Over the last three years alone, energy, utility and solar companies have been targeted in numerous putative class actions alleging violations of the TCPA that resulted in several multimillion-dollar settlements totaling more than $20 million. The high value of these settlements illustrates how automated communications can also pose significant litigation risks that can be mitigated only through an understanding of the requirements of TCPA and a robust focus on compliance. Energy and utility providers often communicate with existing and prospective customers through automated communications for purposes of marketing, customer servicing, and collections—making companies operating in the energy and utility space potential targets of claims brought under the Telephone Consumer Protection Act (TCPA).
Enacted in 1991 to protect consumers from receiving unsolicited telemarketing calls and faxes (and more recently text messages), the TCPA regulates and restricts the manner in which a business may advertise its products and services to consumers or otherwise communicate with its customers. Specifically, the TCPA prohibits the use of an “automated telephone dialing system” or an “artificial or prerecorded voice” to make calls to cell phones without obtaining the recipient’s consent. Certain restrictions apply to telemarketing and non-telemarketing calls alike, including debt collection or informational calls. These same rules apply to energy and utility companies.
Class action risk under the TCPA can be considerable. Because the TCPA provides for statutory damages of $500 per violation (and up to $1,500 per willful violation) with no maximum cap on recovery, potential exposure in a TCPA class action can quickly escalate into the millions.
Federal Communications Commission (FCC) regulations interpreting and implementing the TCPA require consent for most automated telemarketing communications. Specifically, prior express written consent is required for autodialed or prerecorded telemarketing calls or texts to cell phones. These requirements also apply to prerecorded telemarketing calls to landlines, and there is no exception for calls to customers with whom the company has an established business relationship. For purposes of the regulations, the term “prior express written consent” means an agreement in writing, with a signature in some form that clearly authorizes the seller to make telemarketing calls or texts using an autodialer or a prerecorded voice. For non-marketing communications such as servicing and outage calls, the FCC issued guidance to utilities that specifies the standards for utilities to communicate with customers through automated means.
TCPA Class Actions Continue to Target Energy and Utility Companies
The TCPA continues to raise litigation and compliance challenges across the energy industry, with scores of lawsuits being filed against the industry each year. These class action lawsuits have challenged both marketing calls and/or non-marketing calls, including servicing and collection calls, and have resulted in several high-dollar settlements. In the last several years, TCPA class actions against energy and solar providers have been settled for as much as $15 million.1
There appears to be no end in sight for these cases. In one recent example, a lawsuit against an electricity and natural gas provider alleges that the company placed unlawful autodialed calls and text messages for the purposes of collecting on delinquent utility bills.2 The complaint alleges that the calls were misdirected to plaintiff and members of the class who were not customers of the company and as a result had not provided “prior express consent” to receive calls or texts from the company.
In another example, a TCPA class action filed against a solar electric company in California alleges the company placed thousands of unsolicited telemarketing calls to consumers, many of whom had placed their numbers on the National Do Not Call Registry.3 Both of these cases illustrate the types of TCPA litigation continuing to be filed against dozens of energy and utility companies under the TCPA.
FCC Guidance for the Energy Industry
The FCC has issued specific guidance clarifying that utility companies may make automated calls and texts to their customers concerning matters “closely related” to the utility service, without violating the TCPA, as long as the calls are made to the telephone number provided to the company by the customer.4 The FCC reasoned that such communications do not violate the TCPA, because utility customers are deemed to have provided consent to receive these calls and texts when they gave their phone numbers to the utility company.
Per the FCC Order, calls “closely related” to utility service include calls that:
- warn about the likelihood that failure to make payment will result in service curtailment;
- warn about planned or unplanned service outages;
- warn about potential service interruptions due to severe weather conditions;
- provide updates about service outages or service restoration;
- ask for confirmation of service restoration;
- ask for information about lack of service;
- provide notification of meter work, tree trimming, or other field work that directly affects the customer’s utility service;
- notify consumers they may be eligible for subsidized or low-cost services due to certain qualifiers such as age, low income or disability; or
- provide information about potential brown-outs due to heavy energy usage.
The FCC cautioned, however, that customers must be allowed to opt-out and that providers are responsible for maintaining proper records to prove customer consent and must maintain current, up-to-date records of customer contact information, especially cell phone numbers. The FCC also “strongly encourage[ed]” companies to make a disclosure to customers that by providing a phone number they are consenting to autodialer or prerecorded service calls.
The FCC’s order, though providing some guidance to energy and utility companies seeking to comply with the TCPA, applies only to preexisting customers who have provided the company with their contact information. Automated texts or calls to non-customers, or communications to existing customers that are not “closely related” to their service, would still require additional consent from the consumer. For marketing calls, a utility would need to meet the heightened standard for “prior express written consent.”
The TCPA challenges facing the energy/utility industry are expected to continue as companies seek to protect themselves from continuing risk of litigation. A strong TCPA compliance program is essential to help understand the type of communications permissible under the act and minimize potential liability.