FCC Acts on Pending Reconsideration Petitions of its 2020 TCPA Exemptions Order

The Telephone Consumer Protection Act of 1991 (TCPA) restricts many types of calls to residential and wireless telephone numbers if they are made without the prior express consent of the called party or a statutory exemption applies, but the statute authorizes the FCC to exempt certain calls from these restrictions.  In 2020, the FCC in its TCPA Exemptions Order adopted measures to implement the 2019 Telephone Robocall Abuse Criminal Enforcement and Deterrence Act (TRACED Act).  The TRACED Act required that the FCC ensure that any exemption to TCPA prior express consent that the FCC grants under section 227(b)(2)(B) or (C) of the Communications Act, allowing callers to make artificial voice, prerecorded voice, or autodialed calls without prior consent, include certain conditions.  Specifically section 8(a) of the TRACED Act requires that any exemption contain requirements with respect to:  “(i) the classes of parties that may make such calls; (ii) the classes of parties that may be called; and (iii) the number of such calls that a calling party may make to a particular called party.”  The FCC in 2020 determined it would limit the number of exempted calls that can be made to residential phone lines; require that callers making exempt calls allow consumers to opt out of receiving future exempt calls; and codify existing FCC exemptions for certain types of calls to wireless numbers, including calls by package delivery companies, financial institutions, prison inmate calling services, and healthcare providers.

Specifically, the FCC limited the number of exempted calls that can be made to a residential line to three artificial or prerecorded voice calls within any consecutive 30-day period for three types of exemptions (for non-commercial calls, commercial calls that do not constitute telemarketing, and calls by tax-exempt nonprofit organizations).  For exempted HIPAA-related calls, the FCC amended its rules to limit the number of calls that can be made to a residential line to one artificial or prerecorded voice call per day, up to a maximum of three artificial or prerecorded voice calls per week.  This healthcare call limitation is the same as that already imposed on healthcare calls to wireless numbers.

The FCC also required that residential telephone subscribers be permitted to “opt out” of artificial and prerecorded voice calls made under any FCC-recognized exemption by dialing a telephone number (required to be provided in the artificial or prerecorded voice message) to register a consumer’s do-not-call request in response to that call.  Callers were required to provide an automated, interactive voice- and/or key press-activated opt-out mechanism for the called person to make a do-not-call request.

Exempt Informational Calls and Form of Consent Requirements

The FCC received two petitions to reconsider aspects of its new rules.  In its Reconsideration Order, the FCC, on December 27, 2022, granted requests to allow exempted callers the option of obtaining either oral or written consent if they wish to make more calls than the numerical limits specified in the FCC’s rules; however, the FCC denied a request to reconsider any of the numerical limits it imposed on exempted calls as well as rejected calls to scale back the expanded scope of FCC opt-out requirements.

ACA International (ACA) and the Enterprise Communications Advocacy Coalition (ECAC) both requested that the FCC correct amended rules that they contended imposed a written consent requirement for callers to exceed the numerical limits placed on exempted calls to residential lines.  ACA also sought reconsideration of the numerical limits and opt-out requirements imposed on exempted non-telemarketing calls to residential lines, arguing that these limitations were arbitrary and unnecessary.  ECAC contended that placing differing, higher numerical limitations on certain health care calls compared to other types of calls to residential lines created impermissible content-based restrictions that violate the First Amendment.  

Acting on reconsideration, the FCC revised its rule requiring prior express written consent to make informational calls over specified numerical limits to permit callers to obtain consent either orally or in writing so that callers can exceed the limits on artificial or prerecorded voice calls to residential phone lines made under the FCC recognized exemptions.  The FCC clarified that it had not intended to require that such callers obtain consent only in writing and thus the rule was amended to make clear that consent for informational (i.e., non-telemarketing) calls to residential telephone numbers can be obtained orally or in writing.  The FCC agreed with the petitioners that there was no reason for the consent requirements for informational calls to residential lines to differ from the consent requirements for informational calls to wireless numbers, which allow for either oral or written consent.  The Reconsideration Order notes that the FCC’s longstanding precedent expressly limits a written consent requirement to telemarketing calls.  The FCC amended section 64.1200(a)(3) of its rules to implement the clarification.

The effective date of the amended rule will be six months after the publication of the Reconsideration Order in the Federal Register, which will mean the amended rule will take effect on the same date as the rules that were adopted in the TCPA Exemptions Order that have not yet gone into effect.  In the TCPA Exemptions Order, the FCC gave callers a six-month implementation period to develop and take measures to comply with the numerical limits and opt-opt requirements on artificial or prerecorded voice calls made to residential lines.  For procedural reasons, the six-month implementation period for those rules to become effective has not yet commenced.

Numerical Limits on Exempt Informational Calls

The FCC denied requests to reconsider the FCC’s numerical limits on exempt informational calls made to residential lines, basing the decision on the TRACED Act’s direction that the FCC set specific numerical limits.  While commenters generally opposed any limits on exempt calls, the FCC noted that they failed to submit specific cost or benefit data on potential call limits and did not provide any specific guidance on appropriate limits for different types of calls for the agency to evaluate.  In its TCPA Exemptions Order, the FCC emphasized that limiting the number of exempted calls to residential lines would greatly reduce interruptions from intrusive and unwanted calls and reduce the burden on residential telephone users to manage such calls.  The Reconsideration Order also observed that a numerical limit brings permitted residential exemptions “in line with” exempted calls to wireless numbers, which already apply a numerical limitation to the number of calls that can be made.

The FCC reaffirmed its view that with respect to the exemptions for non-commercial calls, commercial calls that do not constitute telemarketing, and calls by tax-exempt nonprofit organizations, there is value in limiting the number of non-consented-to calls that can be made to a particular residential line to three artificial or prerecorded voice calls within any consecutive 30-day period.  According to the FCC, this three-within-30-days’ limit strikes the appropriate balance between callers reaching consumers with valuable information against the goal of reducing the number of unexpected and unwanted calls consumers receive.  Moreover, the numerical limitation is designed to restore trust in the residential landline network and advance health and the safety of life.  The FCC underscored its view that its chosen numerical limit is also reasonable because of the two exceptions that the TCPA already provides for artificial or prerecorded voice calls:  all calls with an emergency purpose are permitted, and all calls for which prior express consent has been provided are permitted.  These allow callers to contact consumers in an emergency or when they have received prior express oral consent for exempt informational calls which the FCC clarified could be obtained when using one of the three permitted calls over the course of a 30-day period.  And because the TCPA only restricts calls to a residential telephone number when they use an artificial or prerecorded voice, the FCC noted that callers are free to use live agents on residential calls without implicating TCPA calling restrictions.

The FCC rejected the notion that different, more liberal numerical call limitations for residential line exemption for healthcare calls subject to HIPAA as compared to those for noncommercial calls; commercial calls that do not include an unsolicited advertisement; and calls from tax-exempt nonprofit organizations (the “non-HIPAA exemptions”) are arbitrary or constitute content-based restrictions that fail strict scrutiny and thus violate the First Amendment.  The parties advancing this argument asserted that because the distinction in the call limitations for the different residential line exemptions is content based, the FCC must satisfy a strict First Amendment scrutiny test, and the FCC failed to do so.

While the FCC accepted that strict scrutiny of its rules could be required, it asserted that such a test requires the “government [to] prove[] that the [restrictions] are narrowly tailored to serve compelling state interests.”  Evaluating the concerns parties raised on reconsideration, the FCC determined that the call limitations it prescribed for the different residential line exemptions satisfy strict First Amendment scrutiny as they are narrowly tailored to advance a distinct governmental interest—restoring trust in the residential landline network and advancing the health and safety of life.

The FCC relied on evidence supporting its conclusion that the volume of robocalls landline consumers receive undermines their trust in, and willingness to rely on, the landline telephone network and that increased robocalls, even if legal, have resulted in consumers’ increasing reluctance to answer their phones.  This in turn undermines public health and the safety of life that depends on the use of the phone network.  The FCC seeks to rebuild the fading trust in the usefulness of landlines by arming recipients with effective tools to stop many of the calls they receive.  Notably, the FCC suggested that callers generally, and specifically those callers who argue they should be able to make unlimited numbers of robocalls without consumer consent, have incentives to call repeatedly because the cost of repeated calling is trivial to the caller financially.  As a result, callers individually have little or no incentive to be concerned about the collective problem of unwanted robocalls undermining trust in the network.

Despite this, the agency reaffirmed that a less restrictive numerical call limitation is warranted for the specific exemption for healthcare calls as defined by HIPAA.  The exemption for healthcare calls as defined by HIPAA was viewed as unique in that these calls implicate the governmental interest in health and the safety of life. On balance, the FCC concluded that this interest is best advanced by allowing a higher number of calls under the exemption for healthcare calls as defined by HIPAA.  This call limit matches the limit the FCC adopted for these types of calls to wireless numbers in 2015, and the FCC observed that there has been no credible evidence that the limits have unduly restricted healthcare providers’ ability to communicate with their patients.  At the same time, the FCC did not find a basis to conclude that a higher number of healthcare calls would be warranted.

The FCC was unpersuaded by arguments that call limitations are unnecessary in light of anti-illegal robocall measures undertaken as a result of the TRACED Act as well as prior FCC policies on opt-out rights; the required implementation of STIR/SHAKEN; and call blocking tools.  For example, opt-out rights, while helpful for consumers, were viewed as inadequate on their own to protect consumers who are reluctant to answer the phone at all.  If consumers do not answer a given call and learn who the caller is, they have no ability to opt out of future calls from that caller.  Thus, opt-out requirements on their own are unlikely to meaningfully reduce the volume of calls.  Similarly, while voice service provider implementation of STIR/SHAKEN will combat robocalls and introduce additional trust into the network, the FCC noted that it addresses a different problem:  that of illegal spoofing or falsification of caller ID information by bad actors to deceive call recipients.  Such scam spoofed calls are a subset of unwanted calls.  A reduction in the number of scam calls or even their elimination would not, in the FCC’s estimation, be sufficient by itself to restore the trust that an incoming call is likely to be one the recipient wants to answer, as a significant number of unwanted robocalls would remain.  Similarly, even though call-blocking measures need not focus solely on scams or illegal robocalls, measures currently in place for landline customers frequently are focused in those areas.  Thus, call blocking today does not fully address the problem of lost confidence in the landline phone network.

Because these technology tools will take substantial time to be deployed on a widescale basis by both IP- and non-IP-based providers, the FCC did not see them as an adequate remedy for the immediate challenge of addressing illegal and unwanted robocalls.  As a result, the FCC continues to see value in additional steps to reduce the number of potentially unwanted calls to 1) reduce the risk that consumers will be disrupted by a high volume of such calls; and 2) reduce the risk that calls made under the TCPA exemptions will be blocked that, individually, may be wanted, but are not wanted at such high volumes.

Opt-Out Requirements for Exempt Calls to Residential Lines

The FCC denied ACA’s request to reconsider as burdensome and unjustified the FCC’s decision in the TCPA Exemptions Order to extend opt-out requirements to informational calls that previously applied only to telemarketing calls.  The FCC mandated the use of automated opt-out mechanisms, as well as the maintenance of opt-out lists and policies to exempted informational calls to residential lines.  Under these rules, a consumer who wants to avoid further artificial or prerecorded informational calls can “opt out” by dialing a telephone number (required to be provided in the artificial or prerecorded voice message) to register their do-not-call request in response to that call.  Callers must also provide an automated, interactive voice- and/or key press-activated opt-out mechanism for the called person to make their do-not-call request.  This opt-out mechanism is intended to better allow consumers to decide which types of calls they want to receive on their residential lines and which they wish to avoid, and an automated opt-out mechanism was viewed as empowering call recipients to stop unwanted calls.  The FCC noted that those opposing opt-out mechanisms had offered no persuasive reasons for why consumers should not be afforded the same tools to address unwanted informational calls as they have for unwanted telemarketing calls.

The FCC clarified that the opt-out requirement prohibits only the use of an artificial or prerecorded voice message on future informational calls to the call recipient.  It does not preclude further communication by other means.  The FCC noted that it had placed a similar condition on exemptions for calls to wireless numbers, and there was no evidence that callers have not been able to comply with those requirements. The new opt-out requirement, the FCC highlighted, will have a six-month implementation period and known means of implementation as they are already in use for telemarketing calls.

Scope of Prior Declaratory Ruling Expanded

ACA’s Petition for Reconsideration also included a request to confirm that an earlier FCC declaratory ruling on “prior express consent” for calls made by utility companies to wireless phone numbers applies equally to residential numbers. The 2016 ruling, the Edison Electric Institute Declaratory Ruling, addressed utility company calls to wireless telephone numbers.  The FCC confirmed in response that consumers who provide their wireless or residential telephone number to a company involved in the provision of their utility service when they initially sign up to receive utility service, subsequently supply the wireless or residential telephone number, or later update their contact information with their wireless or residential telephone number, have given prior express consent to be contacted by that company at that number with messages that are closely related to the utility service so long as the consumer has not provided instructions to the contrary.

In addition, the FCC took the opportunity to confirm that the provision of a telephone number to the subscriber’s utility service provider reasonably evidences prior express consent by the subscriber to be contacted at that number by an upstream electric utility that:  (1) provides electricity service to the subscriber’s retail electricity provider, to whom the telephone number is given by the subscriber; or (2) is an affiliate of another utility company that provides some other type of utility service to the subscriber, to whom the telephone number is given by the subscriber.  In some instances, the upstream electric utility provider may be best positioned to provide subscribers with more timely information regarding issues that may be affecting their service.  This was meant to ensure that service providers involved in the provision of utility service to a subscriber but that do not have a direct customer relationship with the subscriber can rely upon consent given to a retail utility provider to communicate with an affected subscriber on matters closely related to the utility service, such as situations in which the provision of electricity service is, or is scheduled to be, impacted due to issues related to the upstream utilities’ generation or transmission of electricity.

The FCC confirmed that calls closely related to utility services include those that warn about planned or unplanned service outages; provide updates about service outages or service restoration; ask for confirmation of service restoration or information about lack of service; provide notification of meter work, tree trimming, or other fieldwork 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, for example, age, low income or disability; or provide information about potential brown-outs due to heavy energy usage.  As for calls regarding payment for current utility service, in the absence of facts supporting a contrary finding, prior to the termination of a customer’s utility service, a customer who provided a residential telephone number to the utility in the manner the FCC already described is deemed to have given prior express consent to be contacted by their utility company with messages that may include calls to warn about the likelihood that failure to make payment will result in service curtailment.  In contrast, after utility service has been terminated, however, routine debt collection calls by utilities to those customers will continue to be governed by existing rules and requirements.  The FCC reiterated the utility company is responsible for demonstrating that the consumer provided prior express consent and the utility company will bear the burden of showing, likely by use of business records, that it obtained this consent.  Consumers have the right to revoke consent to such calls if they no longer wish to receive them, just as they can when these calls are made to wireless numbers.  As a result, the FCC asserted that this expansion of its prior ruling balances important public safety communications with consumer privacy interests.

Effective Date of the Rules

The Declaratory Ruling was effective as of the date of the release of the Reconsideration Order, while the revised rules and those initially adopted in the TCPA Exemptions Order will be effective six months after publication of the Reconsideration Order summary in the Federal Register in order for callers to modify their operations as necessary.

Qiusi Y. Newcom

About the Author: Qiusi Y. Newcom

Qiusi Newcom brings efficiency and reliability in navigating clients through regulatory issues in telecommunications, export controls, economic sanctions and global privacy laws. Her experience in these areas uniquely positions her to help companies bridge compliance gaps in light of emerging legal developments such as multi-agency actions to protect U.S. communications supply-chain security and foreign direct-investment considerations involving critical telecommunication infrastructures or sensitive personal data. Having lived in and obtained law degrees in both China and the U.S., Qiusi’s understanding of cultural factors and local customs adds immense value to her counsel for business activities across borders.

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