Protection Act compliance. The TCPA, which provides for unlimited statutory damages of up to $1,500 per violation, provides companies that seek to communicate with consumers via their mobile device with obvious reasons to comply.
Although the speakers addressed various subjects such as operations, management and employee best practices, this report will only cover the compliance track.
The first compliance session addressed the issue of maintaining electronic records when a notice of an actual or potential lawsuit has been received. Failing to preserve or destroying documents that may be relevant to a litigation will likely be viewed unfavorably by a judge, or worse sanctionable, if such actions were designed to intentionally avoid discovery. As an example, the panelists reported that one company that intentionally destroyed relevant documentation was ordered to pay $8.5 million in sanctions and had six attorneys referred to the California state bar for possible disciplinary proceedings.
The second compliance session focused on how to conduct a compliance call or text campaign following the FCC's July 2015 ruling. Specifically, the panelists focused on how to obtain appropriate consent for calling and texting consumers on their mobile phones and when and how consumers can revoke consent. They also discussed the expansive definition of an autodialer and the perils of calling reassigned numbers. Attendees heard that strict compliance with the new rules is a must to avoid lawsuits and costly litigation. While the panelists offered some valuable compliance guidance given the breadth of the topics covered, many attendees posed questions that were not easily answered, evidencing the compliance difficulties that the FCC's confusing and unreasonable rulings have presented.
Christine Reilly, co-chair of Manatt's TCPA Compliance and Class Action Defense practice group, and I presented the third compliance session, titled "TCPA 2.0: A Deeper Dive on FAQs." Whereas the prior sessions focused on the basics of the TCPA and recent FCC rulings, we took a different approach and shared real client questions that fall within the cracks of the TCPA rules and exposed the nuances and gray areas they present. We discussed the legal risks facing lead generation firms and the companies that buy and use the leads. We also addressed the various FCC exemptions to the TCPA consent rules for healthcare related calls subject to HIPAA and the issues and questions they raise. While the exemptions may be appropriate for some companies, in the end we concluded that most companies would not benefit from them.
We also addressed the issue of whether using a manual dialer to avoid coverage of the TCPA really provides the user with any meaningful benefits. Given the FCC's expansive definition of an autodialer in its July 2015 ruling, developing a truly manual dialer may be elusive for many. But those who do invest in this technology are sorely mistaken if they believe they can be used to place unsolicited marketing calls (including texts) to mobile phones without fear of lawsuits. While they may ultimately have some cases dismissed by offering credible testimony in support of their dialer, other cases will still be filed and costs will be incurred in the pursuit of proving such point. Further, these companies must still comply with state laws that prohibit unsolicited marketing calls to mobile phones, regardless of the method used to place such calls. Putting aside the legal issues implicated in conducting these types of campaigns, companies need to consider the reputational harm and fallout that may ensue.
Finally, we addressed recent statements by the FTC that appear to limit the scope of the existing business relationship exemption (EBR) in the Telemarketing Sales Rule (TSR) and TCPA Do Not Call regulations (DNC). In its recent revisions to the TSR and its Biennial Report to Congress on the DNC rules, the FTC stated that an inquiry EBR belongs only to the party that is known to the consumer and from whom the inquiry is directly obtained. This would appear to limit lead generation companies from obtaining leads for third parties. But the FTC stopped just short of an absolute ban in the DNC report by acknowledging that a recipient of a lead may rely on an inquiry EBR exemption if the party was identified to the consumer at the time the consumer responded to the offer.
Further, we reported that in its Biennial DNC report, the FTC added a consumer "expectation" qualifier to purchase EBRs by stating that companies must consider whether a consumer who is on the federal DNC list would reasonably expect to receive a call from a company from which the consumer made a purchase. For example, the FTC questioned whether a consumer who makes a one-time purchase from a company would reasonably expect that such purchase would trump their desire not to receive marketing calls from the company.