On March 22, 2018, the Federal Communications Commission (FCC) issued its Second Further Notice of Proposed Rulemaking and is seeking comments on the intractable problem of Telephone Consumer Protection Act (TCPA) liability stemming from calls to reassigned cell phone numbers. This second open comment period on the topic has now taken on greater urgency following the March 16, 2018, reversal of significant portions of the FCC’s July 2015 Omnibus TCPA Order by the US Court of Appeals for the DC Circuit.

Specifically, the Second Notice:

  • Proposes to ensure that one or more databases are available to provide callers with the comprehensive and timely information they need to avoid calling reassigned numbers.
  • Seeks comment on the information that callers need if they choose to use a reassigned numbers database.
  • Seeks comment on the best way for service providers to report that information and for callers to access that information, including the following three alternatives:
    • Requiring service providers to report reassigned number information to a single, FCC-designated database;
    • Requiring service providers to report that information to one or more commercial data aggregators; or
    • Allowing service providers to report that information to commercial data aggregators on a voluntary basis.
  • Seeks comment on whether, and how, the FCC should adopt a safe harbor from TCPA liability for those callers that choose to use a reassigned numbers database.

The FCC stated in the Second Notice that it would not require callers to utilize the database, but seeks further comment on whether the implementation and use of a comprehensive database would be an effective way to allow companies to avail themselves of a newly created TCPA safe harbor. During the first open comment period, some commenters criticized the creation of a reassigned numbers database on the grounds that it could drive up compliance costs for good actors while not deterring spam callers from calling consumers. The FCC also acknowledged that some commenters would like a safe harbor for those callers that use “existing commercial solutions” to attempt to avoid calling reassigned cell phone numbers. The FCC seeks input on these suggestions and other alternative approaches. We expect the Second Notice to be published in the Federal Register any day, with comments accepted for the following 45 days. Reply comments will then be accepted for another 30 days.

As discussed in Eversheds Sutherland’s prior Legal Alert, the DC Circuit held that the FCC’s one-call safe harbor rule relating to reassigned cell phone numbers was “arbitrary and capricious.” With the FCC back to square one on how to deal with the problem of reassigned cell phone numbers, and with millions of cell phone numbers being reassigned each year, the open comment period provides businesses that call and text their customers a rare opportunity to have an impact on an area that has been a source of significant TCPA liability.

In its July 2015 Omnibus TCPA Declaratory Ruling and Order (2015 TCPA Order), the FCC crafted a rule that afforded callers one opportunity to call a cell phone to determine whether the number had been reassigned so that callers could establish whether they had consent to place the call. Under the FCC’s rule, however, the caller was deemed to have knowledge whether the number had been reassigned (and therefore, did not have consent from the current subscriber), even if the cell subscriber did not answer the phone. If the caller made a second call to the reassigned number, TCPA liability could attach, even if the caller had consent from the prior subscriber, and the call to the number (since reassigned) was made in good faith to reach the original consenting subscriber.

As a result, calls made to customers from whom companies believed they had consent were actually made to non-consenting cell phone subscribers in violation of the TCPA. To compound the issue, the recipient of the calls had no obligation to alert the caller of the mistake, and instead could let the calls—and accompanying statutory damages—accumulate.

Recognizing the inherent unfairness in the FCC’s approach, the DC Circuit struck down the one-call safe harbor as arbitrary and capricious. The court also questioned why the FCC had not adopted a reasonable reliance standard to try to protect good-faith callers while also preventing a flood of unwanted calls to consumers. The DC Circuit set aside the FCC’s rule on reassigned cell phone numbers, leaving it to the FCC to revisit the issue.

There is currently no systematic and reliable way for callers to track reassigned cell phone numbers. This situation has left callers facing a potential liability trap solely based on routine, good-faith communications directed to their own customer lists. The FCC is, therefore, working on new rules for databases to track reassigned numbers. Specifically, in the Second Further Notice of Proposed Rulemaking (Second Notice), which was adopted on March 22, 2018, the FCC proposes and seeks comment on ways to address the problem.

The DC Circuit’s rejection of the prior safe harbor rule is not the only extenuating factor to consider. The political makeup of the FCC itself has changed considerably since the 2015 Order, with Republican Chairman Ajit Pai now helming the Commission. Chairman Pai and fellow Republican Commissioner Michael O’Rielly dissented vigorously from the 2015 Order, and recent comments suggest strongly that the FCC will take a different approach to the issue of reassigned numbers than it did three years ago.

In the press release accompanying the Second Notice, Chairman Pai commented that “[w]ith a robust record [from commenters], we hope to adopt an approach that’s easy-to-use and cost-effective for callers while minimizing the reporting burdens on service providers.” Commissioner O’Rielly also noted that “we have to have real data [from commenters] about the costs and benefits of creating a reassigned numbers database.” Commissioner O’Rielly indicated that he “wonder[s] whether the benefit of a new database will exceed the costs of creating it and potentially requiring service providers to keep it or other databases current.” He opened the door to the option of “encourag[ing] voluntary reporting to existing, commercially available databases with appropriate legal protections for those that decide to do so.”

In other words, the FCC is taking a different approach to this issue than it did in its 2015 Order. As the FCC has made clear, companies that are impacted by the thorny issue of reassigned cell phone numbers have an opportunity to effectuate real policy change through participation in the comment period.