‘Counterintuitive’ FCC Ruling Poses Risk For Contact Centers

The FCC's latest Declaratory Ruling, which expands the reach of the Telephone Consumer Protection Act (TCPA), will have significant impact on the contact center industry and on telemarketing in general if it remains in its current form.

Photo by Joe Gratz.

The Federal Communications Commission’s (FCC) latest Declaratory Ruling, expanding the reach of the Telephone Consumer Protection Act (TCPA), has sent shockwaves through the contact center and BPO industry. The Professional Association for Customer Engagement (PACE) filed an appeal against the ruling just days after it was announced, and other industry players are strategizing their responses.

The debate centers on the need to balance consumer privacy and data protection without unfairly disadvantaging legitimate businesses. The ruling spells out a number of new guidance points that companies engaging with consumers should abide by, and specifically addresses issues of automated calls. Under the new terms of the TCPA, companies are compelled to stop calling customers who, at any time, request not to receive such calls. They are also barred from calling a reassigned number more than once.

The ruling also seeks to restrict or even stamp out so-called robocalls, which are calls that are autodialled, prerecorded calls, or artificial voice calls. Although a precise definition of an autodialer is not provided, the Ruling seems to extend the existing definition, noting that “equipment that has the requisite ‘capacity’ is an autodialer and is therefore subject to the TCPA.” This means that even if the capacity to autodial is not being used, the company using that equipment could find themselves facing TCPA litigation.

David Klein, Managing Partner of Klein Moynihan Turco LLP in New York, said that the ruling will have negative repercussions provided that the declaratory ruling stays in place. “There are at least two or three lawsuits that have been filed since the declaratory ruling came out. I expect that some parts of it will be overturned or at least barred from continuing to have legal effect, but either way what the FCC has come out with is just guidance and not binding on courts of law, which is good thing for contact centers,” he said.

Challenging the Ruling

Challenges to the ruling are increasing daily. Christine Haerich, Senior Vice President at PACE, explained that a statement had been issued, detailing PACE’s position on the FCC Declaratory Ruling. “PACE members and other legitimate companies have for too long been the target of vexatious litigators and their attorneys seeking to profit from the TCPA. The FCC, with its Declaratory Ruling, has made class action lawsuits easier to file and an onslaught of litigation is surely soon to follow. Instead of providing consumer protections, the FCC Ruling stifles legitimate business and consumer communications. PACE’s Appeal seeks to bring the TCPA back to its original purpose of balancing consumer protection with the interest of legitimate businesses.”

Sirius XM has also put forward a petition to the United States Court of Appeals for the District of Columbia Circuit “to hold unlawful and vacate the FCC’s Declaratory Ruling and Order”. Both petitions challenge similar aspects of the ruling.

Eduardo R. Guzmán, a partner in Drinker Biddle’s Government and Regulatory Affairs Practice Group and a member of the TCPA Team, who handles work in Latin America/Caribbean, noted that the TCPA applies both to certain telemarketing calls and certain informational calls.

Guzmán added that US companies that have sub-contractors anywhere outside of the US, including Latin America, will need to carefully look at compliance with these provisions. “It is fair to say that the FCC has already shown its willingness to hold US companies accountable for actions by subcontractors in the privacy arena,” he said.

The Letter of the Law

Klein’s advice to clients in the telemarketing space at this stage is to “follow the declaratory ruling with respect to the TCPA as if it is the letter of the law.”

He explained: “Effectively everything now is in autodialer, whether it is used as an autodialer now, in its present capacity or its future capacity, either way you have to treat it as though it is an autodialer. This means that unless you are calling to residential lines without the use of pre-recorded calls or artificial voice calls, you need prior express written consent from consumers before you telemarket to them.”

Klein is advising companies to use “pretty much the dumbest phones possible to avoid falling into the autodialer definition.” It’s not a failsafe, though, because even those phones could have future capacity to become autodialers. He also recommended that on every phone call at the beginning of the telemarketing script, there needs to be a line that asks for confirmation that the person they are speaking to is the intended recipient. If the person is not the intended party or does not confirm, then that number should not be called again.

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No Exceptions

Guzmán explained that this order refused to carve out an exception for calls made to a number that has been reassigned to a new person. “This is a particular problem even in customer support calls. You have express consent to call them for non-telemarketing calls, but when the customer changes their number they don’t tell the businesses. The FCC is making it clear that you are still going to be liable for that while admitting that the tools available to help businesses avoid this are not going to work in every instance.”

“I feel the pain of the telemarketers of the world,” Klein said. “I advise that it should be routine business practice that when they sign up a customer, they get that express written consent, so that they can protect themselves.” Klein added that the ruling is counterintuitive as it hampers the ability of businesses to use automation technologies.

Litigation against businesses falling foul of the TCPA under the new FCC guidance is likely to increase if the ruling remains unchanged. The administrative and logistical burden of following the requirements of the ruling would be significant, and business in the customer engagement sector as a whole is likely to suffer. Whether the ruling will remain in its present form is unclear, but what is apparent is that businesses will need to look more closely at how they target and engage with customers. It is unlikely that pressure on telemarketing pressures will diminish.

Update (23 July 2015): The FCC was not available to comment on this issue at the time of going to press. However, Mike Snyder, a Deputy Chief in the FCC’s Media Relations Liaison, Consumer and Governmental Affairs Bureau, recently provided this statement to Nearshore Americas: “Through these rulings, the FCC has provided clarity sought by a number of businesses while affirming consumers’ statutory protections. We expect this clarity will help industry to assure compliance with the law. If callers have any doubt about compliance, they only have to obtain a consumer’s consent before calling.”

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