A company making calls to residential telephone numbers was not liable for alleged violations of the Telephone Consumer Protection Act (TCPA) where the calls were made on behalf of a nonprofit, according to a recent decision by an Illinois federal court in Spiegel v. Reynolds, 2017 WL 4535951 (N.D. Ill. Oct. 11, 2017). In ruling for the defense, the court applied an exemption under the TCPA for calls made by a nonprofit to a landline and held that even if a call is placed by a for-profit entity, the rules applicable to nonprofits will apply provided the call is “made by or on behalf” of a nonprofit organization. Although the TCPA still applies to some calls made by nonprofits (such as calls to cell phones), the decision clarifies how the TCPA is applied to calls made by or on behalf of a nonprofit organization and those that are not. The ruling also reinforces the policy reasons underlying the TCPA, namely, to stem the tide of excessive telemarketing calls made to consumers for a commercial purpose.
In Spiegel, Plaintiff Marshall Spiegel filed a class action lawsuit against the defendant, Associated Community Services (ACS), claiming that it violated the TCPA by calling him and others on their residential telephone numbers using a prerecorded voice message despite being listed on the do-not-call registry. The defendant, a for-profit entity, was a registered professional fundraiser that had a longstanding contractual relationship with the Breast Cancer Society. The defendant made calls to consumers’ residential numbers asking them to donate money to the nonprofit. Spiegel argued that because the defendant retained the majority of gross revenues from donors’ contributions, it was not truly acting “on behalf of” the nonprofit. After limited discovery on the issue, the defendant moved for summary judgment, arguing in part that its calls to numbers on the do-not-call registry did not violate the TCPA because they were made “on behalf of” a tax-exempt nonprofit organization, and the calls were not “telephone solicitations” under the TCPA.
The court found that the defendant met the standard for the nonprofit rules to apply under the TCPA because the call(s) were placed “for the benefit of or in the interest of the nonprofit.” Specifically, the defendant argued successfully that it was an agent for the nonprofit because (1) its contracts required that calls be made “on behalf of” the nonprofit, (2) the nonprofit exercised control over the content of the calls, and (3) the nonprofit controlled the flow of money collected from the calls. The court rejected Spiegel’s contention that the defendant was the de facto caller since it kept 85% of the money collected. The court reasoned that the TCPA does not require the terms of fundraising contracts to be favorable to the nonprofit and that it is not the court’s place to inquire whether they are. Such a task would come close to litigating the nonprofit’s tax-exempt status, a task that was outside the court’s jurisdiction.
The court also explained that the calls were not “telephone solicitations”—defined in the TCPA regulations as “the initiation of a telephone call or message for the purpose of encouraging the purchase or rental of, or investment in, property, goods, or services.” This definition does not encompass a request for monetary donations to a nonprofit organization. Finally, the court noted that the prohibition in the TCPA against prerecorded voice calls to residential numbers does not apply to calls made on behalf of a tax-exempt nonprofit organization.
The decision in Spiegel is consistent with cases from other jurisdictions considering the TCPA’s nonprofit exemptions for certain types of calls. See Fitzhenry v. The Independent Order of Foresters, No. 2:14-cv-3690 (D.S.C. June 15, 2015) (granting TCPA defendant’s motion for judgment on the pleadings where the call was made by a for-profit entity to solicit the purchase of good or services on behalf of a tax-exempt nonprofit organization); Wengle v. DialAmerica Marketing, Inc., 132 F. Supp. 3d 910, 919 (E.D. Mich. 2015) (a call is placed “on behalf of” a tax-exempt nonprofit when it is placed “for the benefit of or in the interest of the nonprofit, concepts that encompass common law agency principles.”). But see Zean v. Fairview Health Servs., 858 F.3d 520, 523 (8th Cir. 2017) (nonprofit organization may not ““[i]nitiate ... any telephone call that ... constitutes telemarketing ... to any [cellular telephone number] other than a call made with ... the prior express consent of the called party.”) (quoting 47 C.F.R. § 64.1200(a)(2)). Spiegel is welcome news for nonprofits because it demonstrates that courts are willing to apply the TCPA’s nonprofit standards even where a for-profit entity initiates the call. Although the TCPA still applies to nonprofits in many situations, the rules are less stringent in some areas.
- Nonprofits do not need prior express consent to place calls to landlines.
- Nonprofits are not precluded from calling consumers on the do-not-call list, because nonprofits do not engage in “telephone solicitations” under the TCPA.
Other provisions of the TCPA are still applicable to nonprofits, however, and should be reviewed for compliance.
- The for-profit TCPA rules may apply if the message has a commercial component, even if it has a charitable purpose.
- Prior express consent is required to make autodialed or prerecorded calls to cell phones, although that consent need not be in writing. Similar rules apply to texting.
- Nonprofits must include, at the beginning of the message, the name, address and telephone number of the organization, as well as a means for opting out of future communications.
Although nonprofits are subject to fewer requirements under the TCPA than for-profit businesses, the potential litigation exposure for any violation is the same for all types of entities. Nonprofits and businesses that work with them must still place a high level of focus on the TCPA and telemarketing compliance. While Spiegel suggests that courts are willing to apply TCPA nonprofit exemptions even where a for-profit interest is involved, the exemptions are not absolute. Nonprofit organizations should pay careful attention to how they manage their communications to ensure compliance with the TCPA.