INSIGHT: How to Contact Your Customers Without Getting Sued

Telephone Consumer Protection Act restrictions can be a trap for unwary businesses that use automated phone or text messaging systems to contact their customers.

In light of the FCC’s continuing failure to issue updated rules regarding the scope of the TCPA, businesses cannot wait for relief (or even clarity) from Washington, and must self-assess the risk inherent in any automated customer contact system, “assuming the worst.” The good news is that—if you are careful—you can still contact your customers without getting sued.

The TCPA limits the use of “autodialers” and prerecorded messages when calling residential phones or mobile phones, as well as regulating fax advertisements and telemarketing. A statutory private right of action with per-violation damages makes noncompliance fertile ground for class actions. More than 3,800 TCPA cases were filed in 2018.

Autodialer Definition Struck Down

Over a year ago, in March 2018, the D.C. Circuit struck down the FCC’s sweeping definition of an “autodialer,” leaving courts to apply the plain words of the statute. ACA International v. FCC, 885 F.3d 687 (D.C. Cir. 2018). The smart money bet that the FCC would act quickly to put new business-friendly regulations in place, providing certainty and reducing the class action risk. The smart money was wrong.

In the past year, the FCC has twice asked for conceptual comments on a new proposed rule but has still not released a draft, and Chairman Pai did not even mention the subject at the May 15 hearing before a House oversight committee. Meanwhile, last September the Ninth Circuit rushed in to fill the vacuum, opining that any automated system that uses stored numbers is an autodialer—a definition as sweeping as anything the FCC could come up with. Marks v. Crunch San Diego LLC, 904 F.3d 1041 (9th Cir. Sept. 20, 2018).

The vacuum also attracted congressional attention. Legislation (H.R. 946) is pending to enact the Marks definition of an autodialer into law, its chance of passage is anyone’s guess.

Risks Highest With Text Messaging

Automated text messaging systems pose the highest litigation risk. Automated texts are illegal unless sent with the consent of the recipient. Advertising texts require express written consent, which is just what it sounds like, but merely providing a mobile number as a contact number is sufficient consent for purely informational messages like appointment reminders.

However, be warned: The FCC takes an expansive view of what constitutes an “advertisement”—even a free giveaway or seminar counts. Careful recordkeeping is critical, as the burden of establishing consent is always on the calling party, and there is no safe harbor for texting existing customers.

Problems frequently arise when a number is reassigned to a new subscriber who has not given consent, however the FCC is taking steps to remedy this aspect of the problem. In March it issued a Final Rule providing for the establishment of a national database to track reassigned numbers, and a litigation safe harbor for companies that check the database. Steps to implement the new database are expected to occur over the summer.

Problems can also arise when a subscriber withdraws consent that was previously given. Even debtors who give consent on loan documents can withdraw that consent later when they default. However, one-off mistakes based on those requirements are unlikely to support a class action.

An automated recorded voice message system is a little less risky because purely informational messages to residential phones do not require consent, nor do calls to business phones—but if that business phone is a mobile phone, the above rules still apply. And there are rules regarding the content of recorded voice messages. They must disclose who is calling and provide information on how to opt out of future messages.

Faxes, Voice Calls, Emails

Faxes are still an option for automated communication but are probably only practical for contacting businesses. Still, “information only” faxes are unregulated under the TCPA, and even advertising faxes are OK if they are sent to someone who has given consent or if the sender has an “existing business relationship” with the recipient. This makes faxes a lower-risk option.

Even making a traditional voice call can trigger regulatory issues. For telephone “solicitations” there are limits regarding time of day, caller ID, and the national and company-specific do not call lists. Purchased contact lists that purport to have been pre-checked against the national do not call registry can be especially dangerous. Live solicitations using computer-assisted technology will trigger rules designed to minimize the customer’s experience of answering a solicitation call and finding no one on the other end.

E-mail is the least risky method for contacting customers. E-mails are governed by the CAN-SPAM Act, not the TCPA. Compliance with CAN-SPAM is simplicity itself—don’t misrepresent the sender, identify the e-mail as an advertisement, and provide a “click here to unsubscribe” feature. There is no private right of action for violations of the CAN-SPAM Act, so the liability risk is minute. Unfortunately, your e-mail will probably end up in the spam filter.

Barring new regulations from the FCC or legislation from Washington, every company needs to think about its communication strategy in light of the risks posed by the TCPA, CAN-SPAM, and related statutes.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

Author Information

Karl D. Belgum is a litigation partner in Nixon Peabody LLP’s San Francisco office, specializing in business disputes and privacy/data security issues.