Businesses often consider the use of telemarketing campaigns as an efficient and effective way to reach vast numbers of consumers. Recently, new rules issued by the Federal Communications Commission ("FCC") under the Telephone Consumer Protection Act of 1991 ("TCPA") went into effect and significantly changed the telemarketing legal landscape. To mitigate the potential for substantial liability, businesses that make telemarketing calls or send text messages must understand the impact of these new rules and adjust their business practices accordingly.

The new TCPA rules contain strict consent requirements for "robocalls": (i) telemarketing calls and text messages initiated to mobile devices using an automatic telephone dialing system ("ATDS") or using an artificial or prerecorded voice; and (ii) telemarketing calls made to residential land lines using an artificial or prerecorded voice. The TCPA defines an ATDS as anyequipment that has the capacity to store or produce numbers to be called or texted using a random or sequential number generator and then automatically dials such numbers. Consequently, many telemarketing calls and text messages are subject to the new rules even without the use of a prerecorded or artificial voice.

Before the new rules went into effect, businesses were permitted to make robocalls with the called party's "prior express consent." Such consent could be obtained orally or in writing, or could be implied through the called party's conduct. However, a company was not required to obtain express consent prior to making a prerecorded telemarketing call to residential lines if the business had an "established business relationship" with the called party.

As of October 16, 2013, companies may not initiate autodialed telemarketing calls or texts or leave prerecorded marketing messages via wireless numbers or deliver prerecorded telemarketing messages via residential land lines without first obtaining the called party's express written consent.

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To obtain adequate "prior express written consent" under the new rules, there must be a written agreement between the company and the called party that meets the following requirements:

  1. Clear and Conspicuous Disclosure The written agreement must contain a clear and conspicuous disclosure informing the consumer that:
  • the agreement authorizes a company to initiate telemarketing calls and/or texts using an ATDS or an artificial or prerecorded voice. Only the specific company that is authorized to engage in telemarketing should be identified – affiliates, partners, and other related parties should each obtain distinct prior express written consent for their own telemarketing activities; and
  • specifically states that the recipient is not required to sign the agreement as a condition of purchasing any property, goods or services.
  1. Authorized Number The written agreement must identify the specific telephone number that the company is authorized to call or text for telemarketing purposes.
  2. Signature The written agreement must be signed by the consumer who will receive telemarketing calls or texts. Electronic signatures obtained in compliance with the E-SIGN Act are sufficient under the new rules.

Companies that engage in telemarketing bear the burden of demonstrating that a clear and conspicuous disclosure was provided to, and that unambiguous consent was obtained from, a recipient of a telemarketing call or text. Consent implied through the recipient's conduct – such as submitting a telephone number via an online form or in the context of a business transaction – is insufficient. When evaluating telemarketing initiatives, companies should be aware of the following:

  • Prior Verbal/Implied Consent is Insufficient - Companies must obtain prior express written consent from each consumer who previously provided only verbal or implied consent before calling or texting such consumer for telemarketing purposes.Companies that engage in telemarketing bear the burden of demonstrating that a clear and conspicuous disclosure was provided to, and that unambiguous consent was obtained from, a recipient of a telemarketing call or text. Consent implied through the recipient's conduct – such as submitting a telephone number via an online form or in the context of a business transaction – is insufficient. When evaluating telemarketing initiatives, companies should be aware of the following:
  • Uncertainty Regarding Previously Obtained Written Consent – There is considerable debate regarding whether companies must obtain updated written consent satisfying the "prior express written consent" requirements from consumers from whom written consent was previously obtained. Given the current uncertainty, companies should evaluate whether prior forms of written consent conform to the new "prior express written consent" regulatory requirements.
  • Revocation of Consent - Even if the requisite prior express written consent is obtained, the Third Circuit recently held that the TCPA allows consumers to revoke their consent at any time.

Violations of the TCPA may result in statutory penalties ranging from $500 to $1,500 per violation (meaning each individualnon-compliant robocall or text message), regardless of any actual damage, with no damages cap. Moreover, in a recent declaratory ruling, the Federal Communications Commission held that, in certain situations, businesses may be vicariously liable under the TCPA for calls and texts initiated by third-party telemarketers. As the TCPA provides for a private right of action for consumers and allows for class action claims, it is increasingly popular with the plaintiffs' class action bar. The TCPA also provides for enforcement by the FCC and actions by state attorneys general.

In light of these new rules and the severity of potential liability for noncompliance, all businesses employing their own or third-party telemarketing resources should carefully review their operations, particularly if making prerecorded calls or using an ATDS to place calls or sending texts for telemarketing purposes.