The third quarter of 2024 kept the telemarketing industry buzzing with regulatory updates. Here is a recap of the newest regulatory changes in the Telephone Consumer Protection Act (TCPA), Do Not Call (DNC), and AI legislation.
FCC Proposes New Rules for AI-Generated Robocall Disclosures
On July 16th, the Federal Communications Commission (FCC) announced a proposed Notice of Proposed Rulemaking (NPRM) to:
- Define AI-generated calls
- Adopt new rules requiring callers to disclose intent to use AI-generated calls when obtaining prior express written consent and requiring callers to disclose when a call is AI-generated during a call
- Support technologies that alert and protect consumers from unwanted and illegal AI robocalls
- Protect positive uses of AI to improve access to the telephone network for people with disabilities
These new rules are intended to enhance a consumer’s ability to identify and avoid scams and high-risk fraud calls, while safeguarding protections for AI use supporting disabilities without the threat of TCPA liability. Specifically for people with disabilities, this item would propose that people with hearing and speech disabilities would be exempt from consent or identification requirements if these people with disabilities use an AI-generated voice to communicate during an outbound telephone call as long as the call does not contain any unsolicited advertisement.
The FCC will seek comment on:
- Whether or not AI-generated voice communication, exempted for people with speech and hearing disabilities, would be subject to abuse by scammers
- What other types of disabilities should be included as an exemption
- To limit (or not) the number of AI-generated voice calls by people with disabilities
- The ability to define “artificial or prerecorded voice” in a manner excluding disability enabled technologies from TCPA’s sphere, eliminating the need for an exemption while maintaining accessibility for individuals with disabilities
To move forward, the NPRM must be adopted during a vote of the full Commission, which could happen at the upcoming monthly open meeting on August 7th.
On September 10, 2024, the FCC released the comment and reply comment dates:
- Comment Date: October 10, 2024
- Reply Comment Date: October 25, 2024
These dates are 30 days and 45 days after publication in Federal Register.
Read more here.
FCC Takes Next Step Against Non-Compliant Voice Provider to Block Traffic
After Veriwave Telco failed to respond to the Federal Communications Commission’s (FCC) cease-and-desist letter issued in April ordering them to stop the “National Tax Relief Program” robocall campaign, Veriwave is now the subject of an FCC Initial Determination Order.
This order is the next step in the FCC’s process to tackle the war on robocalls. If Veriwave fails to acknowledge the order and take appropriate action, they’ll face consequences such as mandatory blocking of all Veriwave traffic by downstream providers.
In April, the FCC issued a K4 Public Notice alerting all US-based voice service providers about Veriwave and their robocaller status, stating voice providers may block voice calls or cease to accept traffic from Veriwave without liability.
Depending on how Veriwave responds to the Initial Determination Order issued on July 8th, the optional blocking of Veriwave traffic could become mandatory soon, with possible removal from the Robocall Mitigation Database (RMD).
Read more in the press release here.
Fourth Circuit Court Reverses Unsolicited Advertisement Interpretation Under TCPA
A decision that could impact businesses and influence TCPA litigation strategies was included in a U.S. Fourth Circuit Court of Appeals opinion, adopting a broader interpretation of what constitutes an unsolicited advertisement. This opinion reverses a lower court’s dismissal of a claim under the Telephone Consumer Protection Act (TCPA).
In 2021, Family Health Physical Medicine filed a lawsuit against Pulse8 after they received a fax regarding an unsolicited advertisement about a free webinar that they believed violated the TCPA. Pulse8 moved to dismiss, arguing the fax did not meet TCPA “advertisement” requirements because the webinar was free. The district court agreed, and Family Health appealed.
Ultimately, the fact that the webinar was free, by itself, was not convincing enough to qualify as an advertisement. The argument stating the webinar promoted a for-profit business selling medical coding software persuaded the Fourth Circuit to agree with Family Health.
Businesses should consider the impact this decision has made and understand the TCPA implications of the more broadly defined interpretation, taking a closer look at marketing content and using caution when offering free services related to the business, as those messages could now be considered marketing or advertising, elevating TCPA risk.
Subway Franchise Sued for Automated Text Messages; Appeal Ruling Says No TCPA Violations Were Made
In 2016, a Subway customer received an automated text message for a promotional offer of a free bag of chips with any purchase. After replying “STOP” to opt-out of receiving text messages from the franchise, the consumer received a second text days later with a link to another promotional offer, despite receiving confirmation that she had successfully unsubscribed.
The consumer alleged the following TCPA violations:
- Subway’s calling system was an Automatic Telephone Dialing System (ATDS)
- The text message was a “voice or pre-recorded message”
After multiple layers of litigation, Judge Chin of the Second Circuit Court granted Subway’s motion to dismiss after ruling that Subway’s system does not meet ATDS criteria and that a text message is not an artificial or pre-recorded voice because there was no audio component.
The definition of ATDS has been under scrutiny, so it’s important to note that the resulting interpretation of ATDS in this case aligns with prior decisions from the Third, Eighth, and Ninth Circuit courts. There is no mention of Subway’s Internal Do Not Call list or the National Do Not Call list.
For more information, click here.
How to Prepare for New Lead Gen Requirements Effective January 2025
While 2025 may seem far away, preparation time to accommodate the Federal Communication Commission’s (FCC) new requirements targeting and eliminating unlawful text messages and robocalls (aka the lead generator loophole law) is quickly evaporating.
We’ve outlined the new requirements of the lead generation loophole law plus FAQs, including what you can do now to comply.
Read our blog post for more information.
FCC Approves New AI Robocall Rules
During their August 7th open meeting, the Federal Communications Commission (FCC) adopted the Notice of Proposed Rulemaking (NPRM) and Notice of Inquiry regarding the implications of Artificial Intelligence (AI) technologies on protecting consumers from unwanted robocalls/robotexts.
The FCC’s NRPM and Notice of Inquiry seek comment on:
- The definition of AI-generated calls
- New disclosure rules (re: AI-generated artificial or prerecorded voice messages)
- Whether AI technology may enhance the risk of confusion, fraud, or scams
- Requiring additional disclosures at the point of consent
- Potential benefits and drawbacks of any new disclosures
- Whether the proposed disclosure at the beginning of an AI generated voice call should include a special indication
The NPRM and Notice of Inquiry also proposed to exempt artificial or prerecorded voice calls made by individuals with speech and hearing disabilities.
For more information, click here.
Click here for the FCC press release.
FCC Adopt Rules to Strengthen the Robocall Mitigation Database
During their August 7th open meeting, the Federal Communications Commission (FCC) adopted rules to strengthen a key tool for combatting robocalls: the Robocall Mitigation Database (RMD).
Established by the FCC in 2021, the RMD was created as a public database to facilitate the implementation of STIR/SHAKEN and robocall mitigation rules.
In recent years, additional FCC provisions for the RMD have included provider certifications and mitigation plans, assisting the FCC with evaluating compliance and enforcement activities. The RMD is the FCC’s system of record, enabling the ability to block malicious carrier traffic. “Downstream providers… are prohibited from accepting a provider’s traffic if it is not listed in the RMD.”
Given the importance and increasing value of the RMD, the FCC’s NPRM for improving the effectiveness of the RMD was established to seek comment on procedural measures for continuous improvement.
For more information, click here.
Do Not Call Registry Fees to Increase October 1, 2024
On August 27, 2024, the Federal Trade Commission (FTC) announced they are increasing Do Not Call (DNC) Registry fees for 2025, taking effect on October 1, 2024.
“All telemarketers calling consumers in the United States are required to download the numbers on the National DNC Registry to ensure they do not call consumers who have registered their phone numbers. The first five area codes are free to download, and organizations that are exempt, such as some charities and political callers, may obtain the entire list for free. Telemarketers must subscribe each year for access to the Registry numbers.”
Here is a summary of the changes:
For more information, click here.
Navigating Personal Jurisdiction in TCPA Cases
In a recent case (Warren Ingram vs. Money Map Press), a California resident with a Nevada area code filed a lawsuit in the Northern District of California alleging that he is on the National Do Not Call list and that defendant, Money Map Press, sent him 124 unsolicited promotional text messages.
Money Map Press moved to dismiss the case for lack of personal jurisdiction and the court granted the dismissal for three reasons:
- General jurisdiction applies to a corporation’s principal place of business, or where it primarily exists. The defendant is a Maryland company, and the texts were received in California.
- Specific jurisdiction requires “purposefully directed” activities in the state where the lawsuit was filed and the plaintiff’s claims stem from these activities. The court did not agree that Money Map Press activities met these requirements and there was no evidence of targeting California specifically. “In TCPA actions, courts consistently decline to find personal jurisdiction where the cellphone number at issue has an out-of-state area code and no other relevant evidence suggests that the defendant purposefully directed conduct at the forum state.”
- The plaintiff’s request for jurisdictional discovery was denied because jurisdiction was not alleged in the initial filing and no “colorable” basis to pursue discovery since general jurisdiction is unrelated to cause of action.
For more information, click here.
FCC Settles with Lingo Telecom
On August 21, 2024, the FCC (Federal Communications Commission) adopted an order stating the FCC’s Enforcement Bureau entered into a consent decree with Lingo Telecom, LLC, where Lingo agreed to implement a robust compliance plan and settled on payment of a $1,000,000 civil penalty (originally proposed penalty was $2,000,000).
In January, two days before the New Hampshire presidential primary election, prerecorded deepfake calls were placed with President Joe Biden’s voice, encouraging voters to abstain from voting. In addition, the calls used “spoofed” caller ID information.
After an extensive investigation across multiple organizations and agencies, the FCC demanded Lingo Telecom stop illegal traffic and subpoenaed Lingo for violation of STIR/SHAKEN attestation practices.
Separately, an enforcement action was filed against political consultant Steve Kramer for initiating the calls. He’s been indicted in New Hampshire on state felony charges and faces a proposed $6 million fine.
Click here to see the FCC’s Order.
FCC Publishes Small Entity Compliance Guide for New Robotext Rules
To help and support small businesses and organizations, on August 23, the FCC (Federal Communications Commission) published a compliance guide focused on enabling conformity of the FCC’s Targeting and Eliminating Unlawful Text Messages Report and Order.
The Report and Order requires:
- Mandatory blocking of “highly likely to be illegal” texts
- Includes specific NANP (North American Numbering Plan) origination stipulations
- Establishes a “reasonable” Do Not Originate (DNO) list
- A valid Point of Contact to resolve network traffic issues (effective May 11, 2023)
- Maintenance of a reasonable DNO list
The Report and Order effective date for mandatory blocking was September 3, 2024.
Click here for more information.
Connecticut Defines Term for “Telephonic Sales Call”
Approved on May 30, 2024, and effective on October 1, 2024, the Connecticut Senate Bill 121 has been amended to define the term “telephonic sales call” and more clearly explain the rules around the use of the National DNC Registry, making all telemarketing calls and texts subject to the same standard regardless of whether or not the number is on the DNC Registry.
SB 121 addresses consumer protections, particularly focusing on telephonic sales calls and solicitations for consumer goods or services. The bill expands regulatory oversight by aligning with key provisions from the Dodd-Frank Wall Street Reform and Consumer Protection Act. It aims to enhance the responsibilities of the Attorney General and the Banking Commissioner in managing issues related to deceptive telephonic sales practices, ensuring stronger consumer protection.
Key updates include:
- More specific guidelines for solicitors using telephonic methods to prevent abuse and fraud
- A new definition of “telephonic sales calls” that requires telemarketers to have written consent before making “telephonic sales calls” to cellular telephone numbers that are not on the National DNC Registry
- General restrictions on making “telephonic sales calls” (to residential or wireless numbers) without written consent or unless another exemption (e.g., existing customer) applies
For more information, click here.
Comment Dates Published for FCC NPRM AI in Political Advertising
In August, the FCC released the Comment and Reply Comment deadlines for the Notice of Proposed Rulemaking (NPRM) for Artificial Intelligence (AI) in Political Advertising:
- Comment Date: September 4, 2024
- Reply Comment Date: September 19, 2024
These dates are 30 days and 45 days after publication in Federal Register.
For more information on the NPRM, click here.
FTC TSR Violations Lead to Permanent Bans for Pyramid Scammers
In response to a Federal Trade Commission (FTC) complaint filed in 2022, a federal court initially shut down Michigan-based Financial Education Services (FES) temporarily for scamming consumers out of more than $213 million.
Targeting consumers with low credit scores, FES violated the FTC’s Telemarking Sales Rule (TSR) in several ways:
- Misleading claims: false promises of credit repair and significantly increased credit scores
- Unauthorized charges: charged consumers for services that were either not provided or ineffective
- Pyramid Scheme: recruited consumers to sell their services and earn commissions
- Unsolicited calls: Made unsolicited telemarketing calls to consumers, often using contact information obtained through deceptive means
On August 5, 2024, the FTC was awarded a $324 million judgement by a Michigan District Court, and FES defendants were permanently banned from selling any credit repair product or service, among other things (personal liability judgements, money held in escrow, surrender of personal property, and 12 years of compliance reporting to the FTC).
For more information, click here.
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